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Everything You Wanted to Know About the Faster EMV Chip Cards

Everything You Wanted to Know About the Faster EMV Chip Cards
Posted: Jul 5, 2016
Comments: 0
Author: Lou Grilli

Following the switch to EMV chip cards last October, merchants that implemented chip card readers at the check-out lanes noticed something besides the initial confusion – that the time to process a transaction was taking much longer versus a simple card swipe. The time varied greatly by terminal type, but a study carried out by JDA Software Group claimed that it took an extra 8 – 12 seconds per checkout. In the retail world, those are precious seconds that can drive cost for extra labor to open additional check-out lanes.

Luckily,  solutions have been introduced 

The initial implementation to process EMV (the standards body that dictates how chip cards are processed in terminals) had the cardholder keep the card in the terminal slot until the authorization response was received from the issuer. Depending on network speeds and the capabilities of all the entities between the store and the issuer that round trip accounted for almost all of that extra 8 to 12 seconds. However, other payment methods, such as using Apple Pay, did not require holding the phone near the terminal for the same length of time. So the card networks (Visa, MasterCard, AmEx and Discover) started working on a solution that worked more like the Apple Pay model. With the new solution, the chip card still needs to be inserted for the chip to be read, but can then be removed and put away while the authorization round trip occurs. Visa (as well as AmEx and Discover) called their version of the solution Quick Chip, while MasterCard labeled theirs M/Chip Fast, and it is offered to merchants and their acquirers free of charge. In all cases, the credit/debit/prepaid card does not have to be reissued, the card works on both the old and new versions. Also, the hardware at the checkout terminal does not have to be changed, and no new certification is required. New software does have to be downloaded to each terminal, which will take some time to complete, and the processors involved in the roundtrip of the authorization need to make changes to accommodate the faster process. But the faster process has already been implemented successfully in several very large retailers.

To be technically complete, one other major change was made to the chip card processing model to make the Quick Chip and M/Chip Fast solutions work. In the previous processing flow, the authorization request, the beginning of the round trip, could not start until the final purchase amount was known. In other words, if you inserted the chip card as the first grocery item was scanned, you could not pull out the card until the final item was scanned, coupons keyed in, cash-back amount, if any, entered, etc. Then the authorization request could be sent. This is because the final amount (i.e. the “authorized amount”) is a key component of the cryptogram that both the terminal and the chip card use to securely talk to each other. This is part of what makes chip cards more secure than mag stripe transactions.

In the faster version, if the final amount is known, the process works the same, and if the final amount is not known when the card is inserted, then a “pre-determined” amount is used to develop the cryptogram, and the cardholder is immediately prompted to remove the card. The chip data is retained and encrypted by the terminal until the final amount is known. When the final amount is determined, then the terminal requests authorization for the final amount, plus cash back, if any, and the terminal displays an approval or declined message.

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Lou Grilli

Lou GrilliLou Grilli

Lou is the Director of Payments Strategy at Trellance and is responsible for providing leadership to the organization for emerging payments and industry trends, as well as managing the product portfolio.

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