Differences and Benefits of EMV
The purpose and goal of the EMV standard is to specify interoperability between EMV-compliant IC cards and EMV-compliant credit card payment terminals throughout the world. There are two major benefits to moving to smart card based credit card payment systems: improved security (with associated fraud reduction), and the possibility for finer control of "offline" credit card transaction approvals. One of the original goals of EMV was to allow for multiple applications to be held on a card: for instance, a credit and debit card application or an e-purse.
EMV chip card transactions improve security against fraud compared to magnetic stripe card transactions that rely on the holder's signature and visual inspection of the card to check for features such as hologram. The use of a PIN and cryptographic algorithms such as DES, Triple-DES, RSA and SHA provide authentication of the card to the processing terminal and the card issuer's host system. The processing time is comparable to online transactions, in which communications delay accounts for the majority of the time, while cryptographic operations take comparatively little time. The supposed increased protection from fraud has allowed banks and credit card issuers to push through a 'liability shift' such that merchants are now liable (as from 1 January 2005 in the EU region) for any fraud that results from transactions on systems that are not EMV capable. For transactions in which an EMV card is used, the cardholder is assumed to be liable unless they can unquestionably prove they were not present for the transaction, did not authorize the transaction, and did not inadvertently assist the transaction through PIN disclosure.
Although not the only possible method, the majority of implementations of EMV cards and terminals confirm the identity of the cardholder by requiring the entry of a PIN (Personal Identification Number) rather than signing a paper receipt. Whether or not PIN authentication takes place depends upon the capabilities of the terminal and programming of the card. For more details of this (specifically, the system being implemented in the UK) see Chip and PIN.
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