From Mag Stripe to EMV® – Knowing the Basics


Are you ready for EMV® payment transactions? Whether you already accept credit cards in your business, or are still considering your options, it can be helpful to start with what is familiar. TransFirst® gets down to basics to help keep you in-the-know.

Magnetic Stripe Cards - The credit or debit card’s magnetic stripe contains three tracks of data encoded with information about the cardholder’s account — such as their credit card number, full name, the card’s expiration date and the country code. With the new generation of credit cards, such as chip cards, no magnetic stripe is needed.

Chip Cards, aka: Smartcards - A chip card, as it relates to payments, is a credit or debit card that has a computer chip implanted into it that enables the card to perform financial transactions — some also require the use of a separate Personal Identification Number (PIN). Chip cards may also be used for security system access and storage of medical or other records.  Current smartcards being issued feature magnetic stripes so that consumers can make traditional point-of-sale (POS) transactions if a merchant has not yet transitioned to EMV-compatible terminals.

PAN - Primary Account Number on either a debit or a credit card of 14 or 16 digits embossed on a bank or credit card and encoded in the card’s magnetic strip.

PAN Truncation - PAN (primary account number) truncation is a technology that prevents most of the digits in a credit card, debit card or bank account number from appearing on printed receipts issued to customers. PAN truncation is used by point-of-sale (POS) terminals and has become nearly universal in recent years.

Magnetic Stripe Transactions - In a magnetic stripe transaction, the terminal reads the PAN and the expiration date from the card and makes a transaction authorization request that contains the card number, expiration date and other data, including the transaction amount. The terminal sends the request to the acquiring bank, which forwards it to the issuing bank through a payment network such as Visa® or MasterCard®. If appropriate, the issuer returns an approval code, which reaches the merchant via the payment network and the acquiring bank.

At the end of the day, the merchant sends a batch of approval codes to the acquiring bank for clearing. The acquiring bank forwards each approval code to the appropriate issuing bank via the payment network and credits the merchant account after the issuing bank accepts the charge and the transaction amount is received by the acquiring bank from the issuing bank.

EMV - EMV is a global standard for credit and debit payment cards based on chip card technology. The EMV acronym is derived from the joint effort between Europay, MasterCard and Visa to ensure payment security and global interoperability. The use of secure smart chip technology, encryption and other cryptography measures makes it extremely difficult for unauthorized users to access or use information on a smart card or to create duplicate cards, which is not true of magnetic stripe cards which are more easily exploitable by hackers.

EMV Compliance Liability Shift – Starting October 2015 merchants not using EMV equipment may be held financially liable if a data breach or counterfeit transaction occurs.  (The liability shift does not go into effect until October of 2017 for fuel dispensers.)

TransFirst® can help you prepare your business for the latest advancements in payment technology. Don’t wait for the deadline rush — contact us today to help your business become EMV complaint and increase your payment data security.

EMV is a registered trademark or trademark of EMVCO LLC in the United States and other countries. Trademarks are the property of their respective owners and are not necessarily affiliated with TransFirst. TransFirst, LLC is a registered ISO/MSP of: Wells Fargo Bank, N.A., Walnut Creek, CA, and Synovus Bank, Columbus, GA, for Visa® and MasterCard® transactions only.

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federally-registered U.S. service marks of Total System Services, Inc. TransFirst is a registered ISO/MSP of: Wells Fargo Bank, N.A., Walnut Creek, CA; Synovus Bank, Columbus, GA; and Deutsche Bank, New York, NY; for Visa® and MasterCard® transactions only. TSYS Merchant Solutions is a registered ISO/MSP of Wells Fargo Bank, N.A., Walnut Creek, CA and Synovus Bank, Columbus, GA.