EMV
J U N E 2 014
The global standard for payment
cards based on chip technology
EMV® stands for Europay, MasterCard®, and Visa®, and is commonly referred to
as a chip card used for payment technology. The chip within the card stores
cardholder and application data more securely, and the technology
itself provides protection against counterfeit card-present fraud.
What does a chip card look like?
EMV cards are called chip cards because they have a small
microprocessor, or mini computer, in them. Data on the chip is
accessed interactively, and the chip requires specific responses
from a card terminal in order to reveal its information. This makes
cloning of cards significantly more difficult for criminals.
In many cases, the card is “chip & PIN” where the terminal reads
financial and identity information from the chip, and the customer
enters their PIN. This means customers are providing two factors
of authentication — something the customer has (the card) and
something the customer knows (the PIN).
Chip
Ultimately, EMV will help in protecting your personal data better
than a magnetic stripe card.
Definition of a common AID
An AID is an
application identifier,
a number similar to
a telephone number,
that points to an
application on the
chip of the card.
The AID helps the terminal and card “talk” to each other, and the application is the payment software installed
on the chip that runs the transaction process. The terminal uses the AID to be able to select between different
applications on the card. Once the correct application is selected, the transaction begins.
Today, magnetic stripe cards don’t have AIDs. The magnetic stripe is just data such as account number, expiration
date, and cardholder name. In a magnetic stripe transaction, when a cardholder makes a purchase at a merchant
location and swipes their card, the transaction is routed to any network affiliated with the bank identification number
(BIN). Per Regulation II (the Durbin Amendment), the merchant gets to choose where to route the transaction.
For the U.S., each branded chip card will have both a global AID and a U.S. common AID. The common AID is
present to ensure Regulation II compliance. The common AID can be utilized by all ATM acquirers and merchants,
allowing them to route transactions to any network available on the card. The global AID is for international use.
How SHAZAM is preparing for EMV
SHAZAM has numerous enterprise-wide projects that will allow
you to shift to EMV technology when you deem the time to be
appropriate. With the U.S. being the largest market in the world,
the migration of EMV support could take more than a decade to
fully complete. Although there will be early adopters and programs
designed to incent you to upgrade early, the business case to
support migrating to EMV now is not yet clear.
SHAZAM will meet any industry mandates. Recently, SHAZAM has
partnered with Visa for the use of a common AID for SHAZAM- and
Visa-branded chip cards and transactions.
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• The use of this common AID enables debit transactions originating
on chip cards to meet the routing requirements of Regulation II,
which requires that merchants be provided with at least two
unaffiliated networks for routing.
• Our goal was to establish a mechanism that allowed for merchant and issuer routing choice for contact and contactless payments
supporting PIN, PINless, and signature, and we believe this
partnership accomplishes that goal.
• We are currently in negotiations with MasterCard for a similar
partnership.
Educating your cardholders about EMV
Unfortunately, migrating cardholders to EMV chip cards won’t be as easy as just reissuing cards
and getting those cards in consumers’ hands. You’ll need to think about educating cardholders
on how to use their cards at both the point-of-sale (POS) and the ATM. Advanced information
made available to the cardholder through different channels informing them EMV chip cards
are coming will help make them more aware, minimize the confusion, and hopefully reduce
the amount of questions.
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For more
information
.
on EMV
contact you
used correctly
r financia
l institution.
SHAZAM is here to help you! We recently created a cardholder marketing piece that helps
explain what EMV is, why the change in cards, what they look like, and how EMV will work.
Order your inserts from shazampowermarketing.net or contact your SHAZAM Account
Executive today.
EMV110-JQ
-SS
Liability shifts
A reminder of some upcoming liability shifts are listed in the following table. Remember that for a loss to occur on a PIN-based transaction,
both the card and PIN need to be compromised.
Effective Date
Type of Liability Shift
October 2015
POS terminals for
MasterCard, Visa, American
Express®, Discover®, and
PULSE®
If a cardholder’s magnetic stripe card is used at a chip-enabled POS device, and there’s
fraud on that transaction, the issuer would be liable.
All MasterCard ATM
transactions
If a cardholder’s magnetic stripe card is used at a chip-enabled ATM, and there’s fraud
on that transaction, the foreign or U.S. card issuer would be liable.
October 2016
Liability After Shift
If the card is a chip card, the POS device only accepts magnetic stripe cards, and there’s
fraud on that transaction, the acquirer/merchant would be liable.
If the card is a chip card, the ATM only accepts magnetic stripe cards, and there’s fraud
on that transaction, the ATM acquirer would be liable.
For more information on EMV contact your SHAZAM Account Executive.