How are transactions authorized with EMV?

EMV transactions can be authorized online or offline. For an online authorization, transaction information is sent to the issuer, along with a transaction-specific cryptogram, and the issuer either authorizes or declines the transaction in real time.

In an offline EMV transaction, the card and terminal communicate and use issuer-defined risk parameters that are set in the card to determine whether the transaction can be authorized. Offline transactions are used when terminals do not have online connectivity (e.g., at a ticket kiosk) or in countries where telecommunications costs are high.

Chip cards can be configured to allow both online and offline authorization, depending on the circumstances. Due to improvements in telecommunications infrastructure worldwide, most EMV transactions are now authorized online.