Processing EMV®/NFC Transactions at the POS
By adopting EMV (chip card) technology, the United States has taken a major step towards protecting sensitive payment card data and combatting counterfeit fraud in card-present transactions. EMV provides enhanced authentication of both the cardholder and card. This reduces a merchant’s risk of accepting a counterfeit card or being held financially responsible for a fraud-related chargeback.
The key to an EMV transaction lies in the microprocessor embedded in the card. This microprocessor, or chip, stores data securely and performs cryptographic processing that helps to keep the data safe. It uses a process called dynamic authentication that generates a unique code for each individual transaction, a level of sophistication not available in mag stripe cards. This makes it much more difficult for thieves to steal, sell or use payment data for unauthorized purchases.
Processing a chip card transaction at the point of sale (POS) requires a slightly different approach than processing a mag stripe transaction. Instead of swiping the card through the magnetic stripe card reader, the customer inserts the card, chip side up, into a slot at the bottom of the terminal. The chip card must remain in the card reader until a prompt on the terminal screen indicates that the transaction is complete. If the card is of the chip-and-PIN variety, the cardholder enters their personal identification number using the PIN pad on the terminal. If the card is chip-and-signature, the cardholder signs the receipt.
During the transition to EMV, chip cards issued in the U.S. will have a mag stripe, which EMV-capable terminals are equipped to handle.
Most EMV terminals can also process near field communication (NFC), or contactless, transactions. This short-range wireless technology allows the terminal to communicate with NFC-equipped cards and smartphones when they’re within close proximity to each other. Like EMV, NFC is considered to be more secure than mag stripe technology.
At the POS, the customer simply waves or taps their contactless chip card or NFC-enabled and app-equipped device (also known as a digital wallet) in front of the NFC logo on the terminal. Some systems require a biometric confirmation (typically a fingertip scan) or passcode from the customer to authenticate the transaction.
EMV is a registered trademark or trademark of EMVCo LLC in the United States and other countries.