Traditionally, a debit or credit card contains magnetic stripes that hold the data necessary for performing a transaction. However, that system had a number of security flaws. Many times, those cards were compromised or forged. To address that concern, EMV was developed.

What is an EMV chip card? How is it different from using debit or credit cards containing magnetic stripes only? And how does it enhance security? Let’s explore this in more detail.

What is the EMV chip card technology?

EMV is a global technology standard for processing credit and debit card payments using a card that contains a smart chip instead of magnetic stripes. The word ‘EMV’ stands for Europay, MasterCard, and Visa—the three companies that originally created the standard. The standard is now managed by EMVCo, which has six member organizations: American Express, Discover, JCB, MasterCard, UnionPay, and Visa.

EMV cards use a smart chip instead of magnetic stripes to hold the data required to process a transaction. The smart chip is basically a microprocessor that can run applications to perform authentication and hold encrypted data. It can also generate a unique code for each transaction that cannot be used for more than one transaction, thus preventing fraud.