EMV technology was made to reduce fraud for all businesses. As effective as EMV is, account compromise still happens. 

The emergence of EMV brought new ways to prevent fraud. Although EMV technology isn’t perfect, it is safer than other credit card payment methods

What is EMV? 

EMV is how smart cards process transactions. Smart cards are those that can interact with a terminal or ATM through an ingrained EMV chip. These EMV chips replace magnetic stripes. The data on EMV is dynamic, which makes it difficult for fraudsters to interfere. 

EMV stands for “Europay, Mastercard, Visa” as they are the ones that utilized EMV technology for credit cards. 

How Does an EMV Chip Work?

EMV chips can be used through chip-and-pin and contactless methods. A chip will create a unique code each time it’s used. These one-time codes transfer cardholder information to the terminal. 

Cardholder information still sits inside of a chip card. However, it’s unlike magnetic stripes, which directly transfers cardholder information through terminals. 

Authentication methods for EMV chips include pin codes and signatures. 

Where Does EMV Fraud Happen? 

EMV fraud can happen anywhere. However, card-not-present transactions are more likely to face EMV fraud. 

EMV makes in-person transactions safer. Card information is not static on EMV cards as they are on regular cards. Each transaction incurs a one-time code for the terminal to receive card information. 

EMV does not protect against card-not-present transactions. This does not include mobile wallet transactions where a physical card is not used. Card-not-present purchases are those made online or over the phone. Information is manually transferred by the cardholder rather than through an EMV chip. 

Additional authorization such as pins and biometrics (Face/Touch ID) further prevents fraud. Stealing information through an in-person EMV transaction is very difficult. 

What is EMV Liability Shift 

EMV chips increase security which saves customers, businesses, and banks time and money. 

When fraud happens, businesses and banks help cardholders get their money back. However, somebody has to take the hit for the lost funds. 

Issuing banks, which are cardholders’ banks, took responsibility for money lost to fraud. In other words, issuing banks took liability. 

EMV eradicates magnetic stripe fraud. However, EMV only works when businesses can accept them. 

U.S. card companies started implementing EMV chips in 2015. Since then, banks have slowly offset fraud liability to merchants. So instead of banks covering the costs of fraud losses, merchants will. 

Why did banks decide to shift liability to businesses? Their primary goal was to incentivize businesses to accept EMV cards. This requires upgrading payment terminals and using EMV certified merchant accounts. These are no small changes and can be costly for businesses. 

Businesses who aren’t ready to accept EMV cards continue magnetic stripe transactions, which are vulnerable to fraud. Since banks want all merchants to accept EMV, any fraud that happens with an EMV card read through its magnetic strip is the merchant’s responsibility. 

How to Prevent EMV Fraud

EMV fraud through in-person transactions are not common if businesses are properly set up to take EMV payments. 

Some basic fraud protection includes tools such as 3D secure. These add additional layers of security to all of your transactions, EMV or not. 

Even when fraud happens, you can still take steps to prevent resulting chargebacks. Chargeback alerts notify you when a customer files a dispute. You then have the time to resolve situations with clients before chargebacks hit. 

Finally, you can prevent fraud liability shifts by accepting EMV payments if you haven’t already. EMV terminals and EMV certified merchant accounts will have you all set to accept EMV transactions. 

RevitPay has all the tools for you to safely and easily accept EMV payments. Contact us today to find out how we can help your business.