Cashless & Mobile Payments

10 EMV Facts Every Operator Should Know

November 16, 2020 | By Elyssa Steiner

10 EMV Facts Every Operator Should Know

EMV chip card acceptance, both contact and contactless, is finally gaining momentum in the United States. As adoption proliferates, operators need a clear understanding of the why, what, and how behind EMV in order to know when to invest in migrating their business. As with any large-scale change in payment technology, merchants can often receive mixed and confusing messages that can lead to invalid assumptions, and ultimately faulty business decisions (1). In this blog, we seek to provide the facts around EMV and everything an operator needs to know:

#1 | What is EMV?

EMV – is the security standard jointly created by Europay, Mastercard, Visa (i.e. “EMV”) – reduces the chance of in-person credit/debit card fraud and increases the security of consumer financial data vs. traditional mag-stripe payments.

#2 | What is the difference between EMV contact and contactless?

Contact EMV (also known as “chip” or “dip”) is the method of payment where consumers insert their debit card or credit card into the slot of the terminal and wait for the purchase to be authorized.

Contactless EMV (also known as “tap”) is the method of payment where consumers with contactless-enabled cards or digital wallets tap or wave their card or device over an EMV Contactless enabled terminal.  

#3 | Will magnetic stripe “swipe” no longer work at an operator’s machine?

Currently, as reported by Visa, there are no specific plans in place to eliminate the magnetic stripe from physical cards. (1) In fact, the mag-stripe is the fallback option for when EMV enabled cards do not work at a machine. We believe that mag-stripe will continue to be made available on physical credit/debit cards, as payment brands have not announced anything to the contrary.

#4 | Should operators anticipate an increase in card declines on non-EMV transactions anytime soon?

Fraud models are constantly changing, and we cannot predict the issuers’ updated policies and procedures. As consumers adopt EMV enabled cards for payments, whether contact-chip or tap, it is important that operators consider accepting all methods a consumer may want to use to pay. Declines can occur if a consumer only pays via tap and is using an EMV-enabled card at a legacy card reader that does not accept EMV contactless. While the reader should still allow for NFC-MSD, the card may not push it through, and the consumer may not think to default to swiping if they don’t commonly do that when making a payment.

#5 | What is NFC-MSD versus EMV Chip/EMV Contactless?

“NFC” which stands for near field communication, and “MSD” which stands for magstripe data, is a process by which a consumer taps their card and the data is relayed to process via near field communication, which has the same security requirements as an actual magnetic “swipe.”

EMV Chip and EMV Contactless use higher security levels than traditional magnetic stripe to process a card payment and prevent fraudulent transactions. Legacy card readers accept and process payments via NFC-MSD, and newer card readers that accept EMV contactless “tap”, will leverage the new security protocols.

#6 | When do I need to prepare my machines to accept EMV?

Banks are issuing contactless cards at an increasing rate, which could be due to the acceleration around touchless payments, from the onset of COVID. While there is no set date, the networks strongly encourage operators to not only complete their device upgrades to 4G LTE, but to also be EMV enabled.

#7 | Why should operators with 2G/3G telemeters consider upgrading their non-EMV card readers?

As consumer payment methods evolve and technology develops, it is important that consumers can pay for their purchases with any form of payment, including EMV. While you still have time with your devices in the field today [learn more about 2G/3G and the move to 4G LTE here], it is worth considering upgrading those legacy card readers you currently have, that are not EMV enabled, and that are connected to 2G/3G telemeters. Take advantage of our competitive low rates for telemeters or full cashless kits associated with your 2G/3G upgrades today. You can learn more here.

#8 | Do my machines have to accept EMV Chip or is EMV “tap” all I really need?

In the small ticket market, specifically vending, EMV Chip will not be a required method of payment, as contactless becomes the payment method many consumers across the globe are now choosing. EMV contactless “tap” should be all you need to support the card brands and your consumers’ use of EMV.


Quick Facts:

  • 31 million Americans tapped a Visa contactless card or digital wallet in March 2020, up from 25 million in November, with overall contactless usage in the U.S. growing 150% since March 2019. (2)
  • 80% of surveyed consumers are extremely/very/or somewhat concerned about touching payment readers, after the onset of COVID-19. (3)
  • In the vending channel, we tracked a 51% growth in contactless payments from January to July as a percentage of total cashless payments. (4)
  • During January 2020 to July 2020, USAT reported seeing contactless payments grow 8X as fast as non-contactless, specifically within the vending industry. (4)

#9 | How will operators know if their current devices in the field have EMV enabled card readers?

USAT customers can easily view their 2G/3G devices in the field by logging into USA Live [view instructions for running reports here]. The report will display which 2G/3G devices are connected to EMV enabled card readers, which in turn, will help you easily learn where to consider upgrading to a full cashless kit.

#10 | What is an operator’s risk if they don’t have devices upgraded to accept EMV after August 2022, per the recommendation by the network carriers as a best practice timeline?

We believe that EMV contactless is the preferred method by card brands like Visa, and don’t anticipate traditional MSD transactions to be phased out for many years. Therefore, the risk is low, but it is important to consider that in the small ticket market, and with the onset of COVID-19, we do expect more and more consumers to pay via “tap” or EMV contactless methods.


Want to hear industry experts give more in-depth knowledge about EMV and 3G sunsets? Check out our upcoming UR Tech Insiders podcast episodes coming out later this month.

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Resources:

  1. Chip Payment Acceptance. Visa. 2014.
  2. VisaNet Data, March 2020.
  3. Visa Commissioned Study COVID-19 Contactless Messaging – Market Research & Insights. April 23rd – April 30th, 2020.
  4. USA Technologies, Cashless During COVID-19 Study. September 2020.

Author

Elyssa Steiner

VP of Marketing

Elyssa has over 9 years in the unattended retail industry and was among the first to be a part of launching the micro market concept into the vending channel. She is passionate about sharing both her knowledge in unattended retail and marketing with industry associations such as NAMA and Frost and Sullivan’s Marketing professionals.

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