EMV SRC Explained for Beginners

As someone who sells stuff online, I want to be on the pulse of the chargeback world. That way, I don’t fall behind and lose precious money.

I found out about EMV SRC and thought I’d discuss it. We’ll then see if it’s beneficial to us and our quest to stop chargebacks.

Let’s learn something new.

Key Takeaways

• EMV SRC acts like a digital wallet that securely stores transaction information.
• It’s not available in all countries.
• There are no additional fees for using it.
• It has improved transaction success rate by around 6%.
• It can reduce chargebacks by reducing fraud.

What is EMV SRC?

EMV Secure Remote Commerce (SRC) is a standard for secure online payments. It aims to simplify e-commerce transactions while enhancing security.

SRC uses dynamic data to protect payment information during checkout.

Dynamic data securely transmits payment details. Minimizing exposure to fraud. It also authenticates transactions without revealing sensitive information.

Another key feature is its use of consumer identity.

This eliminates the need to repeatedly enter card details. As a result, approval rates for online purchases increase.

Consumer identity reduces the need for manual card entry. Improving the checkout experience.

This feature also boosts approval rates by using stored payment details.

And it ensures that EMV SRC works with existing technologies like payment tokenization and 3D Secure.

Global e-commerce is booming, with sales expected to hit $7 trillion by 2025.

However. Challenges persist.

A smooth checkout process is crucial for conversion, but complex systems often lead to abandoned carts. Additionally, online fraud continues to rise, with CNP fraud losses projected to reach $13.73 billion in 2024 [1].

SRC addresses these issues by adding the following to payment experiences:

• Convenience
• Consistency
• Security

It works across various digital platforms and devices. The EMV SRC Specifications serve as a foundation for developing e-commerce solutions known as Click to Pay.

With Click to Pay, consumers can shop online using their preferred card. They enjoy similar security and convenience as in-store purchases.

By implementing SRC, e-commerce and SaaS businesses can potentially decrease chargebacks.

The enhanced security measures and simplified user experience contribute to this reduction.

Adopting SRC could be wise for those seeking to reduce financial losses from disputes.

I covered the “SRC” part of the acronym. But not “EMV.”

Wait, What’s EMV?

EMV stands for Europay, Mastercard, and Visa. It's a global standard for card payments that's designed to make transactions more secure.

The "EMV" in "EMV SRC" refers to the chip technology used in EMV cards.

This chip is a tiny computer that generates a unique code for each transaction.

Payment processors use this code to verify the card's authenticity and prevent fraud.

Does it actually produce results?

Heck yeah.

Visa said it has helped reduce counterfeit fraud by at least 87% [2].

We have a couple more things to discuss before talking about whether it’s worth using.

And What’s Click to Pay?

Click to Pay is a simplified payment method that allows consumers to make online purchases with a single click.

It's based on the EMV SRC.

This icon will tell you that it’s Click to Pay:

Source: EMVCo.

Think of Click to Pay as a universal payment button that works across the following:

• Different devices
• Payment cards
• Online stores

When there’s the Click to Pay icon, shoppers may find themselves more confident knowing that their data is in good hands. So long as they know what Click to Pay is.

Or think of it like PayPal’s one-click checkout. But with the ability to accept more cards.

What Countries Is EMV SRC Available In?

EMV SRC is available to merchants in the following areas [3]:

• United States
• United Kingdom
• Singapore
• Poland
• Spain
• New Zealand
• Malaysia
• Ireland
• Hong Kong
• France

What Cards Can Customers Store in SRC Wallets?

Shoppers can store the following card brands in their SRC wallets:

• Visa
• Mastercard
• American Express
• Discover
• UnionPay

EMV SRC Components

EMV SRC consists of the following components that work together to enable secure online payments:

1. SRC System
2. Digital Payment Application
3. The Digital Card Facilitator
4. SRC Initiator
5. SRC Participating Issuers
6. SRC Program
   

1. The SRC System is the central coordinator, overseeing all other elements. It manages participant onboarding and facilitates secure data exchange using dynamic information.

2. The Digital Payment Application (DPA) is the user interface.

It's the software customers interact with when making purchases.

3. The Digital Card Facilitator (DCF) stores and provides access to payment credentials.

It integrates with SRC systems to offer customers their digital card details.

4. The SRC Initiator collects and sends information between the DCF and merchants.

This component also registers DPAs and integrates with SRC Systems.

5. SRC Participating Issuers enroll cardholders into the system.

They identify eligible cards and provide necessary data for digital representation.

These issuers also set preferences for authentication methods.

6. An SRC Program oversees the entire ecosystem. It establishes policies and requirements for participants.

The program guides onboarding, registration, and configuration processes.

Different entities in the payment ecosystem can handle various roles.

This adaptability allows for effective implementation across diverse banking systems and regions.

By utilizing these components, e-commerce and SaaS businesses can enhance security.

Now that we know the components, we’ll want to know how it works.

How Does EMV SRC Work?

EMV SRC operates through two main processes:

1. Enrollment.

During enrollment, card issuers provide customer data to the SRC System. Cardholders must confirm their participation.

The system then creates or updates an SRC Profile for each user.

2. Checkout allows merchants to request permission to use a payment method.

We’ll find 2 types of checkouts:

• SRC Checkout
• Merchant Checkout

An SRC Initiator orchestrates SRC Checkout. It streamlines purchases across multiple DPAs.

The process begins when a customer initiates payment.

From there, it goes as follows:

1. The SRC Initiator presents a list of digital cards.
2. The customer reviews and confirms purchase details.
3. The SRC Initiator initiates payment authorization.

The seller deals with Merchant Checkout and integrates with SRC Systems.

Merchant Checkout has 3 variants:

1. Digital Card-On-File lets customers save a card for future purchases.
2. Orchestrated Checkout integrates fully with the merchant's experience.
3. QR Code Checkout uses a dynamic code to trigger an SRC checkout.

And it supports these implementations:

• Cardholder-Initiated Transactions: Shopper initiates transaction.
• Merchant-Initiated Transactions: Seller requests transaction.
  • Scenarios include subscriptions and recurring payments.

Now you know how it works.

Does it provide any benefits with chargebacks?

How is EMV SRC Beneficial?

Unlike proprietary platforms, SRC is available royalty-free.

Here are the perks for or shoppers:

It eliminates the need to re-enter payment details on different websites. Users validate their identity, and SRC handles the rest.

This convenience is similar to a digital wallet (like Apple Wallet). Which stores card information securely.

Merchants gain from this streamlined process, too.

As it reduces cart abandonment rates.

This is critical to tackle since the average cart abandonment rate is 79.53% in 2023 [4].

48% of customers within this statistic said they’re “just browsing.”

However:

25% didn’t trust the site with their credit card information.

Source: Baymard Institute

Having a more trustworthy card processor may help.

And customers no longer struggle with misplaced cards during checkout.

Another statistic suggests that 91% of shoppers say a complex checkout experience makes them dump their purchase [5].

This smooth experience can lead to increased sales and customer satisfaction.

A key benefit for businesses is the potential reduction in chargebacks.

SRC's authorization process makes fraudulent claims more difficult.

Cardholders can't easily argue that transactions were made without their knowledge. This system deters true fraud and friendly fraud attempts.

The initial setup is the only potential friction point for customers.

Once completed, subsequent transactions become effortless.

This ease of use encourages repeat purchases and customer loyalty.

It enhances security while simplifying transactions. The result is a win-win situation.

Customers enjoy a better shopping experience.

Merchants see fewer abandoned carts and reduced chargeback risks.

When researching this subject, I wanted to see an actual use case.

And I found one.

One website used Click to Pay and noticed a 6% increase in transaction success rates within 2 weeks [5].

Speaking as an e-commerce seller, I’d say this sold me.

If it sold you, you probably want to know how to add it to your ecosystem.

Here’s How to Use EMV SRC

American Express Checkout, Visa Checkout, and Masterpass now use EMV SRC.

If you don’t have Click to Pay, you’ll need to check with your payment processor to find out how to add it.

If, for instance, you process orders through Stripe, you’ll need to generate a Masterpass Checkout ID and deal with a process. They explain the process here.

Or, see this for more information on accepting SRC payments through Braintree.

There’s no API for SRC (at the moment).

There’s not much else I can teach you. This is a straightforward topic.

Wrapping Up

EMV SRC and Click to Pay give merchants a proven way to reduce fraud and chargeback rates. Implementing them seems pretty straightforward, too.

However. That only focuses on preventing fraud chargebacks.

You’ll need tools to prevent other types of disputes.

We offer such a tool with chargeback alerts. These give you a chance to tackle an issue before it escalates to a chargeback.

Learn how we’ve helped merchants reduce chargeback rates by up to 91%.

Sources

• [1] US Card Payment Fraud Losses Forecast. EMARKETER. 12/6/2022.
• [2] Visa EMV chip cards help reduce counterfeit fraud. Visa. 9/4/2019.
• [3] Secure Remote Commerce. Braintree.
• [4] Cart Abandonment Rate. Baymard Institute. 2024. 
• [5] SRC Webinar. US Payments Forum. 5/16/2023. PDF.