EMV Chip FAQ's
Democracy FCU Implementation of the EMV Chip Cards
Democracy FCU is devoted to providing the most secure way to perform card transactions by implementing the EMV chip. Democracy FCU’s EMV chip provides a security feature that makes our debit and credit cards more protected than the standard cards by providing an extra wall of safety for every day purchases. This security feature not only protects your personal data but will also aid in minimizing card fraud and card counterfeiting.
Members will begin getting Democracy FCU EMV credit cards when cards are reissued beginning in January 2016. EMV debit cards will begin issuing near the middle of 2016.
What are EMV Chip Credit and Debit Cards?
Chip cards, or “smart cards” have a microchip embedded in the credit or debit card. The chip is encrypted and provides stronger security and protection against fraud.
Why are EMV credit and debit cards and EMV payment transactions more secure?
EMV cards store payment information in a secure chip rather than on a magnetic stripe and the personalization of EMV cards is done using issuer-specific keys. Unlike a magnetic stripe card, it is virtually impossible to create a counterfeit EMV card that can be used to conduct an EMV payment transaction successfully.
EMV secures the payment transaction with enhanced functionality in three areas:
Protecting against counterfeit cards. The card is authenticated during the payment transaction, protecting against counterfeit cards. Transactions require an authentic card validated either online by the issuer using a dynamic cryptogram or offline with the terminal using Static Data Authentication (SDA), Dynamic Data Authentication (DDA) or Combined DDA with application cryptogram generation (CDA). EMV transactions also create unique transaction data, so that any captured data cannot be used to execute new transactions.
Authenticating the cardholder and protecting against lost and stolen cards. Cardholder verification ensures that the person attempting to make the transaction is the person to whom the card belongs. EMV supports four cardholder verification methods (CVM): offline PIN, online PIN, signature, or no cardholder verification method (CVM). The issuer prioritizes CVMs based on the associated risk of the transaction (for example, no CVM is used for unattended devices where transaction amounts are typically quite low).
Using issuer-defined rules to authorize transactions. The transaction is authorized either online and offline. For an online authorization, transactions proceed as they do today in the U.S. with magnetic stripe cards. The transaction information is sent to the issuer, along with a transaction-specific cryptogram, and the issuer either authorizes or declines the transaction.
In an offline EMV transaction, the card and terminal communicate and use issuer-defined risk parameters that are set in the card to determine whether the transaction can be authorized. (Offline transactions are used when terminals do not have online connectivity (e.g., at a ticket kiosk) or in countries where telecommunications costs are high.
What are the benefits of EMV?
The biggest benefit of EMV chip cards lies in its powerful fraud prevention technology Inherent in the chip. Because every EMV card is essentially a small, secure computer, EMV cards are nearly impossible to counterfeit. By replacing the current un-encrypted magnetic stripe with a chip embedded in the card, smart card technology adds dynamic data to the transaction process, making it far less vulnerable to fraudsters.
The adoption of EMV in other parts of the world has significantly reduced card fraud in those regions. Although the U.S. is no stranger to fraud, payment card fraud is now logically following a path of least resistance to even more aggressively ply its trade in America. The migration of fraud from EMV-enabled countries to the states is already underway. Between 2009 and 2011, the percentage of the world’s payment system compromises centered on the U.S. rocketed from 38% to 67%.
Currently, credit union card issuers absorb $430 million in fraud losses split between $206 million in card-present (CP) and $224 million in card-not-present (CNP) transactions. Based on other countries’ EMV experiences, EMV deployment will cut those fraud losses by 40% to 60%, which will generate up to $248 million credit unions could return to their members in the form of lower loan rates or higher dividends.
Additional benefits include:
EMV is a gateway to continued payments innovation.
It is no big stretch to picture today’s EMV cardholder as a credit union’s next mobile payments channel adopter. EMV and NFC are two near-term game changing technologies that put a tremendous amount of transactional power in the hands of consumers and merchants. EMV’s chip technology is a foundational building block for future mobile payments methods – EMV forms the game changing payments DNA that will unlock a multitude of new transaction experiences for consumers.
Why are other countries migrating to EMV?
Issuers around the world are including chips in bank cards and merchants are moving to EMV-compliant terminals to increase security and reduce fraud resulting from counterfeit, lost and stolen cards.
Will magnetic stripes be discontinued on credit and debit cards?
No, magnetic stripes will continue to be used on cards so they can be used at terminals in countries that have not yet converted to chip technology, including the United States.
What information is stored on EMV Chip Cards?
The microchip embedded in the card stores information required to authenticate, authorize and process transactions. This is the same type of information already stored in the magnetic stripe. No personal information about your member’s account is stored on the chip card.
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