EMV smart card systems

EMV may be considered the new standard for the financial cards worldwide. EMV, which comes from the initial letters of Europay, MasterCard and VISA, may be considered as the migration from the magnetic stripe cards to the chip based smart cards.

EMV is an interoperability standard developed by the three financial institutions which ensures that, all Europay, MasterCard, and VISA branded smart cards and all smart card reading POS terminals and ATM's work together to deliver the highest security level for electronic transactions.

An EMV smart card is a plastic card with at least one embedded integrated chip which can process data and it complies to the EMV technical standards.

The smart card (the chip) contains volatile memory and microprocessor components. It differs fom the memory card which only contains non-volatile memory storage components.

In fact, the smart card is a mini-computer; it can store and runs applications as well as it requires, like a computer does, an operating system. That's why a smart card which may run many applications is named also "multiapplication smart card".

A smart-card may use also one or more contactless chips. The contactless chip communicate with the card system without the need to insert the card in a reader, POS or ATM. 

Leader financial institutions (but not only) have structured the main benefits of the EMV smart card systems in three main categories:

• Reduction of credit card based frauds worldwide
  

Frauds have grown as number year by year. There are registered worldwide both ecommerce fraud as well as what we know today as "card cloning".

By using the new EMV smart cards, instead the old magnetic stripe cards, consumer surveys say that the ecommerce transactions will reach at least at double and the card cloning frauds will be reduced at over 99%.

• Growth of the total credit card transaction number
  

The new EMV standard offers an important benefit: transactions can be processed offline, instead only online as before. Clients can conduct transactions anytime and anywhere which means that the credit card based transactions will grow. Also, because the transaction doesn't depend on communications, the EMV smart-card system determinate savings in time and money.

• Multi-application interoperability
  

The smart-card using an microprocessor based chip supports the use of many applications. The EMV standard provides interoperability; different card schemes can communicate as well as readers support any smart cards compliant with the new standard.

A first step for the migration to the new standard is the issuing of hybrid credit cards which support both magnetic stripe and chip transactions. The next step will eliminate totally the magnetic stripe from the smart cards.

• New innovative concepts based on the EMV standard
  

The applications used with the smart cards serve for a very large pallet of domains, from security purposes, to loyalty programs up to the use of the digital signature.

The EMV standard, the new technology developments and the larger and larger use of communications worldwide let IT&C experts propose new concepts and projects in the public-private area. One of the new EMV based developments is the SVN concept which states the issuing of national official smart-cards for both citizen and business. Using both financial and digital signature applications the SVN concept may determinate huge national savings of over 4% of the national GDP. 

Today there are over 800 Million EMV compliant credit cards issued on the market. Over 9 Million terminals (POS and ATM's) can read chip based smartcards and conduct payment transactions.

Banks worldwide have to migrate to the new standard, to issue chip based financial cards if they want to benefit on Visa, Mastercard and Europay advantages.

Specially in Europe, the EMV migration has become also somehow official by adopting the EMV as an SEPA mandatory standard.

The EMV contactless technology is a mix-up between the classic EMV standard and the ISO 14443 Radio Frequency specification.The new solution enables finacial card users to simply wave their payment card at a contactless POS to complete the transaction in few secons.

The Contactless EMV standard (also named Contactless 2.0) provides faster transactions and much more secure than cash. It will allow financial institutions to increase transactions through a large acceptance of low value merchant payments where cash has traditionally been dominan.

Cardholders are not prompted for their PIN because they reach the pre-authorised offline limits indicated by their bank preventing in this way, if card if lost or stolen, indefinite usage. For example, such contactless payment transactions will change the way of how transportation services are offered to people.

The new EMV contactless standard is also a very important step ahead according to the payments conducted via the mobile phones equipped with Near Field Communications (NFC).

Contactless payments and RFID opperations are considered worldwide as the future of service oriented applications. Recently, for example, the European Union has issued official RFID (Radio-frequency identification) recommendations for the the implementation of privacy and data protection principles in applications supported by radio-frequency identification in order to let such services be developed at large scale in Europe.