Compared to end-to-end encryption, contactless cards with dynamic cryptograms would have the following advantages:

• Less impact on the payments acceptance infrastructure for merchants, acquirers and issuers
• Enable merchants to implement a solution more quickly and without waiting for new standards
• Provide a high level of cardholder data protection by including a dynamic cryptogram with each transaction
• Reduce the threats posed by cloning magnetic stripe-based cards and stealing cardholder data

EMV has also been offered as a solution, but critics of have argued that the merchant terminal implementation costs and the complexity of key management made chip cards prohibitively expensive.

Compared to EMV, contactless online-only implementation:

• Lowers the cost of the cards since a crypto-coprocessor is not required
• Eliminates the need for key management at the merchant terminal by using online cryptogram verification
• Uses the existing contactless infrastructure that is already in place in many retailers
• Readies the payments acceptance infrastructure for mobile NFC payments
• Works with existing transaction processing networks
• Can be coupled with contactless payment, an attractive payment product for consumers
• Achieves the goal of eliminating fraud from cloned cards
• Can be used with a handheld reader or with a mobile application to eliminate CNP fraud
• Supports issuers who want to offer globally-interoperable chip cards

Download End-to-End Encryption and Chip Cards in the U.S. Payments Industry from the Smart Card Alliance.