EMV Chip Cards : Background, Fraud, Security and Small Business Issues

Consumer financial card fraud due to data breaches of card information is an ongoing problem in the United States. The majority of breaches are carried out against point-of-sale (POS) systems, and are facilitated by what many consider to be the weak link in the U.S. retail sales payment process: the continued use of magnetic stripe cards (also referred to as stripe-and-signature cards). These cards are what most U.S. consumers think of when referring to financial cards. In much of the rest of the world, cards that provide a much higher level of security for conducting sales transactions are used: EMV cards, named for the coalition of Europay, MasterCard, and Visa (the EMV Coalition or EMVCo) that developed the specifications for the system in the 1990s. EMV cards store card information on an embedded microchip and are more commonly called chip cards. With these cards, instead of swiping and signing to make a payment, the cardholder inserts the card into the POS machine, then either enters a personal identification number (PIN) or signs to verify the transaction. Fraud is significantly more difficult to carry out against chip cards, but financial institutions in the United States have until recently issued stripe cards almost exclusively. This book provides a background of the EMV chip card transaction, and discusses the status and issues for Congress.