Bill Hanifin
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I have a great answer for you the next time someone accuses you of being behind schedule. Just tell them that compared to the schedule for implementing EMV in the US, you are way ahead of the game.
Ok, I know that “payment card joke” is probably an oxymoron, if funny at all, but as I sat through an update of the status of EMV roll-out in the US at the recent Card Forum, I had to chuckle, even if under my breath.
You see, I was in the front row listening to a presentation given by Richard Sanders, former head of cards for Visa Europe and, at that time in the same position with Abbey Bank UK, when he brought the house down with his predictions about the timeline for EMV coming to America. Richard made his remarks in 2005.
The presentation was made during a CardTech SecurTech event in Las Vegas, and Richard was fresh from leading the launch of the first successful ”chip and PIN” program in the UK.. He knew his stuff and predicted to the audience that chip cards would be coming to America sooner than later. His logic was that as markets outside the US went to the more secure system of payment card management, fraudsters would be steadily eliminated from those markets and would eventually turn to the US as the only greenfield of fraud left in the world.
Most questions from delegates that followed expressed skepticism, saying that the current system powered by magnetic stripe was so dependable and that our fraud issues were so well managed that EMV may not ever land on US shores. Now EMV is well on its way to becoming a reality in the US, meaning that consumers will soon nonchalantly accept that all credit cards come with a micro-chip on board.
There is some confusion in the payments industry about the implementation timeline even today, but EMV (Chip and PIN) payment is most certainly on the way to the US. You might want to visit the Smart Card Alliance Group website to learn more about details of the plan.
At the moment, “up to 56% of US cardholders going abroad have difficulty using their cards” according to Carolyn Balfany, Group Head U.S. Product Delivery, MASTERCARD WORLDWIDE. As the EU has completed its migration to EMV, the region has seen an 80% reduction in credit card fraud while the US has witnessed a 47% increase. According to Troy Bernard, Director, Chip Payment Technology, DISCOVER FINANCIAL SERVICES, “fraud generally declines about 50% when the new system is fully in place”.
The April 2013 deadline for merchant acquiring organizations to be equipped to process EMV enabled cards in the US is just about in the rear view mirror. Plenty of progress has been made and the acquirers should be ready well ahead of the next important date in the process, October 2015. At that time, retailers or other parties in the payments chain that are not ready for EMV will become liable for any fraud that occurs in the course of purchases made.
ATM’s must be ready to accept EMV cards by 2017 and Stephanie Ericksen, Head of Authentication Product Integration, VISA INC. shared “the company is not pushing to accelerate the rollout of Chip and PIN at the point-of-sale” as it knows that any remaining fraud volumes will run full speed ahead for those unprepared ATM machines.
Once EMV is in place, early days will see about 60% of transaction volume be managed through the CHIP and PIN process, with about 40% of volume falling back to magnetic stripe card readers until all systems are converted.
The path to full implementation of EMV is deliberate, but it will happen. At the rate fraudsters are ramping-up skimming schemes via ATM’s throughout the Americas, better protection of cards used by consumers will be most welcome. Consumers may not understand much about the card they will soon carry, but they will like the big idea that their card accounts will be safer on a daily basis.
When Richard made his predictions in 2005, he probably did not expect that it would take up to 12 more years for EMV to become a reality in the US. The fact that he made the prediction at all in 2005 is testimony to Richard’s visionary understanding of the payments business. If you are interested in today’s predictions about the cards business, throw away your crystal balls and just click here to contact Richard directly.
Editor’s note: This is not a paid endorsement, I simply remember this as one of my favorite stories from the early smart card days in the US. Richard is now Principal Solution Consultant with ACI Worldwide, where he continues to evangelize for winning card strategies.
