With the EMV chip technology fast becoming a world standard, it is necessary to ask yourself some questions: Are you aware of the types of EMV card transaction authorization methods? How are EMV chips authenticated at your POS checkout systems? An onslaught of EMV information entwined with information on the mobile wallet (which is contactless) has confused quite a number of merchants and customers. As a merchant, you need a payment system that is EMV-capable and which can then handle the different authorization procedures for EMV card transactions as well as handle the authentication process.
How to Authorize an EMV Card Transaction
Although the chip-and-PIN method is the best-preferred method, the gold standard in EMV card transaction authorization, there are in fact, three methods of authorizing a transaction with EMV chip cards:
The Chip-and-Signature: Also known as the chip-and-sign method, once the transaction is completed at the POS terminal, the customer signs for it much like in the case of the traditional magstripe card transactions.
The Chip-and-PIN: In this case, the cardholder is required to create a secret PIN when activating the EMV chip card. This PIN is then used on the POS terminal by the customer to authenticate a transaction. The chip-and-PIN card is more secure as in case the card is lost or stolen; it can not be used without the required PIN. While widely used abroad, in the U.S., only a handful of card issuers and financial institutions are reportedly issuing this type of card to their customers.
The Easy Pay/Self-Serve: In this type of authorization the EMV chip cards can be used without the associated PIN or Signature. Such transactions are categorized as small and easy to pay such as buying small tickets or paying for gas at a gas pump.
How to Authenticate (Read) An EMV Card At the POS Terminal
While the traditional magstripe card used swiping through a card reader to authorize a transaction, the EMV chip card generates a unique code for each purchase the customer. Instead of swiping. However, several methods may be used to read an EMV card:
Card dipping: In this method, the EMV card has to be in contact with the card readers in a process called card dipping. Here, the customer inserts his card into a slot in the EMV card reader and leaves it there authorizing the transaction by confirming through the reader’s interface. Once the transaction is authorized and completed, the customer then removes the card.
Tap to Pay: In this the method, the customer would load their card information to their NFC-enabled smartphone then hold it near a contactless EMV reader where transaction data is transferred to the reader using radio frequency method. However, this method has not picked up due to security concerns and the prohibitive cost of implementation for card issuers and merchants.
Dual EMV chip: This is a card that can support both card dipping and tap to pay methods.