EMV Cards: What's The Advantage?

Magnetic-stripe transactions have been the credit-card standard for generations. But a new standard has taken over. EMV, which stands for Europay, MasterCard and Visa, is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.

The major difference between magnetic-stripe and EMV-chip transactions is the increased security that EMV provides. But there are many other aspects that allow the new EMV standards to outshine the older magnetic-stripe process.

What makes it smart?

EMV cards contain a microprocessor chip that holds much more data than a magnetic stripe. It is also used to add encryption to the transaction. EMV sales can be “chip and pin,” where you slide the card into the EMV card reading slot and use your pin to validate. The card stays in the EMV slot on the terminal until the transaction is complete. Unlike magnetic-stripe cards, every time an EMV card is used for payment, the card chip creates a unique transaction code that cannot be used again.

How do you process an EMV transaction?

The biggest difference between an EMV chip vs. a magnetic stripe card is how the card is processed at the point of sale. You no longer have to master a quick, fluid card swipe in the right direction. Chip cards are read in an entirely different way. Here is a typical EMV chip card transaction process:

• Slide the card into the slot (typically in front of the payment terminal or pin pad) face up/chip side up until it stops and leave it in the slot.
• You will either be prompted for a pin or you will be asked for a signature (the card issuer decides).
• When the receipt prints and the transaction is complete, remove the EMV card from the slot.

The days of handing your card over to the clerk controlling the transaction are ending. External pin pads with EMV will be popular for the same reasons external pin pads have always been popular: they’re customer-facing, more hygienic and more secure.

Why change to chips?

The very best reason to change to a chip card is for the encryption. A magnetic stripe has no encryption and can easily be cloned onto another card. It’s significantly more difficult to hack or clone EMV chips, and the immediate benefit to the merchant is that an EMV card is almost guaranteed to be legitimate.

If fraud occurs after EMV cards are issued, who will be liable for the costs?

Prior to Oct. 1, 2015, if an in-store transaction was conducted using a counterfeit, stolen or otherwise compromised card, consumer losses fell back on the payment processor or issuing bank.

Today, with the introduction of EMV chip cards and terminals, major U.S. credit card issuers have introduced a “liability shift.” If a cardholder comes into a retail environment with an EMV chip card and the merchant doesn’t yet accept them, the merchant will take full liability if there is a chargeback.

If I want to use my EMV chip card at a retailer that doesn’t support EMV technology yet, will my card work?

Yes. The first round of EMV cards that have been issued to clients are equipped with both chip and magnetic-stripe functionality so you can adjust your payment method depending on the merchant’s equipment.

Pinnacle has reissued all of its debit and credit cards so they now include EMV chips. If you have any questions or need a replacement card, please contact our card services team at 800-264-3613.

If you would like to apply for a Pinnacle credit card, go here.