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How does EMV chip card system works?

 

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The EMV (Europay, Mastercard, and Visa) chip card system is a global standard for payment cards equipped with computer chips. It aims to enhance security and reduce fraud in card transactions. Here's how it works:

1. Card Authentication: When you insert an EMV chip card into a payment terminal, the terminal checks if the card is authentic by communicating with the chip. The chip has a unique digital signature that the terminal verifies, ensuring the card has not been tampered with or cloned.

2. Dynamic Data: EMV cards generate unique transaction data for every purchase. The chip, along with the terminal, creates a cryptogram specific to that transaction. This dynamic data makes it extremely difficult for häçkers to reuse or replicate the information for fraudulent purposes.

3. Cardholder Verification: EMV cards offer various methods to verify the cardholder's identity. These include PIN entry, where the user enters a Personal Identification Number, or signature verification, where the user signs on the terminal's screen. This adds an extra layer of security by preventing unauthorized usage of lost or stolen cards.

4. Offline Capability: EMV chip cards have offline capabilities, which means they can process transactions even when the payment terminal is not connected to the internet. The card's chip can store the necessary information to complete the transaction, allowing payments to be made in areas with limited connectivity.

5. Terminal Authentication: Just as the card authenticates itself to the terminal, the terminal also authenticates itself to the card. This mutual authentication ensures that the cardholder's information is not compromised by fake or malicious terminals.

6. Reduced Counterfeit Fraud: EMV chip cards significantly reduce counterfeit fraud compared to traditional magnetic stripe cards. Since the chip generates unique transaction data, it becomes extremely difficult for fraudsters to clone the card and reproduce the transaction details.

Overall, the EMV chip card system offers robust security, protecting both merchants and cardholders from various forms of payment fraud, including counterfeiting, skimming, and data breaches.