Chip Card Profile Business Considerations

Offline Acceptance
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Offline Acceptance

WITH OFFLINE ACCEPTANCE, YOUR CARDHOLDERS WILL BE ABLE TO COMPLETE MORE TRANSACTIONS

The powerful security features of M/Chip™ cards, enhanced with offline acceptance, means a better payment experience for your cardholders, faster transactions, and more completed transactions—boosting card volume and revenue.

If your chip card supports offline acceptance, the terminal can determine if the card is genuine, the cardholder can be verified as the authorized user, and the transaction can be completed without having to connect to the issuer host system. Transactions that would otherwise not occur—where ultra-fast transactions are required (transit), where the low value of the transactions does not justify the expense (vending machines), or where occasional communication breakdowns occur—chip technology provides the opportunity for transactions to be completed offline in a secure and controlled way. The entire transaction (including authentication, verification, and acceptance) can be completed without connecting to the issuer host system.

Advantages of Offline Acceptance

Offline acceptance creates new acceptance opportunities, such as on board airplanes and trains, at parking locations, and at vending machines—improving your cardholders' experience. Some of the features of cards supporting offline acceptance are:

  • Approval parameters are stored on the chip and used by the terminal to authorize the transaction
  • Cards are personalized with approval parameters covering total spend, number of transactions, and other criteria
  • If a transaction is attempted at a terminal that also supports offline authorization, the terminal will check the chip parameters, then approve the transaction, decline the transaction, or force the transaction online for authorization
  • Offline acceptance enables ultra-fast MasterCard PayPass payments, such as transit

Control of Offline Spending

Software on the chip card contains offline spending limits as part of the card risk management (CRM) processing. CRM enables the card to decide if a transaction should be approved offline, sent to the issuer host for online authorization, or declined offline. These features of CRM give issuers much better control over the offline use of the card, which means that they can issue cards to more people than at present, with these features:

  • Maximum number of consecutive offline transactions allowed by the issuer, also called a "velocity check," before the card must go online
  • Maximum cumulative value of consecutive offline transactions allowed by the issuer, after which a further transaction is allowed only if it is approved online
  • Risk assessment of the transaction, based on such factors as transaction amount, transaction country, and type of merchant location

Verify the Card Is Genuine

Offline Card Authentication Method (CAM) enables a terminal to verify whether a card is genuine without having to go online to the issuer host system. In the U.S., dynamic offline CAM is supported, meaning the card produces a certificate for each transaction. Dynamic offline CAM requires a special type of chip card with a crypto coprocessor and RSA encryption keys stored in the card's secure memory. There are two offline CAM options: Dynamic Data Authorization (DDA) and Combined Data Authentication (CDA). CDA offers the added benefit of being more secure supporting contactless PayPass transactions, and costs no more than DDA to implement.

Considerations

Offline acceptance requires the keys and certificates for offline CAM to be prepared and personalized on the cards, but only costs about 15 cents more than an online-only card. If an issuer chooses not to select offline acceptance, card personalization is simpler and cheaper, but there will be no acceptance in some environments, such as on board airplanes and trains, at parking locations, and at vending machines.