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EMVCo, LLC
A Guide to EMV Chip Technology

Version 2.0
November 2014

A Guide to EMV Chip Technology
Version 2.0
November 2014

EMVCo, LLC
A Guide to EMV Chip Technology

Version 2.0
November 2014

Table of Contents
TABLE OF CONTENTS .................................................................................................................. 2
LIST OF FIGURES .......................................................................................................................... 3
1

INTRODUCTION ................................................................................................................ 4
1.1
1.2

BACKGROUND ................................................................................................................. 5
2.1
2.2

What are the EMV Chip Specifications? ........................................................................ 5
Why EMV Chip Technology? ......................................................................................... 6
THE HISTORY OF THE EMV CHIP SPECIFICATIONS ................................................... 8

3.1
3.1.1
3.1.2
3.1.3
3.1.4
3.2
4

Timeline .......................................................................................................................... 8
The Need for a Global Chip Card Standard ................................................................... 8
The Evolution of the EMV Chip Specifications ............................................................... 9
Common Core Definitions .............................................................................................. 9
Extending EMV Chip Technology to Contactless and Mobile ...................................... 10
EMV Chip around the World ........................................................................................ 11
EMVCO LLC..................................................................................................................... 13

4.1
4.2
4.3
4.4

EMVCo Mission ............................................................................................................ 13
Structure of EMVCo Management and Operations ..................................................... 14
The Role of the Payment Systems in Contrast to EMVCo .......................................... 15
EMVCo Relationship with Other Standards Bodies ..................................................... 16
EMV CHIP TECHNOLOGY – HOW IT WORKS .............................................................. 17

5
5.1
5.1.1
5.1.2
5.2
5.2.1
5.2.2
5.2.3
5.2.4
6

Stepping Through an EMV Chip Transaction .............................................................. 17
Steps for an EMV Contact Transaction ........................................................................ 18
Steps for an EMV Contactless Chip Transaction ......................................................... 18
EMV Chip Features ...................................................................................................... 19
Application Cryptogram ................................................................................................ 19
Risk Management and Authorisation Controls ............................................................. 20
Cardholder Verification Processing .............................................................................. 21
Offline Data Authentication .......................................................................................... 22
TESTING AND APPROVAL ............................................................................................ 24

6.1
6.1.1
6.1.2
6.1.3
7

EMVCo Objective ......................................................................................................... 24
Terminal Type Approval ............................................................................................... 24
Card Type Approval ..................................................................................................... 25
Chip Security Evaluation .............................................................................................. 25
IMPLEMENTATION CONSIDERATIONS ....................................................................... 26

7.1
7.2
8

Issuer Considerations .................................................................................................. 26
Retailer and Acquirer Considerations .......................................................................... 28
THE NEXT GENERATION OF EMV CHIP SPECIFICATIONS ....................................... 30

8.1
8.2
8.3
9

Purpose .......................................................................................................................... 4
References ..................................................................................................................... 4

Business Drivers .......................................................................................................... 30
EMV Next Generation Specifications ........................................................................... 31
Milestones .................................................................................................................... 32
GLOSSARY...................................................................................................................... 33

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List of Figures
FIGURE 1: EMV CHIP SPECIFICATIONS TIMELINE ....................................................8
FIGURE 2: PERCENTAGE OF CARD-PRESENT TRANSACTIONS THAT ARE EMV ........... 12
FIGURE 3: EMVCO INTERACTION STRUCTURE ..................................................... 14
FIGURE 4: PROCESSING STEPS FOR AN EMV CONTACT CHIP TRANSACTION ............. 18
FIGURE 5: APPLICATION CRYPTOGRAMS .................................................................. 19
FIGURE 6: RISK MANAGEMENT AND SCRIPT COMMANDS .............................................. 20
FIGURE 7: CARDHOLDER VERIFICATION PROCESSING ................................................. 21
FIGURE 8: OFFLINE DATA AUTHENTICATION ............................................................ 22
FIGURE 9: ISSUER EMV IMPLEMENTATION ACTIVITIES ............................................... 26
TABLE 10: ISSUER IMPLEMENTATION CONSIDERATIONS ......................................... 27
FIGURE 11: EMV ACCEPTOR IMPLEMENTATION ACTIVITIES ......................................... 28
TABLE 12: ACQUIRER IMPLEMENTATION CONSIDERATIONS ..................................... 29

EMVCo, LLC
A Guide to EMV Chip Technology

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1 Introduction
1.1 Purpose
The purpose of this paper is to provide an overview of the specifications and
processes related to EMV chip products and transactions. The document is
intended to describe the “what” and the “why” of EMV chip technology within the
context of the wider payments industry.
Additionally, the document describes the role of EMVCo, LLC (EMVCo), and how
various payment industry stakeholders may interact with EMVCo to participate in
the ongoing management of the various EMV Specifications.
The document was first published in 2011, and this current version (released in
2014) has been updated to focus on the EMV Chip Specifications, as well as
reflect the growing ownership of EMVCo.
Information regarding other specifications published by EMVCo can be found at
www.emvco.com.
1.2 References
Information for this document has been drawn from several sources, including
the following:


The EMVCo web site: www.emvco.com



EMV Integrated Circuit Card Specifications for Payment Systems, version
4.3, November 2011 (EMVCo, LLC)



EMV Contactless Payment Specification For Payment Systems, version
2.4, February 2014 (EMVCo, LLC)



Type Approval Process Documentation for terminals and cards available
from EMVCo, LLC



Issuer and Application Security Guidelines, v2.4, April 2014 (EMVCo,
LLC)

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2 Background
2.1 What are the EMV Chip Specifications?
The EMV Chip Specifications that encompass both Contact and Contactless
payments are global payment industry specifications that describe the
requirements for interoperability between chip-based payment applications and
acceptance terminals1 to enable payment. The specifications are managed by
the organisation EMVCo.
Named after the original organisations that created the specification - Europay,
MasterCard and Visa - the EMV Chip Specifications were first published in 1996.
Approaching twenty years later, there are now over two billion active EMV chip
cards used for credit and debit payment, at over 35 million EMV acceptance
terminals deployed around the world2.
The distinguishing feature of EMV chip transactions is that the payment
application is resident in a secure chip that is embedded in a plastic payment
card (often referred to as a chip card or smart card), a
personal device such as a mobile phone or other form
factors such as wristbands or watches. The secure
chip provides three key elements:
 It can perform
processing functions.


It is able to store confidential information very
securely.



It can perform cryptographic processing.
These capabilities provide the
means for secure consumer payments.

In order to execute a payment, the chip must connect to a
chip reader in an acceptance terminal. There are two
possible means by which this physical connection may be
made which are often referred to as contact or contactless.
With contact, the chip must come into physical contact with the chip reader for
the payment transaction to occur. With contactless, the chip must come within
sufficient proximity of the reader, (a maximum of 4cm), for information to flow
1

Acceptance terminals include attended and unattended point of sale (POS), and automatic teller
machines (ATMs).
2
These figures were reported by EMVCo as of Q4 2013 and represent the latest statistics from
American Express, Discover, JCB, MasterCard, UnionPay and Visa as reported by their member
financial institutions globally.
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between the chip and the acceptance terminal. In both scenarios, the acceptance
terminal provides power to the chip to enable the chip to process.
Chips that are embedded in form factors such as plastic payment cards may
support only a contact interface, only a contactless interface, or both contact and
contactless. Chip cards that support both contact and
contactless interfaces are referred to as dual interface.
When the chip is installed inside a non-card form factor,
such as a mobile phone, contactless is typically the only
option for connection to the acceptance terminal.

2.2 Why EMV Chip Technology?
The EMV Chip Specifications are designed to significantly improve the security
for face-to-face payment transactions by providing features for reducing the
fraud that result from counterfeit and lost and stolen cards.
The features that are defined within the EMV Chip Specifications that enable this
are as follows:
1. Authentication of the chip card to verify that the card is genuine so as to
protect against counterfeit fraud for both online authorised and offline
transactions.
2. Risk management parameters to define the conditions under which the issuer
will permit the transaction to be conducted offline and the conditions that force
transactions online for authorisation, such as if offline limits have been exceeded.
3. Digitally signing payment data for transaction integrity.
4. More robust cardholder verification methods to protect against lost and stolen
card fraud.

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Counterfeit and lost and stolen fraud represents significant cost to all participants
in the payment process, including retailers, acquiring banks, card issuers and
cardholders. Costs are realised through the processing of cardholder disputes,
research into suspect transactions, replacement of cards that have been
counterfeited or reported as lost and stolen, and eventual liability for the
fraudulent payment itself. By reducing counterfeit and lost and stolen card fraud,
EMV chip technology offers real benefits to retailers, acquirers, card issuers and
cardholders.

Become involved in EMVCo
EMVCo can help deliver real benefits – for retailers, acquirers, card issuers and vendors
to the payments industry.
Why not have a say in the ongoing development of the EMV Specifications?
Become an EMVCo Technical or Business Associate. For more information refer to the
EMVCo website www.emvco.com.

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3 The History of the EMV Chip Specifications
3.1

Timeline

Figure 1: EMV Chip Specifications Timeline

3.1.1 The Need for a Global Chip Card Standard
Chip cards have been with us for approximately forty years but have evolved
considerably both in terms of functionality and security in that time. From the first
inventions and patents of the early 1970s through to the initial commercial
deployments in the 1980s, chip cards predate the delivery of the EMV Chip
Specifications by more than a decade.
The first mass deployment of chip cards for payment by the banking industry was
in France. Driven by a need to reduce high levels of fraud due to counterfeit and
lost and stolen magnetic stripe cards, the French banks conducted field trials of
microprocessor chip cards embedded in plastic bank cards in 1984.
By 1994, all French bank cards carried a chip using a French developed
specification for chip card credit and debit payment known as B0′. Through
issuing chip cards with PINs, the French banks were able to dramatically reduce
fraud due to counterfeit and lost and stolen cards.

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Following the French success, a number of European markets issued chip based
bank cards through the 1990s to counter the growing fraud due to counterfeit and
lost and stolen cards. However, all of these programs were based on domestic
market specifications that were not interoperable. This trend of establishing
proprietary domestic chip specifications in Europe through the early 1990s
created a situation where chip technology helped protect against fraud for
domestic transactions but magnetic stripe was the only method of acceptance
when the cardholder travelled outside their local market.
In the early 1990s, the United Kingdom and Japan were considering the
migration of their bank cards from magnetic stripe to chip. Both markets were
reluctant to continue the propagation of non-interoperable domestic chip
environments and so the driver for a global chip standard was born.
3.1.2 The Evolution of the EMV Chip Specifications
In 1994, three international payment systems, Europay, MasterCard and Visa
began the development of a global chip specification for payment systems. This
globalisation continued over the years, with JCB joining in 2004, American
Express in 2009, and both UnionPay and Discover in 2013.
An initial version of the specification titled EMV ’96 Integrated Circuit Card
Specification for Payment Systems, was released in 1996. The first production
version of the EMV Chip Specifications, version 3.1.1 was subsequently
published in 1998.
The most recent version of the EMV Chip Specifications is version 4.3, published
in 2011. Over the years since their initial publication the specifications have
evolved to meet the changing requirements of the payment industry, and
benefited from over a decade of implementation experience in multiple markets
across the globe.
Despite the ongoing change, a driving principle that stands behind the evolution
of the EMV Chip Specifications has been that each new release or version is
always backwards compatible with prior releases. This helps protect the
investment in the EMV chip infrastructure made by payment industry
stakeholders.
3.1.3 Common Core Definitions
The EMV Chip Specifications allow the issuer the flexibility to define their own
risk management processing that occurs in the chip card and the issuer host, and
the information content (known as Issuer Application Data) that flows between
the chip and issuer host. This has resulted in each payment system defining its

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own EMV chip payment application specification3 which requires an issuer to
implement different card personalisation and host authorisation systems per
payment system.
In 2004, Common Core Definition (CCD) was introduced as part of the version 4.1
EMV specification. CCD defines a set of card application implementation options,
card application behaviours, and data element definitions sufficient to accomplish
an EMV transaction. Should an issuer wish to comply with CCD, it allows an
issuer to define a common EMV chip based payment application that may be
applied to all payment systems.
In 2005, EMVCo published a functional specification for an issuer payment
application, called EMV Integrated Circuit Card Specification for Payment
Systems Common Payment Application (CPA) that complies with the CCD
requirements, and defines card applications, implementation options and card
application behaviours. Issuers could choose to deploy CPA-compliant chip
cards as an alternative to cards supporting one of the international payment
systems’ individual applications.
3.1.4 Extending EMV Chip Technology to Contactless and Mobile
The evolution of contactless chip has transpired in quite a different way when
compared with the EMV Contact Chip Specifications. While the development of
contact chip occurred collaboratively amongst payment industry organisations
from the onset, contactless development has occurred in a competitive
environment, with the individual payment systems developing their own
specifications.
In 2007 the EMV Contactless Communication Protocol Specification (CCPS) was
published so that the hardware and firmware specifications (known as
contactless Level 1) would be common for all payment system contactless
payment applications.
This was followed in 2008 by the EMV Contactless Specifications for Payment
Systems – Entry Point Specification, which facilitated multiple payment system
contactless applications to reside in a single contactless terminal.
In addition to accepting EMV contactless chip cards, contactless terminals that
are compliant with the EMV Contactless Specifications can be designed to also
accept contactless chips embedded in other form factors such as mobile phones.
This is possible with the implementation of Near Field Communications (NFC)
support in the mobile phone or equivalent device.

International payment system EMV based card specifications include American Express AEIPS,
Discover DPAS, JCB J/Smart, MasterCard M/Chip, UnionPay IC Card and Visa VIS.
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3.2 EMV Chip around the World
From the earliest field trials in 1997, to the progression of national migrations
from magnetic stripe to EMV chip in various markets around the world, the EMV
Chip Specifications are a global standard for chip payment, and they continue to
grow in usage.
Today there are over two billion active EMV chip cards in circulation and over 35
million EMV acceptance terminals deployed around the world 4. But, of course the
real value proposition is the extent to which EMV transactions actually occur.
Accordingly, in 2014 EMVCo transitioned to reporting EMV chip transaction
percentages by region. The following diagram provides an overview of the
percentage of card-present transactions that are EMV by major region.

Protect your investment in EMV infrastructure.
The EMV Chip Specifications continue to develop to meet the changing needs of the
payment industry.
Make sure you can provide input into the future development of the EMV Chip
Specifications. Become an EMVCo Technical or Business Associate. For more
information refer to the EMVCo website www.emvco.com.

These figures were reported by EMVCo as of Q4 2013 and represent the latest statistics from American
Express, Discover, JCB, MasterCard, UnionPay and Visa as reported by their member financial institutions
globally.

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Figure 2: Percentage of Card-Present Transactions that are EMV

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4 EMVCo LLC
In February 1999, Europay, MasterCard and Visa
created the limited liability company, EMVCo, as a
separate entity to manage, maintain, and enhance
the EMV Chip Specifications.
In 2002, Europay was acquired by MasterCard.
In 2004, JCB joined with MasterCard and Visa as
co-owners of EMVCo, and in 2009, American Express joined as the fourth
owning entity. In 2013 both UnionPay and Discover became joint owners, giving
each payment brand an equal 1/6th ownership of EMVCo, LLC.
4.1 EMVCo Mission
The primary goal of EMVCo was initially to facilitate the interoperability of chipbased transactions. This was achieved through two primary activities:
1. The management, maintenance and ongoing enhancement of the EMV
Chip Specifications.
2. Managing testing and approval procedures for all EMV chip capable
terminals and certain aspects of EMV chip cards to assess compliance
with the EMV Chip Specifications.
In December 2013 the mission statement of EMVCo was revised to reflect its
changing scope following the decision to develop specifications beyond those
solely for chip based transactions. The original primary goals detailed above are
reflected in the following, updated Mission Statement:
“To facilitate worldwide interoperability and acceptance of secure payment
transactions by managing and evolving the EMV Specifications and related
testing processes.”
EMVCo Mission Statement December 2013

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4.2 Structure of EMVCo Management and Operations
The structure of EMVCo’s management and operations, and interactions with
third party advisors is illustrated in the following diagram.

Figure 3: EMVCo Interaction Structure

American Express, Discover, JCB, MasterCard, UnionPay and Visa have
appointed individuals to work at both management and Working Group levels
within the EMVCo organisation. The Board of Managers, under guidance and
direction of the Executive Committee, governs EMVCo. The Executive
Committee, in turn, receives input from the EMVCo Advisors on business and
strategic issues. The organisation has established several Working Groups,
composed of representatives from its members, to carry out the work of EMVCo.
The Board assigns work items, functions and responsibilities to the Working
Groups as appropriate.
EMVCo maintains the EMVCo Associates Programme, in which third parties can
provide input to EMVCo and participate in certain EMVCo activities as a
Business Associate or Technical Associate. Business Associates provide
EMVCo with input on strategic business and implementation matters related to
the use of the EMV Specifications. Each Business Associate may appoint an
individual to serve on the Board of Advisors and, accordingly, advise the EMVCo
Executive Committee.

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Payment industry stakeholders may participate as a Technical Associate and
provide EMVCo with input and receive feedback on detailed technical and
operational considerations connected to the EMV Specifications and related
processes. Technical Associates are able to engage with all of the EMVCo
Working Groups and receive updates or provide input on the Working Group
activities and specifications. Seats on the EMVCo Board of Advisors are
reserved for Technical Associates representing distinct market sectors. Technical
Associate representation on the Board of Advisors is determined through an
annual election process.
Organisations that currently participate in EMVCo as Business Associates or
Technical Associates are listed on the EMVCo website.
EMVCo also maintains the EMVCo Subscriber Service, which anyone can join as
a Subscriber to receive advance notice of pending developments and changes,
submit queries to EMVCo, and participate in a more regular dialogue with
EMVCo. Organisations that may benefit from being Subscribers are participants
in the global payment industry, including vendors, consultants, laboratories,
payment systems, retailers and regional associations.
EMVCo hosts an annual User meeting for Associates and Subscribers.
Eligibility, fee structures, and application details relating to participation in
the Associates Programme and Subscriber Service can be found on the
EMVCo website, www.emvco.com.
4.3 The Role of the Payment Systems in Contrast to EMVCo
EMVCo is the global technical body that facilitates the worldwide interoperability
and acceptance of secure payment transactions by managing and evolving the
EMV Chip Specifications and related testing processes. EMVCo does not define
or issue products, and it has no mandate to enforce EMV compliance within the
marketplace.
EMVCo operates separately from the international Payment Systems that own
EMVCo, with its own separate approval and decision making processes. The
Payment Systems assume the role of defining and issuing products, and
enforcing EMV compliance for products that carry their respective brands.
Additionally, the individual payment systems publish their own EMV chip
payment application specifications for their own respective branded chip card
products; these define the options for card risk management processing and
other features not defined by EMVCo. Also, the Payment Systems maintain the
responsibility for the functional testing and type approval for cards that are
compliant with their own product specifications.

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The individual payment systems have to personalise the EMVCo kernel to
ensure product acceptance matches global and regional rules.
4.4 EMVCo Relationship with Other Standards Bodies
The EMV Chip Specifications cannot be considered in isolation, and to this end,
EMVCo collaborates with other industry bodies and standards organisations.
Examples of this collaboration are given below.
1. International Organisation for Standardisation (ISO) - The EMV Chip
Specifications are based on underlying International Organisation for
Standardisation (ISO) standards as follows:


ISO/IEC 7816: Identification Cards – Integrated Circuit(s) Cards



ISO/IEC 14443: Identification Cards – Contactless Integrated Circuit(s)
Cards – Proximity Cards

2. Payment Card Industry Security Standards Council (PCI SSC) is
primarily concerned with the protection of sensitive payment information
such as account information and personal identification numbers (PINs).
The EMV Chip Specifications and PCI standards are complementary in
enhancing payment security and reducing fraud due to counterfeit and lost
and stolen cards.
3. The Near Field Communication (NFC) Forum – EMVCo has been
working to extend EMV technology to the contactless and mobile
channels. This has required alignment with the NFC Forum which is
responsible for developing the specifications for communication between
NFC devices and services
4. GlobalPlatform - Part of EMVCo’s activities is to review the functionality
and security of platforms on which an EMV chip payment application will
reside. Alignment with standards bodies such as GlobalPlatform are
important as EMV chip payment applications are increasingly
implemented on shared chip platforms that support multiple applications,
each from a different application owner.

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5 EMV Chip Technology – How it Works
5.1 Stepping Through an EMV Chip Transaction
There is a fundamental difference between a magnetic stripe and an EMV chip
transaction. For a magnetic stripe transaction, the card is simply a data store that
is read by the terminal and then the card is no longer used. The terminal
performs all the processing in conjunction with the issuer and / or payment
system and applies the rules for the transaction.
During an EMV transaction, the chip is capable of processing information and
determines many of the rules that determine the outcome of the transaction. The
terminal helps enforce the rules set by the issuer on the chip. These rules can
include enforcing services such as offline data authentication, verifying the
cardholder identity via PIN or signature, online authorisation and so on. It is up to
the issuing bank to define which of these services is required for the current
transaction, via the rules placed on the chip. If the terminal is unable to provide
the services requested by the chip, the issuer can set rules that will result in the
chip declining the transaction.
Accordingly an EMV chip transaction requires interaction between the chip and
the terminal which is a protocol that is defined by the EMV Chip Specifications.
The protocol defines a series of steps, which are described in the following
sections.

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5.1.1 Steps for an EMV Contact Transaction

The selected application is
initiated and the terminal
reads necessary data from
the chip.

Application Selection
Initiate Application
Processing
and Read Application Data

There may be more than one EMV
application in the chip. The terminal
and chip “agree” on common
supported applications and choose
which to use for the transaction. This
may involve the cardholder choosing
the application where there is more
than one mutually supported
application.

Offline Data Authentication
via SDA, DDA or CDA.
Checks are performed to
confirm the chip is allowed
to do the transaction
requested.

Offline Data Authentication

Processing Restrictions

Cardholder Verification
The terminal performs several
checks such as floor limit to
determine whether there is a
requirement for online
processing.

Based on issuer defined
rules and limits, the chip
will respond with
- ARQC :go online;
- AAC: offline decline
- TC: offline approval

Transaction completes.
If online processing occurred
the chip will be requested to
confirm with a TC (approval) or
an AAC (decline) and will apply
any script commands from the
issuer host.

Terminal Risk Management

Terminal Action Analysis

Card Action Analysis

Cardholder is verified via a method
supported by the terminal and agreed
by the chip. Methods can include
signature, online PIN, offline
enciphered PIN, offline plaintext PIN,
or “no CVM”.

Based on results of offline data
authentication, processing restrictions,
cardholder verification, terminal risk
management and rules in the terminal and
from the chip, the terminal application
requests a result of decline offline,
approve offline or go online.

Online Processing

Completion and script processing

If the chip requests to go online,
then the terminal builds an
online request to the issuer host
for authorisation and online card
authentication. If the response
includes optional issuer
authentication (ARPC), the
terminal will send the data to
the chip for verification.

Figure 4: Processing Steps for an EMV Contact Chip Transaction

5.1.2 Steps for an EMV Contactless Chip Transaction
The major difference between an EMV contactless chip transaction and an EMV
contact chip transaction is that the transmission of information between the chip
and the terminal is faster for contactless and some of the transaction steps may
be performed after the chip has left the proximity of the reader (i.e., online
authorisation). The goal is to minimise the amount of time that the chip must be
held within proximity of the reader.

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5.2 EMV Chip Features
The specific features defined by EMVCo that achieve the protections and
controls to reduce counterfeit and lost and stolen card fraud are described in the
following sections.
5.2.1 Application Cryptogram
During an EMV chip transaction, an application cryptogram is generated using
two- key triple DES cryptography. This is a signature generated from critical data
elements contained in either the online authorisation request to the card issuer (if
online authorisation is required), or the final financial transaction required for
clearing and settlement.

Figure 5: Application Cryptograms

The cryptogram that is generated for the online authorisation request is termed
the Authorisation Request Cryptogram (ARQC) and the cryptogram that is
generated by signing data elements when a chip approves the payment for
clearing and settlement is known as the Transaction Certificate (TC). If the
transaction is declined, the chip will generate a cryptogram known as an
Application Authentication Cryptogram (AAC).
The purpose of these application cryptograms is twofold:
1. Online card and issuer authentication
The chip generates an ARQC which is sent in the authorisation request when an
EMV chip payment transaction proceeds online to the issuer host. The ARQC
can be verified by the issuer host and this confirms that the chip is not
counterfeit.
As part of the authorisation process, the issuer host may generate a return
cryptogram known as the Authorisation Response Cryptogram (ARPC) which is
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sent back to the chip in the authorisation response. The verification of the ARPC
allows the chip to confirm that the approval was received from the actual issuer
host, and therefore that any counters or offline limits on the chip may be reset.
2. Signing transaction data elements for transaction authentication and
integrity
The following cryptograms are generated by signing critical data elements in the
respective transaction messages. Validation of the cryptograms by the recipient
helps to confirm the data elements are not altered.
o ARQC – online authorisation request;
o ARPC – online authorisation response;
o TC – financial message for clearing and settlement for an approved
transaction;
o AAC – declined transaction.

5.2.2 Risk Management and Authorisation Controls
EMV chip transactions provide the issuing bank with controls at the point of sale
which helps enable the issuer to reduce exposure to fraud and credit risk for
offline and below floor limit transactions. The issuing bank can set limits in the
chip card that restrict the number of consecutive offline transactions that may be
processed.

Figure 6: Risk Management and Script Commands

Additionally, EMV defines script commands that can be returned to the card in an
online authorisation response that allows the issuer to change the card limits,
perhaps even reducing them to zero depending upon assessed risk profiles.
Issuers may also issue scripts to block or disable a lost or stolen card.
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Under acquirer control, the EMV Chip Specifications provide a means for
acceptance terminals to select transactions for online approval, based not only
on floor limit, but also domestic or retailer criteria, as well as employing a random
selection of below the floor limit transactions to be sent online.
Together, these measures provide protection against the use of lost and stolen or
fraudulent cards which attempt to stay beneath the floor limit and provide the
issuers with a means of permanently blocking a stolen card.
5.2.3 Cardholder Verification Processing
As well as continuing to support all the cardholder verification methods available
for magnetic stripe, the EMV Chip Specifications define two new features which
provide issuers with greater flexibility in determining and enforcing methods for
verifying the cardholder is the actual owner of the card during a payment. These
features can help reduce fraud due to lost and stolen cards.

Figure 7: Cardholder Verification Processing

The first feature is the Cardholder Verification Method (CVM) List which is
defined by the issuer in the chip card. The CVM list allows the issuer to specify in
order of priority, the cardholder verification methods to be applied for particular
acceptance conditions, allowing a CVM to be applied when supported by the
terminal, but providing an alternative when the preferred CVM is not supported.
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For example, this allows an issuer to require the cardholder to use PIN in
acceptance terminals that support PIN (perhaps domestically), but allow the
cardholder to sign when travelling to markets that do not support PIN.
The second feature is a new CVM of offline PIN. While the use of offline PIN is
entirely optional, it is possible to use an EMV chip card to verify a PIN entered
into the terminal PIN pad by the cardholder and therefore provide a PIN based
cardholder verification method available for all offline and online transaction
acceptance environments, including below the floor limit and offline only.
There are two flavours of offline PIN defined in the EMV Chip Specifications:
enciphered offline PIN where public key cryptography is used to protect the PIN
as it is sent from the acceptance terminal to the card for verification and plaintext
offline PIN where the PIN is sent in the clear from the acceptance terminal to the
card for verification.
5.2.4 Offline Data Authentication
The EMV Chip Specifications describe a feature known as offline data
authentication to combat counterfeit fraud for card payments that are performed
at offline card acceptance terminals. Offline data authentication uses public key
cryptography to perform payment data authentication without the need to go
online to the issuer host.

Figure 8: Offline Data Authentication

There are essentially two flavours of off-line data authentication - Static Data
Authentication (SDA), and Dynamic Data Authentication (DDA). Combined Data
Authentication (CDA) is a variation on DDA.

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During a payment transaction, the chip card and the terminal agree to perform
SDA, DDA or CDA. Only one method of offline data authentication is performed
for a particular transaction. When offline data authentication is not performed, an
EMV chip transaction must go online for authorisation.
The essential difference between SDA and DDA is that while SDA indicates that
the data read from the chip has not been manipulated or changed since it was
issued, SDA does not necessarily mean that the card is genuine. It is possible to
copy the chip card data, including the SDA cryptogram, and write it to another
chip card to create a counterfeit card that could successfully pass offline SDA at
the point of sale. It should be noted that any counterfeit card could be detected
during online processing.
DDA indicates that the chip card, and the information on the card, has not been
altered since being issued to the cardholder, and that the card is not a copy of
the original chip card issued by performing offline dynamic authentication using
data from the terminal sent uniquely for each transaction. DDA is therefore a
stronger form of offline data authentication than SDA because DDA indicates that
the card has been authenticated offline using unique transaction specific data.
CDA, as a variation of DDA, is designed to combat a sophisticated method of
attack at the point of sale in which the attacker attempts to use a valid chip card
to pass offline data authentication, but from then on during the payment,
simulates card actions in order to obtain authorisation.
Card issuers will choose an offline data authentication method based on factors
such as cost per card and speed of transaction. These costs are weighed against
the risk of fraudsters attacking chip cards using the less robust authentication
methods such as SDA, while the much easier target represented by magnetic
stripe cards is still prevalent. Individual payment systems may mandate the use
of specific offline data authentication methods in particular regions.
EMVCo is constantly monitoring the strength of cryptography and on a regular
basis issues key length recommendations published in EMVCo Notice Bulletins.
If an issuer chooses to issue a chip card that only permits transactions that are
authorised online to the issuer host, it is possible that the chip would not require
offline data authentication support at all as determined by individual payment
systems.

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Testing and Approval

6.1 EMVCo Objective
In addition to maintaining and evolving the EMV Chip Specifications, the other
key and complementary EMVCo role is to assess the compliance of vendor
products developed to these specifications, and approve products that pass
testing prior to deployment in the field.
There are numerous activities that are performed by EMVCo in support of this
objective which include defining and implementing test plans based on the EMV
Chip Specifications and defining and implementing a process for the qualification
of test tools to implement EMVCo test cases.
The actual testing is performed by EMVCo accredited external test laboratories
located in numerous locations around the world. This is facilitated through an
EMVCo managed laboratory accreditation program with an associated ongoing
monitoring process.
The payment systems specify the rules regarding how long approved products
may be used in the field.
The components that comprise the EMV approval process are described in the
following sections.
6.1.1 Terminal Type Approval
Terminal type approval is defined and administered by the EMVCo Terminal
Approval Working Group (TAWG) and is designed to assess whether EMV chip
enabled acceptance terminals sufficiently conforms to the functional
requirements defined in the EMV Chip Specifications. There are two separate
and independent processes involved.
EMV Level 1 terminal type approval is designed to verify whether the terminal
chip reader demonstrates sufficient conformance to Level 1 of the EMV
mechanical and electrical protocol specifications which covers the transfer of
data between the terminal and the card.
EMV Level 2 terminal type approval is designed to verify whether the software
residing in the acceptance terminal that performs the EMV processing, referred
to as the EMV Level 2 kernel, demonstrates sufficient conformance to the EMV
Chip Specifications. EMVCo defines the kernel as the terminal application
software that supports the EMV payment application functions as defined in the
EMV Chip Specifications. The non-EMV application functionality that supports

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functions like the printer and display, and building messages to send to the
acquirer, is not considered part of the kernel.
The TAWG monitors the ongoing operation of the terminal type approval process
and the application of test tools and tool updates. This allows the required
improvements to be identified and the process to be improved as required.
Additionally, the TAWG manages a contractual process for terminal vendors
seeking approval of their products. Vendors are issued a Letter of Approval for
each product that successfully passes type approval.
6.1.2 Card Type Approval
Card type approval is defined and administered by the EMVCo Card Approval
Working Group (CAWG) and is designed to assess whether the chip hardware
and embedded EMV functionality sufficiently conforms to the electro-mechanical
and functional requirements defined in the EMV Chip Specifications.
It is important to note that EMVCo does not manage the type approval process
for chip cards that comply with international payment system card specifications.
The payment systems directly manage card type approval processes for cards
that comply with their respective EMV-based card specifications.5
However, EMVCo does manage the type approval process for chip-resident
payment applications that are designed to be compliant with the EMV Common
Core Definition (CCD) and Common Payment Application (CPA).
6.1.3 Chip Security Evaluation
The EMVCo chip security evaluation is designed to assess whether a chip
demonstrates sufficient assurance of certain minimum levels of security required
for EMV chip payment, including security mechanisms and protections designed
to withstand known attacks. The results of the EMVCo chip security evaluation
are then used by each payment system in their card approval process.
Card functional security evaluation is out of scope for EMVCo and is run by the
payment systems.

International payment system EMV-based card specifications include American Express AEIPS,
Discover DPAS, JCB J/Smart, MasterCard M/Chip, UnionPay IC Card and Visa VIS.
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7 Implementation Considerations
The migration from magnetic stripe to EMV chip requires investment in changing
the payment infrastructure and associated processes. Changes are required from
the acceptance terminals installed at retailers, through acquirer switches and
networks, right up to issuer authorisation hosts and card production systems.
It is important to note that the implementation of chip infrastructure is not an
EMVCo role. It falls to the international and domestic payment systems, card
issuers and card acceptors.
7.1 Issuer Considerations
An issuer migrating to EMV chip card issuance needs to consider at least three
main areas of implementation activity as illustrated in the following diagram.

Figure 9: Issuer EMV Implementation Activities

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These implementation activities are described in more detail in the following
table.
Activity

Description

Upgrade card production and
personalisation processes and
infrastructure for chip.

Choosing a chip card platform with the necessary
hardware that meets the requirements for issuing
chip cards. These requirements may include single
application, or multi-application, payment only, or
payment plus other applications, contact only, or
dual interface, and support for the required
cryptographic processing.
Determine the parameters and rules that must be
personalised into the chip payment application that
will meet the card issuer’s requirements for
reducing counterfeit and lost and stolen card fraud.
Generate the EMV cryptographic keys required to
support the card issuer’s application features for
reducing counterfeit and lost and stolen card fraud.
Upgrade existing card production systems from the
existing magnetic stripe delivery processes to
enable the production and delivery of EMV chip
cards.
Authorisation and clearing and settlement
messages resulting from chip card transactions at
the point of sale will carry new chip information.
Changes are required to issuer systems to issue,
manage, and authorise and settle transactions for
EMV chip cards and to support the necessary
operational processes that can take advantage of
the enhanced chip data such as customer service,
chargebacks and disputes, fraud, credit risk
management, and management reporting.
Update issuer customer service and back office
operations. This includes updating processes to
enable customer service representatives to support
cardholders with EMV chip cards. Tools need to be
provided to customer service representatives to
enable them to have the necessary information to
handle queries from cardholders with EMV chip
cards. Systems and processes need to be
enhanced to support chip cards back office
operations such as chargebacks and disputes,
fraud investigation and credit risk management

Upgrade authorisation and settlement
systems for chip.

Re-engineer internal processes in support
for chip.

Table 10: Issuer Implementation Considerations

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7.2 Retailer and Acquirer Considerations
An acquirer or retailer migrating to EMV chip card acceptance needs to consider
at least three main areas of implementation activity as illustrated in the following
diagram.

Figure 11: EMV Acceptor Implementation Activities

These implementation activities are described in more detail in the following
table.
Activity
Description
Deploy EMV chip acceptance terminals,
and retrain terminal operators and upgrade
retailer support services

Procure approved EMV acceptance terminals. This
means talking to vendors to agree on the EMV
parameters to be installed in the terminals to meet
retailer and acquirer requirements for accepting
chip cards and ensuring the terminals are EMV
Level 1 and Level 2 type approved.
Ensure that existing terminal applications are
integrated with the new EMV functionality provided
by the EMV Level 2 application kernel.
Upgrade terminal management systems so that
EMV configurations and parameters may be
managed efficiently and remotely.
Deploy terminals in the field. This involves
upgrading or replacing hardware to incorporate
chip readers and upgrading software to include the
EMVCo approved EMV chip functionality.
Train terminal operators and cashiers to accept a
chip card – to insert the chip card instead of
swiping the magnetic stripe. Additionally, retailer
field training staff, and retailer support staff need to
be up-skilled to perform their tasks for chip
implementation and support.

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Upgrade host systems to switch chip
transactions for authorisation and
settlement.

Re-engineer internal processes in support
for chip.

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Upgrade terminal to acquirer host interface. This
means the message format for the interface
between the terminal and the retailer and/or
acquirer host will need to be upgraded to carry new
EMV chip data elements.
Upgrade host and interchange interfaces. This
means the retailer and/or acquirer host will need to
be upgraded to switch messages containing new
EMV chip data elements from the terminals to
outgoing interchange links to the card issuers. This
will require mapping data elements from incoming
messages on the terminal links to outgoing
messages on the interchange links.
Update back office operations and retailer service
to take advantage of enhanced chip information
available in the transaction messages from
terminals. This includes upgrading procedures and
staff operations to support the following functions.
- Chargeback and transaction dispute
procedures
- Retailer service
- Fraud Detection

Table 12: Acquirer Implementation Considerations

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8 The Next Generation of EMV Chip Specifications
Many changes have occurred in the payments industry since the initial
publication of the EMV Chip Specifications. Specifically, EMVCo has recognised
the following:
•

Continuous expansion of business requirements and payment
technologies (e.g. mobile).

•

Convergence of contact and contactless solutions needs to be simplified
across the entire payments ecosystem.

•

Evolution of public key cryptography (e.g. Elliptic Curve Cryptography).

•

Increased requirement to transport additional ‘value add’ data across the
networks.

These developments have impelled EMVCo to review the EMV Chip
Specifications through a strategic lens and evaluate a roadmap for the future of
payments. It formed the Next Generation Task Force which is tasked with
designing the solution and leading the development of the next generation of
EMV Chip Specifications.
8.1

Business Drivers

There are many reasons why EMVCo’s work in the development of the next
generation of EMV Chip Specifications is important. Some of the key business
drivers include:


Product Time to Market – Enable a more cost and time efficient
deployment of current, future payments



Terminal evolution - Reduce impact on terminal infrastructure as product
requirements evolve



POS Throughput – Provide options for improving throughput at the pointof-sale



Transaction Quality – Improve transaction data quality and relevance



Transaction and Business Environments – Address different types of
transactions and various business environments



Product Selection – Improve the product selection for the cardholder and
merchant



Security – Future-proof EMV security including incorporating ECC and
mitigate privacy-related issues

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8.2 EMV Next Generation Specifications
The EMV Next Generation (Next Gen) Specifications establishes a common,
robust technology platform to support a variety of interfaces—contact,
contactless, mobile, etc.—for both online and offline processing, by:


Enhancing transaction information available to acquirers, networks, and
issuers



Optimising transaction flows to improve throughput at the point of sale and
the cardholder experience



Future proofing EMV chip security by incorporating next generation public
key infrastructure and a secure channel between the card and acceptance
device



Supporting multiple communication protocols, with the flexibility to add
additional protocols in the future



Integrating Type Approval processes for contact and contactless

Special attention is given to migration and global interoperability between existing
legacy EMV chip products and EMV Next Gen products. It is expected that cards
and acceptance devices based on legacy EMV Chip Specifications might remain
in the field until 2030.
The coexistence of legacy EMV chip and Next Gen applications (on the card’s
side) and legacy EMV chip and Next Gen Kernels (on the acceptance device
side) facilitates the introduction of new features in response to individual market
needs, while providing a natural migration path. Individual payment systems and
markets will determine when Next Gen products become relevant for their needs,
and may begin migrations well before 2030.
To minimize deployment costs and disruption in the field and to avoid multiple
overlapping migrations—especially those that would require changes to
acceptance devices and Type Approval testing—EMV Next Gen leverages
recent evolutions in smart card, acceptance device, and network technology;
incorporating into the Next Generation Kernel System Specifications all the
enhancements foreseen to keep EMV chip technology relevant for the next 20+
years. EMV Next Gen is designed so that the overall payment functionality and
the cardholder experience should not be impacted by whether Next Gen or
legacy EMV chip functionality is used for a particular transaction.

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8.3 Milestones
EMVCo continues to progress EMV Next Gen by achieving the following
milestones:
2011
2012
2013
2014
2015
2016
2017
2025

Start the EMV Next Generation effort
EMVCo Next Generation scope finalisation
EMV Next Generation high-level architecture completed
EMV Next Generation proof of concept
EMV Next Generation Draft Specification projected
EMV Next Generation Specification projected
Terminal Type Approval Process availability projected
Payment systems may sunset the issuance of legacy contact/contactless
cards
2030 Payment systems may remove legacy cryptography (i.e. keys) from
terminals
*The timeline and milestones presented are provisional and subject to change

Help shape the future of EMV Technology
EMV is continuing to evolve into new channels such as mobile as well as developing the Next
Generation of the EMV Chip Specifications
Will your business provide input into these new and exciting developments? Become an
EMVCo Associate. For more information please refer to the EMVCo website
www.emvco.com.

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9 Glossary
Term

Description

Acquirer

A financial institution that enters into an agreement with
retailers to facilitate acceptance of payment cards and then
settles the transaction with the card issuer directly or via a
payment scheme.

AEIPS

American Express ICC Payment Specification (Terminal and
chip card)

Application Authentication
Cryptogram (AAC)

A cryptogram generated by the card at the end of offline and
online declined transactions to indicate that the card
declined the transaction.

Application Cryptogram

A cryptogram generated by the card in response to a
GENERATE AC command.

Authentication Request
Cryptogram (ARQC)

A cryptogram generated by the card at the end of the first
round of card action analysis which is included in the
authorization request sent to the card issuer and which
allows the issuer to verify the validity of the card and
message.

Authentication Response
Cryptogram (ARPC)

A cryptogram generated by the issuer and sent in the
authorization response that is sent back to the acquirer. The
acquirer and terminal provide this cryptogram back to the
card which allows the card to verify the validity of the issuer
response.

Automated Teller Machine
(ATM)

An unattended terminal that has online capability, accepts
PINs, and disburses currency.

Cardholder Verification Method
(CVM)

The method to be used to verify the cardholder’s identity.
This may include signature, PIN or no CVM required.

Certificate Authority (CA)

Trusted third party that establishes a proof that links a public
key and other relevant information to its owner.

Combined DDA/Application
Cryptogram Generation (CDA)

A type of offline data authentication where the card
combines generation of a cryptographic value (dynamic
signature) for validation by the terminal with generation of
the Application Cryptogram to verify that it came from a valid
card.

Common Core Definition (CCD)

A definition of card application implementation options, card
application behaviours, and data element definitions
sufficient to accomplish an EMV transaction.

Common Payment Application
(CPA)

A functional specification for an issuer payment application
that complies with the CCD requirements, and defines card
applications, implementation options and card application
behaviours.

Contactless transaction

A chip transaction where the communication between the
card and the terminal does not take place over a contact
interface.

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Term

Description

Cryptogram

Result of a cryptographic operation which transforms data
either to hide the data, or to produce a digital signature that
may be used to verify the origin and integrity of the data.

Cryptographic Key

The numeric value entered into a cryptographic algorithm
that allows the algorithm to encrypt or decrypt a message.

CVM List

An issuer-defined list in the chip card’s payment application
profile indicating the hierarchy of preferences for verifying a
cardholder's identity.

Data Encryption Standard
(DES)

The public domain symmetric key cryptography algorithm of
the National Institute for Standards and Technology.

Dynamic Data Authentication
(DDA)

A method of offline data authentication used to verify that
issuer-selected card data elements and transaction-specific
dynamic data elements have not been fraudulently altered
and that they come from a valid card.

DPAS

D Payment Application Specification – The Discover and
Diners Club International EMV-based ICC Specifications.

Elliptic Curve Cryptography
(ECC)

A public key cryptosystem which requires smaller keys and
is significantly faster to process than RSA. It is used for data
encryption and authentication.

EMVCo

EMVCo LLC, a company that manages, maintains, and
enhances the EMV Chip Specifications jointly owned by the
Payment Systems.

Floor Limit

A currency amount below which an online authorization is
not required for a single transaction unless a service code is
present which requires online authorization.

International Organization of
Standardization (ISO)

The international agency that establishes and publishes
international technical standards.

Issuer

A financial institution that issues cards and whose name
appears on the card as the issuer (or, for cards that do not
identify the issuer, the financial institution that enters into the
contractual relationship with the cardholder).
Payment system defined application data for transmission
from the chip card to the issuer in an online transaction.
JCB EMV-based ICC Specifications

Issuer Application Data
J/Smart
Kernel

A piece of terminal application software that supports the
EMV payment application functions as defined in the EMV
Specifications. The non-EMV functionality that supports
functions like the printer and display, and building messages
to send to the acquirer, is not considered part of the kernel.

M/Chip

MasterCard EMV-based ICC Specifications

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Term

Description

Near Field Communication
(NFC)

A short-range high frequency wireless communication
technology which enables the exchange of data between
devices over about a 10 centimeter distance. The
technology is a simple extension of the ISO/IEC 14443
proximity-card standard (proximity card, RFID) that
combines the interface of a smartcard and a reader into a
single device.

Offline Data Authentication

A process whereby the card is validated at the point of
transaction, using RSA public key technology to protect
against counterfeit or skimming. Three forms of offline data
authentication are defined by EMV: SDA, DDA and CDA.

Offline Enciphered PIN

A cardholder verification method defined in EMV in which
the cardholder PIN is entered at a terminal, encrypted with
an ICC public key, and sent to the ICC where it is decrypted
and then validated.

Offline only terminal

A chip terminal that is not capable of sending an online
authorization request and where all transactions have to be
approved offline.

Offline PIN

A cardholder verification method where the card verifies a
PIN that is entered by the cardholder; the PIN is stored in
the card.

Offline Plaintext PIN

A cardholder verification method defined by EMV in which
the cardholder PIN is entered at a terminal and sent to the
ICC in plaintext to be validated.

Online capable terminal

A chip terminal that supports both offline and online
processing.

Online PIN

A cardholder verification method where the PIN is sent
securely from the terminal to the card issuer, or the card
issuer’s designated agent, to be verified.

Payment Card Industry (PCI)

A consortium of the major payment schemes, Visa,
MasterCard, American Express, JCB and Discover, which
became formalized as the PCI Security Standards Council
or PCI-SSC and which manages various aspects related to
common industry security requirements.

Personal Identification Number
(PIN)

A personal identification code that is known only to the
cardholder and is entered into the terminal and sent to an
authorizing entity for verification. The entity may be either
the card issuer, or designated agent, or an ICC.

PIN Entry Device (PED)

A secure device that allows cardholders to enter a PIN.

Point of Sale (POS)

An attended or unattended terminal for the acceptance of
payment cards for cash, goods and services.

Private Key

The secret component of an asymmetric key pair. The
private key is always kept secret by its owner. It may be
used to digitally sign messages for authentication purposes.

Public Key

The public component of an asymmetric key pair. The public
key is usually publicly exposed and available to users. A
certificate to prove its origin often accompanies it.
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Term

Description

Public Key Certificate

An asymmetric transformation of the public key by a
Certificate Authority and intended to prove to the public key
recipient the origin and integrity of the public key.

Public Key Pair

The two mathematically related keys, a public key and a
private key, which, when used with the appropriate public
key algorithm, can allow the secure exchange of information
and message authentication, without the secure exchange
of a secret.

RSA

A public key cryptosystem developed by Rivest, Shamir, and
Adleman. It is used for data encryption and authentication.

Skimming

The act of using a device to illegally collect data from the
magnetic stripe or chip of a credit, debit or ATM card. This
information, copied onto another blank card's magnetic
stripe or chip, is then used to make purchases or withdraw
cash in the name of the actual account holder.

Static Data Authentication
(SDA)

A type of offline data authentication where the terminal
validates a cryptographic value placed on the card during
personalization. Protects against some types of counterfeit
fraud but does not protect against skimming.

Symmetric Algorithm

An algorithm in which the key used for encryption is identical
to the key used for decryption. DES is the best known
symmetric encryption algorithm.

Terminal Risk Management
(TRM)

Offline checks performed by the terminal to determine
whether a transaction should proceed further. It includes
floor limit checking and exception file checking.

Transaction Certificate (TC)

Cryptogram generated by the card at the end of either an
online or offline approved transaction and can be used by
the retailer or acquirer as proof that the card approved the
transaction.

Triple Data Encryption Standard
(TDES)

The data encryption standard used with a double-length
DES key. Sometimes referred to as TDEA or DES3.

VIS

Visa EMV-based ICC Specification

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