The Evolution of Smartcard, Research Paper Example

The Europay MasterCard Visa (EMV), also known as chip cards or micro-processor-based payment-cards, were developed through an alliance of three financial payment firms: Europay, MasterCard, and Visa (Yang 1-2; Al-Alawi 76). Currently, EMV credit card has expanded and integrated UnionPay, Discover, JCB, and Express brands. Essentially, the chip card is the global standard for the chip technology integrated to payment cards (Figliola 1-2). It is designed to facilitate secure interactions of the payment terminals and the smart cards, as well as to apply to various devices and terminals like POS terminals, automated teller machines (ATMs), personal computers, and electronic cash registers (Al-Alawi 76).

The EMV chip integrates account and cardholder data. It is programmed to decide transactions and to control the outcome of the transaction. An example of this includes declining or approving transactions. Mainly, EMV cards can be produced as chip-and-choice, chip-and-signature, or chip-and-PIN. These three forms permit either the use of a signature or personal identification number (PIN). When the card is programmed to use a PIN, then it shows it had been programmed into the CHIP before being ultimately implanted in the card (Yang 1-2).

The EMV cards are designed to execute two dissimilar types of transaction. These include contact “Chip & PIN” transactions and contactless “tap and go” transactions (See Figure 1).

The Contactless “tap and go” transactions are designed for quick and easy replacement of transactions that need small cash. The credit card is positioned on the contactless reader of point of sale (POS) terminal for nearly a second for approval of the transaction. On the other hand, unlike for the contact transaction, the cardholder has to enter their PIN (Emms 6). Additionally, for the contact transactions, the EMV card has to be inserted into the POS terminal. This also means that the contactless transactions EMV card is completely wirelessly. Hence, a transaction can be completed while the card is in the wallet. Contactless transactions do not rely on PIN protection (Emms 6).

The EMV cards were mainly designed to enhance the security of credit/debit card transactions. Contactless transactions, therefore, have different safeguards. In the United Kingdom, for instance, the contactless transactions are restricted to £20 unless a Chip & PIN card is used. They are also restricted to five consecutive contactless transactions, after which a PIN must be used. The “Chip & PIN” contact transactions also have several safeguards. A PIN has to be entered by a cardholder (See Figure 2).

Next, the card requests the POS terminal to make contact with the bank for extra authorization checks in the event that the value of the transactions exceeds the offline transaction limit. Afterwards, the card only permits the transactions once POS terminal transmits a valid authorization code from the bank (Emms 6).

The EMV cards provide enhanced security for transactions and cards, compared to the traditional stripe cards. To ensure this, they render the data stolen during a security breach to be increasingly difficult to apply in fraud (Gray & Ladig 60). At the same time, counterfeiting them is significantly more difficult. Studies conducted in the United Kingdom and Canada showed increased fraud (See Table 1). These chip cards, in spite of the verification method they use, offer highly protected payment environment (Figliola 10-11).

Table 1: Trends of fraud after use of Chip-and-PIN Cards in Canada and United Kingdom (Figliola 7)

Conclusion

In conclusion, EMV credit card ensures improved security of the transaction authorization process. It is an open standard offering bank card specifications, which ensures enhanced protection against fraud, such as using stolen, lost, and counterfeit cards. The card authentication can be executed securely using both online and offline technologies. In the same way, cardholder verification is executed through an offline or online PIN, or even the cardholder’s signature.

Works Cited

Al-Alawi, Adel. “The Evolution of Smartcard And EMV Migration In Bahrain.” Review of Business Information Systems9.4 (2005): 73-92

Emms, Martin, Budi Arief, Leo Freitas, Joseph Hannon, Aad van Moorsel. “Harvesting High Value Foreign Currency Transactions from EMV Contactless Credit Cards without the PIN,” 2014. 29 April 2015, <http://homepages.cs.ncl.ac.uk/budi.arief/home.formal/Papers/CCS2014.pdf>

Figliola, Patricia. “The EMV Chip Card Transition: Background, Status, and Issues for Congress.” Congressional Research Service 7-5700, (2014): 1-18

Gray, Dahli & Ladig, Jessica. “The Implementation of EMV Chip Card Technology to Improve Cyber Security Accelerates in the U.S. Following Target Corporation’s Data Breach.” International Journal of Business Administration 6.2 (2015): 60-67

Yang, Ming-Hour. “Security Enhanced EMV-Based Mobile Payment Protocol.”?e Scientific World Journal (2014) 1-19