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What is EMV?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedSep 20212 min read

For over a decade, EMV has facilitated secure credit and debit card transactions for millions of shoppers worldwide. We all remember the “I ❤ Chip and PIN” campaign that accompanied the mandatory use of Chip and PIN POS machines in UK retail. But fewer of us spare a thought for the technology behind this innovation. Or how it continues to transform the way merchants process payments with contactless transactions.

Here we’ll take a look at the technology that has brought peace of mind to shoppers and removed barriers to sale for retailers.

EMV explained

Today, EMV facilitates over 80% of card-present transactions worldwide. But this technology has actually been around since the late 1990s. The EMV technology toolbox was designed to combat the growing problem of credit and debit card fraud. It was co-developed by Europay, Mastercard and Visa (hence the name). EMV has now established a global standard for secure payments in face-to-face and remote transactions.

Until the advent of EMV, as many will remember, credit and debit card transactions were authorised via a magnetic stripe accompanied by a customer signature. This process was vulnerable to fraudulent transactions – both the signature and the magnetic stripe could be copied and exploited.

EMV technology is constantly evolving, and its changing face has helped define secure and convenient transactions.

Chip and PIN

While Barclaycard started rolling out Chip and PIN POS systems as early as 2003, it wasn’t until 2006 that the technology became mandatory for merchants. The legislation came into force on Valentine’s Day that same year, hence the “I ❤ Chip and PIN” marketing gimmick. Across the pond, it took much longer for US systems to migrate to EMV specifications, which became mandated in 2015.

Contactless

The interface may be different, but contactless payments are also powered by EMV technology. By briefly tapping a contactless credit or debit card on a compatible POS machine, shoppers are able to make secure payments with unsurpassed speed and convenience.

A limit of £30 was placed on transactions for these cards to prevent the misuse of lost or stolen cards. In the pandemic era, contactless has proven invaluable in facilitating secure transactions without the COVID risk associated with touching a keypad. The chancellor Rishi Sunak raised the contactless transaction limit to £45 during lockdown, followed by announcing in his 2021 Budget a further increase of the spending limit to £100.

The future of EMV

In its current state, EMV is almost entirely geared towards Card Present transactions. But with the rise of ecommerce and an increasing preference for e-wallets, we can expect EMV technology to evolve further to encompass Card Not Present (CNP) transactions. EMV already has a suite of specifications developed to respond to the growing CNP market including EMV Payment Tokenisation, EMV 3-D Secure and EMV Secure Remote Commerce.

The benefits of EMV

Even if you operate in a nation where EMV is not mandatory, there are a number of significant benefits to its use. If you haven’t yet adjusted to making EMV payments, here are a number of good reasons to start now:

It reduces the risk (and cost) associated with fraudulent card transactions (Chip and PIN led to a 70% drop in fraudulent card transactions in the UK)
It limits merchant liability in the rare event of a fraudulent transaction
EMV-equipped POS systems are more affordable, portable and easier to integrate than ever
EMV transactions are generally cheaper for merchants than CNP transactions

We Can Help

If you’re interested in finding out more about EMV and receiving secure payments, then get in touch with our financial experts. Discover how GoCardless can help you with ad hoc payments or recurring payments.