News Column

Chip security has changed card payments

February 3, 2014

Jabu Basopo -1

EMV card chips have transformed the world of credit and debit card payments. The little chip that sits on the left side of the plastic cards people carry in their wallets has made the world of electronic payments more secure and faster. The technology was named in the mid-1990s after the three primary electronic payments companies that developed it: Europay, Mastercard and Visa (EMV). In 1999 EMVCo was established as an independent company by the same three founding partners to manage, maintain and develop chip technology. The company is now considered the industry standard. For Visa, it was a revolution in protection that has made card holders much safer from fraud and criminal activity. It has changed the payments landscape and has brought a level of security that magnetic strips could never offer. Whether in New York or Mombasa, EMV chips work the same. Acceptable terminal It's important to understand how EMV chips work. The chip provides three key safeguards: storing information; processing information; and can store secret information and performing cryptographic processing. The card works like a mini computer. All of this means that it is impossible to clone or replicate the chips and the circuitry that makes them work. Each chip is unique and cloning a chip is considered a near impossibility. When you make a purchase, the card must come in contact with an acceptance terminal. The terminal powers the card and activates the chip, which verifies that the card is real and that the owner of the card has sufficient funds or credit to complete the purchase. Magnetic strips, which were the industry standard, have become too easy to copy or clone and have become the focus of fraudulent activity. Once the magnetic strip is read by the terminal, the card is no longer needed because all the data is transferred to the terminal. The chip actually determines and enforces many of the payment rules set by the issuing bank. This can include a number of additional security features such as verifying the cardholder's identity through PIN or written signature. Chips have saved banks massive costs in fraud investigations. EMV has cut down on cloned cards that were used in suspect transactions. The future is bright for new EMV technology. The industry is quickly adopting 'contactless' cards that are read by passing the card over a reader instead of being plugged into it which includes the same level of protection but speeds up check out times. Basopo is Visa country manager for Southern and Eastern Africa .

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Source: Business Daily (Kenya)

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