In recent years, there has been a global shift from the old magnetic strip-based cards to chip-based cards. The new chip-enabled cards are also known as EMV cards.
Financial sector spotlight with Omen Muza
EMV stands for EuroPay, MasterCard and Visa, the first companies to introduce chip cards. EMV is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.
In Zimbabwe, the first EMV cards were launched on June 27, 2013, by MetBank Limited, as the bank sought to extend global transacting convenience for its customers.
Since then, other Zimbabwean banks have followed suit, issuing their own chip-based cards with much pomp and fanfare.
Many, however, still wonder what the fuss is all about. What’s so special about EMV when they can still swipe using their old cards?
This instalment discusses some of the benefits and features of these much-talked about cards, at a time the banking sector in Zimbabwe is promoting the use of plastic money to counter the challenge of cash shortages that have become endemic in the economy.
It is argued that further adoption of plastic money could also see a corresponding increase in card-related fraud.
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Indemnity for merchants
Why does capability for accepting EMV cards matter for merchants? In certain jurisdictions, such as the United States, the credit card industry told retailers that if they did not have EMV readers in their outlets with effect from October 1, 2015, they would no longer be covered for any fraud that might happen if credit card information is skimmed.
In other words, from that date onwards, there was a liability shift between card issuers and retailers. Card skimming is the act of illegally collecting data from the magnetic stripe of a credit, debit or automated teller machine (ATM) card.
This information, copied onto another blank card’s magnetic stripe, is then used by an identity thief to make purchases or withdraw cash in the name of the actual account holder.
Skimming works by replacing a card reader like an ATM with a camouflaged counterfeit card reader called a skimmer.
The counterfeit reader records all the data on a credit, debit or ATM card, as it passes through the skimmer.
It is, therefore, important for investment in EMV card readers to happen on the merchant side, if all the investment made by Zimbabwean banks to date in upgrading to chip and pin cards is to bear fruit.
Convenience
Chip-based card transactions are more convenient than magnetic stripe-based card transactions since the merchant no longer has to spend time visually inspecting cards to check for holograms and other imprints.
The new chip-enabled cards also cater to customer’s evolving needs, as they can be used for online shopping due to their enhanced security features.
Security: Minimising card-related crime
From the consumer point of view, the EMV cards are more secure because the information on them is less likely to be stolen when one uses cards at the retail store.
The chip on the front of your card protects your personal information much better than the magnetic stripe on the back, by making the card difficult to clone or duplicate.
When you use your card to buy something, the chip on your card “talks” with the chip in the point-of-sale (POS) terminal, creating unique codes for each purchase.
These unique codes help protect you against counterfeit card fraud. Contrary-wise, the magnetic stripes on traditional credit and debit cards store unchanging data, so whoever accesses that data gains the sensitive card and cardholder information necessary to make purchases.
You dip rather than swipe
Unlike traditional credit cards, EMV or chip-enabled cards require you to dip your card (like ATM machines do) rather than swipe it.
However, the “dipping” takes a little longer for information to transfer, so you’ll need to be a bit more patient before removing your card — it might take as long as 30 seconds.
NFC-enabled
EMV cards can also support contactless card reading, also known as near field communication (NFC).
Instead of dipping or swiping, NFC-equipped cards are tapped against a terminal scanner that can pick up the card data from the embedded computer chip.
Chips protect from skimming.
The microchip in chip cards generates unique, dynamic data every time a consumer completes a transaction at the point of sale, making it harder for fraudsters to collect their card information.
In turn, it is more difficult for hackers to copy and use credit card information. So, if someone has set up a skimming device, which is meant to steal your credit card information as you swipe, the chip should stop this.
In conclusion, it is important to note that EMV technology will not prevent data breaches from occurring, but it will make it much harder for criminals to successfully profit from what they steal.
Omen N Muza edits the MFSB. You can view his LinkedIn profile at zw.linkedin.com/pub/omen-n-muza/30/641/3b8 or initiate contact on omen.muza@gmail.com
