First, the EMV chip card includes a secure microprocessor chip that can store information securely and perform cryptographic processing during a payment transaction. Chip cards carry security credentials that are encoded by the card issuer at personalization. These credentials, or keys, are stored securely in the EMV card’s chip and are impervious to access by unauthorized parties. These credentials therefore help to prevent card skimming and card cloning, one of the common ways magnetic stripe cards are compromised and used for fraudulent activity.
Second, in an EMV chip transaction, the card is authenticated as being genuine, the cardholder is verified, and the transaction includes dynamic data and is authorized online or offline, according to issuer-determined risk parameters. As described above, each of these transaction security features helps to prevent fraudulent transactions.
Third, even if fraudsters are able to steal account data from chip transactions, this data cannot be used to create a fraudulent transaction in an EMV chip or magnetic stripe environment, since every EMV transaction carries dynamic data.