What is EMV?

Origin:
During the early 90s, the awareness that it was imperative to increase security levels in worldwide payment environments started to grow rapidly.

EMV is named after Europay International, MasterCard International and Visa International, who created a joint industry working group which first met back in 1994 to facilitate the introduction of chip as the replacement technology for credit and debit cards, replacing the traditional magnetic stripe. Therefore "Chip + PIN" is commonly used.

Then in 1995, Europay, MasterCard and VISA decided to define a common payment scheme using a chip card containing a payment application requiring a PIN for authentication on their payment cards (debit & credit) for secure and fraud free payments. The goal was and still is to combat all kinds of fraudulent uses of their debit- and credit cards.
They agreed to call this new standard "EMV".

What is EMV:
EMV is the common chip specification standard of Europay, MasterCard and VISA for debit and credit cards.
EMV is not just an additional application on the chip, but an adjustment to commands for payment applications and add-on EMV compliant applications.
The EMV standardization impacts the communication protocols used as the interface between card and terminal, terminal and acquirer, front office and back office systems.

EMV was established to help reduce the dependence on the inter-banking network and European dial-up connections to the network by providing the ability to conduct transactions 'off line' from the bank.
Depending on the card issuer's risk management policy, EMV can be configured to authorise some number of transactions between the card and terminal without going "on line" to the bank for every transaction.

The goals and drivers of EMV:
The goal of EMV is to increase security offered by smart cards based on worldwide

Interoperability.

• Phase 1: Fraud reduction
  The initial driving factor is fraud reduction.
• Phase 2: Create added value
  EMV cards will bring added value for the parties involved with other applications beyond EMV.

What EMV offers:
EMV reduces fraud
EMV is also designed to help reduce or eliminate two types of credit card fraud that continues to dog banks and merchants. These types of fraud are skimming and counterfeiting.

Current status:
Meanwhile Europay brand has disappeared as MasterCard took over Europay. Still the EMV brand stayed unchanged.

American Express and JCB committed to join the same payment standard.

All around the world the International Payment schemes are strongly encouraging their member banks to migrate their credit and debit card portfolios across to a smart card platform. This is expected to bring many benefits to card issuers and acquirers, including reducing the rapidly escalating levels of fraud losses and tackling the growth in 'Skimming' attacks. Smart cards allow for the introduction of stronger security counter measures, enable offline PIN verification, provide the ability to support enhanced data and introduce new risk management capabilities.

All Financial Institutions around the world (except for the US) are already rolling out or planning to roll out in the near future these EMV chip equipped debit- and credit cards.

This roll out will cost considerable amounts of money, as not only the smart cards need to be rolled out, but also the entire acceptance infrastructure needs to be upgraded to the EMV standard. This involves the Automatic Teller Machines (ATM) and the Point Of Sales (POS) terminals with the Merchands.

Certifications: EMV Level 1 and 2:
Terminal manufacturers are required to obtain two levels of Type Approval for their smart card POS systems.
EMV Level 1 covers the hardware requirements and EMV Level 2 covers software or application certification.

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