What Businesses Need to Know About Contactless EMV

There’s been a lot of buzz about EMV payments thanks to the recent liability shift. By now, most retailers are familiar with chip cards and how they affect businesses and customers. However, many are still uncertain about the future of EMV and what‘s in store for the payments industry. While it can be hard to predict exactly where payments are heading with new technology cropping up regularly, EMV is here to stay. Its future, however, looks a bit different than EMV’s current form.
Here’s what you need to know about where EMV is headed and its future as a contactless payment system:

1. There’s more than one way to make an EMV payment.

Chip card transactions can be processed in a few different ways. The “chip only” method, which requires customers to insert their card and allow time for it to process, and the “chip and signature” method are the only methods currently used in the U.S., but down the road, it’s likely we’ll follow the lead of other countries and turn to different methods for increased security and convenience. Here are the four methods for processing a chip card transaction:

  • “Chip Only” - These transactions require customers to dip their card into the payment terminal and leave it there until it has been processed. While this method is meant for processing smaller transactions, it’s the only method currently used in the U.S.

  • “Chip and Signature” - These transactions add another layer of security by requiring customers to sign after their chip cards have been processed.

  • “Chip and PIN” - These transactions are also meant for securing larger purchases. This technique requires customers to enter a PIN before they remove their card from the payment terminal. “Chip and PIN” transactions are already in use in other countries and will likely be implemented in the U.S. down the road.

  • “Contactless” - As mentioned earlier, the next big step for EMV and payment technology will be contactless chip card payments. In the future, chip cards will be enabled with NFC technology, which will allow customers to make payments by holding their card near an NFC reader and then providing either a signature or a PIN. While “Contactless” payments are an exciting advancement that should make transactions easier than ever, it won’t replace contact EMV payments altogether. Large payments will still be made with contact EMV and it may take a while for stores to upgrade terminals to meet “contactless” payment requirements.

2. EMV contactless payments use NFC technology.

With the EMV liability shift paving the way for NFC technology, the next logical step in the payment space is contactless chip cards. Contactless EMV payments will be processed by placing credit cards in front of an EMV reader at a short range to enable radio frequency communication. This is made possible by using NFC technology, which is the same technology used to process mobile payments from services like Apple Pay and Android Pay. That’s great news for businesses that already accept mobile payments because their terminals won’t require upgrades once the new cards hit the market.

3. EMV contact payments are a stepping stone to contactless payments.

The EMV liability shift has resulted in widespread distribution of chip cards (it’s estimated that 50 percent of all cards in the U.S. will be chip-enabled by the end of 2015) and has encouraged businesses to upgrade payment terminals. While EMV chip cards aren’t the ultimate solution for increased payment security and convenience, it is a necessary stepping stone to bigger and better technology. In many ways, the EMV liability shift has laid the groundwork for widespread NFC payment adoption, which means contactless payments could ultimately become the norm.
What are your predictions for the future of contactless EMV payments? Tell us in the comment section below or send us a tweet @Cayan and let us know!
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