In markets that don’t yet support EMV (such as the USA), there is no option but to process all payment cards using the magnetic stripe, even if the card is actually a chip card. Similarly, a U.S. card used in countries which have migrated to chip card technology still can be processed. In EMV markets there are still further conditions in which payment terminals may be required to process chip cards using the magnetic stripe.
Even if both the terminal and card are fully EMV-compliant, it may not be possible for the EMV card reader to communicate with the chip, for example if the chip on the card has become accidentally damaged or if the contacts on the card or reader are dirty.
A card may also be used at a terminal that does not support any of the payment applications on the chip, for example if not all card schemes have migrated to chip card technology in that market.
Finally, interoperability issues may prevent the EMV payment being completed, if the terminal’s EMV kernel or the chip has incorrectly implemented certain aspects of EMV processing, or if they support different versions of the EMV specifications. Although EMVCo has an extensive testing regime to reduce the probability of this, a small number of interoperability issues have arisen over the years.
Any of these cases would prevent the chip from being used to complete the transaction. In order to allow the merchant to still receive payment, technology “fallback” – where the magnetic stripe is used instead of the chip – may be permitted.
Merchants need to be extra vigilant, as some fraudsters may deliberately disable the chip to try and circumvent the ability to verify the cardholder using their PIN. All fallback transactions must be marked accordingly during the payment clearing process, as the liability for any fraudulent transactions may differ when fallback technology is used.
Unattended devices are not generally permitted to support fallback transactions, as there is no merchant present to check the card for damage that the card user may have done to deliberately sabotage the chip in an effort to force the magnetic stripe to be used and to circumvent the ability to verify the cardholder’s PIN.
CreditCall’s EMV kernels are fully compliant with all the latest industry requirements, and provide a simple but powerful way to add EMV level 2 to payment devices. Check out www.level2kernel.com for further details on certified EMV level 2 kernels.Tags: EMV Fallback, EMV Migration