EMV compliance standards were implemented to help mitigate the chance of fraud during card-present payment transactions. During card-present transactions, card data is captured at the terminal as the payment is processed. Since the way the magnetic stripe card reader captures data has become increasingly susceptible to counterfeiting, EMV was introduced as a more secure solution.
The microchip adds a new level of security, protecting sensitive cardholder information. During a payment transaction, the embedded microchip works in concert with an EMV-enabled terminal to complete the transaction.