White Paper: CHIP & PIN Compliance

Analysis by Frost & Sullivan revealed that credit and debit card fraud totaled over $7.9 billion in 2004 and is expected to reach $15.5 billion by 2009. To help combat this fraud, EMV (Europay, MasterCard International, and Visa International) has been implemented in Europe, Asia, and Australia. It is currently being implemented in Canada and Latin America.

Experience from implementations in Europe has shown that as EMV rolls out within a country, the fraud moves to adjacent countries where EMV has not yet been implemented. Visa Canada has shown that as credit card fraud has dropped in countries around the world where EMV is implemented, it has increased in Canada and the United States. Visa Canada, MasterCard Canada, and the Canadian Interac association have banded together to implement EMV in Canada to stem the rising tide of fraud.

In 1993, Europay, MasterCard International, and Visa International formed a study group to look at ways to stop the escalating fraud associated with credit and debit cards. In 1999, they formed the company EMVco to create a set of standards for payment processing. In 2002, MasterCard International acquired Europay, and in 2005 JCB joined the organization, yet the name remains EMVco, and the standards which they drafted are still referred to as "EMV".

The changes defined by these new standards include a credit card that has a computer chip embedded in it, new card readers that can read the chip in the credit card as well as the magnetic stripe on the card (although the magnetic stripe is no longer used under the new standards), and some operational changes, including the required entry of a Personal Identification Number (PIN) by the cardholder whenever the card is used.