How Do EMV Terminals Work?


Quick Answer

When used in EMV terminals or point-of-sale systems, Europay, MasterCard and Visa (EMV) cards work though a process known as "dipping," in which the cards are inserted into the terminal slot, as opposed to the traditional method of swiping cards that have magnetic stripes. During the dipping process, an exchange of data takes place between the data chip embedded in the card and the card's issuing financial institution. This process verifies the authenticity of the card and likewise creates a unique transaction data, notes CreditCards.com.

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Full Answer

Europay, MasterCard and Visa are the three institutions that laid the groundwork for this data chip-enabled, credit card payment system. Also called "chip-enabled card acceptance," EMV cards generate a unique transaction number for each transaction, where traditional credit cards rely on static data. For credit card hackers, cloning traditional credit cards is easy because the data encoded in the card's magnetic stripe is unchanging. Such duplication will not work with EMV cards because the transaction data captured from any EMV terminals cannot be used again.

The EMV credit card payment system has been in place in about 80 countries worldwide including Canada and countries in Europe, South America and Asia. In the United States, major credit card institutions, such as Visa, MasterCard and American Express, set an October 1, 2015, deadline of shifting the liability of a card-present fraud to merchants who still use old terminals. This move is aimed at encouraging merchants to make their point-of-sale terminals EMV-system compliant.

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