Cardholder Verification Method (CVM): Considerations In A Changing Payments Landscape

We’re quickly approaching the liability shift that puts the financial burden resulting from fraudulent use of counterfeit, lost and stolen cards on merchants and acquirers instead of card issuers. This shift will serve as the major impetus for U.S. adoption of the EMV (Europay, MasterCard, and VISA) standard—the globally-accepted approach to payment security based on smart card technology by both issuers and merchants.

With the migration to EMV comes many technology and process-oriented changes to the payment acceptance environment, not the least of which is the preferred cardholder verification method (CVM). Merchants, VARs and integrators play a role in ensuring changes to CVMs are seamless and efficient at the point of sale (POS).

The primary benefit of EMV is the near-impossibility of counterfeiting the chip in the EMV card. When the issuer authenticates an EMV card, the likelihood that the card is counterfeit is extremely low. Counterfeiting, however, is not the only means of card fraud. That’s where the CVM comes in.

If a stolen chip card is used at a POS terminal that does not require a PIN CVM, the issuer will simply authenticate the card and approve the transaction. The theft victim bears the burden of reporting the stolen card and deeming subsequent transactions fraudulent. The chip card, if used without any CVM, cannot prevent fraud associated with lost or stolen cards.

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