It's very much encoded in the track data. It may not be in clear-text by the time it leaves the reader but it's encoded in the data.
Start sentinel — one character (generally '%')
Format code="B" — one character (alpha only)
Primary account number (PAN) — up to 19 characters.
Field Separator — one character (generally '^')
Name — 2 to 26 characters
...https://www.emvlab.org/emvtags/show/t5F20/
There is one store in my neigbourhod where the payment terminals show this field (my full name) on the screen during checkout. I was very surprised when I noticed this the first time.
But apparrently not all card issuers fill the field with correct data. One card, a prepaid Visa from a big fintech, has "N/A" programmed in the field.