An EMV Bullseye: Taking chip card security one step further with the PIN

Last updated: 01 September 2015

We have frequently written blogposts on the upcoming fraud liability shift in the U.S., and now we are only 30 days away from one of the most significant changes in the history of the U.S. payment ecosystem. So what’s the big deal? Hundreds of millions of credit and debit cards are being reissued with stronger authentication technology known as EMV. These cards are made smarter and more secure by having embedded chips that boast the same computing power as an Intel microprocessor, similar to the one you would find in a desktop PC. That is a lot of computing power for a bank card, and it serves as the backbone for how these cards provide higher levels of security for consumers and the industry as a whole.

A “smarter” payment card is able to work with updated point-of-sale terminals to determine whether the card is real or a clone, and thus accept or reject the transaction. Cloning bank cards is otherwise known as counterfeit card fraud, which represents one of the primary forms of payment fraud in the U.S. and has been consistently growing year over year. EMV card security helps tackle this type of fraud. For example, in Europe counterfeit card fraud fell 60 percent between 2009 and 2011 following widespread chip-and-PIN implementations.

Last year, the EMV migration landed front and center in the U.S. when Target became one of the first retailers to announce a transition to chip-and-PIN technology. The company revealed they would migrate their millions of REDcards to EMV technology. Gemalto has been working with Target to help them throughout the entire process of launching their EMV-enabled REDcards, providing customers with greater transaction security, thanks to the strong, dynamic authentication of the chip cards.

With the U.S. being one of the last countries to move to EMV technology, information and lessons learned from other countries like the U.K., Canada and Australia are much more accessible. We have been able to share our experiences and prepare our clients across every aspect of the migration, from initial strategy to the complexities of card issuance to what lies ahead in payment security and fraud.

If other markets are any indication, EMV will continue to shake up the ecosystem as we move to complete ubiquity over the next couple years. While it fights fraud on the backend, one of the most noticeable changes with EMV cards will be their impact on consumer behavior. Shoppers across the U.S. will no longer be swiping their credit or debit cards, but rather will now need to “dip” EMV cards at the point-of-sale terminal. Some EMV cards only require a signature for verification, while some have a personal identification number (PIN), The PIN allows for dual authentication – using something you have and something you know – to further protect against lost or stolen cards. Many merchants and issuers new to EMV, will want to make sure their cardholders and guests understand how the new cards work and how to take advantage of the safer version of check-out through a frictionless experience. This layer of education can lead to a smoother transition and is a perfect opportunity to promote the security benefits of the new credit and debit chip cards.

As the EMV deadline approaches, we continue to collaborate with retailers and issuers alike, ensure the industry is equipped with the necessary technology and expertise to deploy their unique portfolios of cards, and ultimately beat the fraud liability shift. It is an exciting time in the U.S. in terms of advancements in security and payments, and we are pleased to be working with companies that are a proactive, driving forces in the industry with a sharp focus on payment security.

To learn more about Target’s EMV cards click here.

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