Payment card security: A brief history

For the past few months, EMV-compliant payment card processing has been a main focus for retailers across the U.S. With the deadline for transition passing last fall, many merchants are in a hurry to ensure their compliance, and boost security for their customers.

However, EMV wasn't the first security system to be put in place in respects to payment cards. Today, we'll take a brief walk down memory lane, and examine the technologies that led up to this crucial new payment processing technology.

Analog and electronic: The early years

Before the 1950s, the main form of payment was cash. Retailers only had to worry about stocking their registers with enough bills and coins to provide change. By 1959, though, all this changed with the emergence of plastic payment cards. Security measures like the signature panel on the back of the card, embossing and microprint wouldn't come until the 1970s.

The next major developments were made in the mid 1980s, when real-time electronic authorizing was made available in 1985. This was followed in 1990 by the Card Verification Value (CVV) security code, which was used on magnetic strip cards as an extra security precaution.

Plastic payment cards were first introduced nearly 58 years ago. Plastic payment cards were first introduced nearly 58 years ago.

The birth of EMV

According to Visa and and EMVCo, the first EMV security was first widely introduced in 1994 when major financial institutions – Visa, Europay and Mastercard – provided specifications for card chips. According to Visa, this development actually occurred one year previous to the use of PINs at points-of-sale to help better safeguard cardholders.

EMV technology became instrumental in France in 1994, when every bank in the country began supporting chip card specifications for payment.

"Through issuing chip cards with PINs, the French were able to dramatically reduce fraud due to counterfeit, lost and stolen cards," Chase stated in a whitepaper.

Following its success in France, chip card technology then spread across Europe, with card holders and financial institutions enjoying reduced card security issues alongside more staunch payment card processing protection.

"Now is the time to transition to an EMV payment card processing system."

The push for EMV chip cards became a prime focus in the U.S. in 2015, when a deadline was put in place to signal a shift in liability. By October of that year, every retailer that hadn't upgraded its payment card processing technology to an EMV-compliant system was liable for fraudulent activity.

Transitioning to EMV

Despite a shift in liability, some retailers still haven't put EMV-compliant payment card processing technology in place. In fact, Business Insider reported that only 7 percent of all card transactions in 2016 were made through EMV point-of-sales systems. By comparison, chip cards contributed to 75 percent of all transactions in Europe, 89 percent in Africa and the Middle East and 88 percent of card purchases in Canada over the same time period. 

In order to best safeguard against fraudulent payment card activity and offer the strongest available protection for your customers, now is the time to transition to an EMV payment card processing system.

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