EMV is an abbreviation of Europay, Mastercard, and Visa. In 1994, a working group called EMV, which included MasterCard International, was launched to establish standards for chip technology on payment cards, and this effort resulted in the development of the EMV standards.
The EMV standards are the cornerstone of the measures taken to ensure that chip-carrying MasterCard and Maestro cards can be used seamlessly at terminals worldwide. A company called EMVCo was established specifically to manage and develop the EMV specifications. Smart cards have begun to replace magnetic-stripe cards in payment and ATM transactions.
Under EMV, cardholders authenticate credit and debit transactions by entering their PIN at the terminal where the sale is made. The PIN is verified by the smart card, which performs authentication with the terminal using a digital certificate method. The transaction details are authenticated using a MAC (message authentication code) generated with a symmetric key shared between the cardholder and the issuing bank.
Advantages of EMV:
- The "Chip and PIN" approach was introduced as a solution to rising card fraud. While the chip prevents the card from being cloned, the PIN prevents stolen cards from being misused.
- It reduces the liability of the issuing banks. For example, if a transaction made with a smart card is approved with a wet signature, liability falls on the merchant; if it is approved with a PIN, liability falls on the cardholder.
- Transactions made with magnetic-stripe cards are approved through online authorization. This causes delays during the connection stage and increases transaction costs.
When a chip is used for debit/credit transactions, most of them can be carried out offline, saving on time and communication costs. - The EMV standards define every step of debit/credit processing for Europay, MasterCard and Visa transactions, thereby guaranteeing international interoperability.
- Thanks to their microprocessors, EMV cards support multiple applications in addition to debit/credit functions, allowing them to truly integrate with other important areas such as loyalty cards, ID cards, electronic wallets, e-commerce, and transportation, becoming a card capable of hosting many different applications.