EMV Card Series – Pt 2: How to Use it and What Happens When You Do

(This is the second in a series on EMV technology, which is designed to thwart credit and debit card fraud.)

You know how to “swipe”, but now you’ll need to learn how to “dip”.

“Swipe” is typically what you do when using a debit or credit card to complete a transaction. However, in the new world of EMV, you’ll need to “dip” your card when it comes time to make a purchase. Why the difference? Simply put, EMV cards require the exchange of much more information compared to traditional magnetic stripe transactions.

As we revealed in Part 1 of this series, EMV cards are embedded with computer chips and tethered to technology that’s used to authenticate chip-card transactions, which help to prevent fraud. Each chip card transaction involves exchanging dozens of pieces of information between the card, the checkout terminal and the acquiring bank or processor host.

As EMV technology makes inroads in the U.S. – following an existing presence in Europe — financial institutions and merchants need to add new in-store technology and internal processing systems to accommodate the cards’ usage. As a result, you’ll be seeing new card-processing equipment showing up more frequently at retail checkout lines; and that’s where the “dip” comes in.

Just like magnetic stripe cards, EMV cards are processed for payment in two steps: card reading and transaction verification. But there is a distinct difference in how the cards are read. Rather than swipe in a particular direction like you do with a magnetic stripe card, the EMV card is inserted into a terminal slot where it processes the card information.

Once an EMV card is dipped, information flows between the card chip and the issuing financial institution to verify the card’s legitimacy and create unique transaction data. This process will take a bit longer than a magnetic-stripe swipe, so the user will need to take a little more time to dip the card and allow the data to be transmitted. You’ll need to sign for the transaction, or enter a personal identification number (PIN), to verify your transaction.

Experts note that another option to EMV card dipping is contactless card reading, also known as near field communication (NFC). NFC-equipped cards are tapped against a terminal scanner that can pick up the card data from the embedded computer chip. Although this is an easier and more consumer-friendly approach, most U.S. financial institutions have or will be issuing contact cards that require dipping. A global move is underway to produce EMV cards that can be used either way, but those versions are not expected to show up in the U.S. anytime soon.

So what happens if you want to use an EMV card at a retailer that doesn’t yet have the technology/equipment to support it? According to experts, the first round of EMV cards issued in the U.S. will have both chip and magnetic-stripe capabilities. So if you’re at a checkout terminal that doesn’t have “dipping” capabilities, you can swipe the card instead.

Millions of EMV cards are hitting the streets as the October 1st deadline approaches. This date was established by U.S. credit card issuers MasterCard, Visa, Discover and American Express to signify a shift in liability for card-present fraud to whichever party is the least EMV-compliant in a fraudulent transaction. After all is said and done, if your retailer isn’t prepared to add the new equipment by October 1st, they could be on the hook if a crook tries to commit fraud with your new card.

Up next: How effective will EMV technology be in preventing fraud?

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