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MasterCard to make transactions smarter with EMV technology
MasterCard to make transactions smarter with EMV technology
By: iMedia News Bureau

Following the lead of rival Visa, MasterCard has finally set out plans to push the United States into abandoning mag-stripe cards in favour of EMV chip technology.

The clamour for America to join Europe and take up EMV has been growing over the last year, with retailers and bankers voicing concern over the fraud risks associated with mag-strip technology. MasterCard has revealed that they are finally pushing the EMV system (aka chip-and-PIN) across its U.S. credit card infrastructure. Developed well over 15 years ago, the technology is ubiquitous in Europe and Canada. Its main advantage is security, as a PIN is easier to conceal than a fairly forgeable signature, and each transaction between the merchant and a bank at the point of sale is carried out using powerful encryption, so it's highly impossible to intercept the data. And unlike run-of-the-mill magnetic strips, EMV chips can't be scanned or altered by a card-reader, a popular tool used in identity theft.

MasterCard is promising to support current industry timelines in an effort to minimize disruption and to maximize investments across the payments ecosystem. Their main aim is to cut down on complaints from customers who frequently run into problems trying to use their magnetic-stripe cards overseas. By the end of April 2013, MasterCard is saying it'll have replaced its existing magnetic strip infrastructure with one compatible chip-based technology, where every credit card has a small silicon chip embedded in it, not unlike a cell phone's SIM card.

The MasterCard roadmap includes:

  • Solidifying EMV as the foundation of the next generation of payments.
  • An immediate focus on acquirer infrastructure, working with acquirers to ensure infrastructure readiness by April 2013.
  • Encouraging greater security and cardholder verification, providing consumers with greater control and to reduce fraudulent transactions.
  • Providing incentives so that merchants get "true financial benefits" when they implement EMV-compatible terminals.
  • Covering all channels by addressing all touch points where consumers will interact with MasterCard, including ATMs, the physical point-of-sale, online and mobile commerce.
  • A commitment to leadership with the aim of fostering industry collaboration to deliver the next generation of payments into the US marketplace.

Master Cards prime decision of switching to EMV technology is to cope up with the world which is moving beyond plastic, where consumers are shopping either from their tablets or mobiles. A move to EMV equipment by merchants could also advance mobile-payment technology, experts said. The terminals that handle chip-based cards are often compatible with systems that allow customers to tap and pay with a smartphone embedded with payment technology. Such systems are just now being rolled out or tested in the U.S. Apart from making financial information more secure, smart cards would make life for frequent travellers a lot easier. Some European businesses can't even accept American debit and credit cards because of the old magnetic strip model.