IF you're a depositor at any of the commercial banks in Jamaica, chances are you've received an e-mail explaining the roll-out of new Europay, MasterCard, and Visa (EMV) chip cards.

In fact, some depositors may have already received their new card in the mail. One of the visible new features on the card is the EMV smart chip.

EMV chip cards are true representations of the maxim “necessity is the mother of invention”. In many spheres have bankers noticed that cyber criminals were becoming more sophisticated and were finding new ways to commit fraud. As a result, the technology used to protect depositors needed an upgrade too. The existing magnetic stripe cards have been around since the 1960s and uses the same technology as cassette tapes. EMV cards were designed specifically to prevent fraudulent transactions when someone physically uses a counterfeit card at a payment terminal.

The EMV standard is a security technology used worldwide for all payments done with credit, debit, and prepaid EMV smart cards. Instead of using the magnetic stripe at the back of your card to store data, EMV cards store data using a smart chip. This is an important distinction because fraudsters can easily clone data from a magnetic stripe but it's much harder to clone a chip card.

The process of using a magnetic stripe card involves a physical swipe of the card, allowing it to communicate with a magnetic payment reader which matches the magnetic fields on your card to your banking information. Because the data being shared in this process is static, fraudsters are able to capture that information using a skimmer which is relatively cheap on the market and transfer the information to a counterfeit card.

EMV chip cards, on the other hand, have built-in encryption technology, which guards against skimming. Therefore, when the card communicates with the payment terminal the data is constantly changing. Additionally, the contactless nature of the card is an extra layer of protection which combats cloning.

In Jamaica, many EMV chip cards still have a magnetic stripe at the back, allowing depositors to use the card for transactions in three forms: mobile, contactless, and contact. The variety of options allow depositors to use their card if the payment terminal doesn't have the contactless functionality. However, studies have shown that countries which have accepted the EMV standard like the United Kingdom, Europe, and the United States have seen a reduction in certain types of card fraud.

In the US, for example, EMV compliance law stipulates that all businesses need to upgrade their point-of-sale (POS) systems to accommodate EMV chip cards and EMV compliance. Otherwise, you won't be able to avoid liability under new credit card chip reader law.

But the EMV chip card transformation comes with challenges of its own. Firstly, if EMV processors slow down or stop working, millions of consumers could be left stranded. Furthermore, merchants will have to upgrade their payment systems to make it compatible with EMV chip cards. At the same time, bankers encourage depositors to remain vigilant when using their EMV chip cards, stressing that fraudsters are always on the hunt for new ways to engage in malicious activity.

Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at https://bit.ly/epaper-login