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How EMV Credit Card Transactions Work

Everything you need to know about how EMV credit card transactions work and what you need to know to keep your business running smoothly.

In October 2015, merchants must be able to process EMV transactions, or be prepared to assume the liability for any fraudulent transactions. If your business is not equipped with EMV-compatible technology, you will be at risk. 

In a recent post, we talked about what EMV is, but how do EMV transactions actually work? Here’s what you need to know to keep your business running smoothly.

During a Transaction

Rather than swiping cards with a magnetic stripe, you will insert EMV cards into your terminal. Another option is to tap the card on the terminal, if your terminal is equipped with Near Field Communication technology. The chip in the EMV card encrypts cardholder information and creates a new encryption for every transaction. Even if the encryption is accessed, it is never valid again, which reduces the risk of fraud. When the card is inserted, the encryption is sent to and read by the card issuer, who approves the transaction. This process helps protects both the cardholder and the business owner from a fraudulent transaction.

EMV transactions rely on a secondary level of security: PINs or signatures. After his or her card is inserted, a customer will provide this information to further authenticate the card and his or her identity. Most U.S. cardholders and credit card processors now use signatures during transactions, so the majority of EMV transactions also will use signatures. As users become more familiar with EMV technology, however, the process will likely switch to PINs, as they are more secure.

Completing a Transaction

After an EMV card has been inserted into the terminal and authenticated, it takes about the same amount of time to process the payment on the back end as with magnetic stripe transactions.

Despite a brief learning curve for both cardholders and businesses, the transition to EMV cards will result in increased security for cardholders and businesses. Professional Services Financial Solutions not only offers EMV-compatible terminals, but also training and tech support to guide you through the transition.

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