What is EMV?

EMV is the global card technology of choice and it’s coming to the U.S. There are an estimated 1.5 billion EMV cards worldwide and 21 million EMV terminals. Coupled with card adoption rates averaging 44.7 percent and terminal adoption rates at 76.4 percent, EMV’s global dominance is uncontested. 

EMV is defined by EMVCo as, “a global standard for credit and debit payment cards based on chip card technology”. Originated in the early 1990s, EMV stands for Europay, MasterCard, and Visa. Sometimes referred to as Chip and PIN, EMV offers several cardholder verification methods. We expect to see both Chip and PIN and Chip and Signature in the U.S. market by 2013.

With EMV, when the card is scanned at the merchant there are two data parts for authorization. The primary account number (PAN) is a static verification tool and is presented with the card validation code (CVV), which is a dynamic code generated through a complex algorithm for each transaction. EMV still requires encryption, but chip technology provides a more secure option compared to magnetic stripe cards, which are significantly more susceptible to counterfeiting and fraud.

As credit card companies such as Visa, MasterCard, Discover and American Express continue to push for EMV adoption, there is still a sense of reluctance amongst retailers and payment processing companies. The Nilson Report estimates that there are more than 15 million magnetic stripe POS terminals in the U.S., and some experts predict that it will cost more than $8 billion in total to adopt EMV in the U.S. While large box retailers like Wal-Mart have already moved to EMV capable terminals, others are lagging behind with a ‘wait and see’ attitude.