Page 56 - Pay Magazine s2014

54
finance & strategy
Q&A with Steve Montross, CPI Card Group
Paybefore: What can you tell us about the U.S. EMV migration and where prepaid issuers are in terms of the transition?
Steve Montross: We’ve def- initely seen a pickup on EMV with the prepaid issuers, particularly with the issuers of government bene ts and payroll cards, but the pace is much slower, in general, than with debit and credit. Many prepaid issuers have taken a wait-and-see attitude. As the acceptance network expands, we’re starting to see more prepaid issuers delving into what EMV means for them and what they need to do.
A lot of our recent EMV activity
on prepaid actually has been in Canada, where issuers are moving to dual-interface cards. Canada began its EMV migration eight years ago and prepaid issuers there are concerned about fraud on their mag stripe cards. While we expect prepaid issuers to focus on EMV for reloadable segments and have seen that in the U.S.—health care, GPR, government bene ts and payroll—Canadian issuers are switching non-reloadable gift cards to EMV as well. Even though the cards are more expensive to pro- duce, the enhanced security of
an EMV card and the consumer perception that the EMV prepaid card is like their bankcards and is more secure outweigh the addi- tional costs.
Paybefore: Tell me more about the demand for dual-interface—
contact and contactless—EMV cards. What’s driving it?
SM: The dual-interface cards
have additional technology—an antenna that’s built into that card to enable contactless transactions. Although that extra technology makes the cards more expensive, issuers are showing more interest in dual-interface cards, especially in markets like Canada, Australia and the U.K., where contactless transaction volume has risen dra- matically. For example, the London transit system moving to contact- less has really moved the U.K. market rapidly to contactless. Issuers want to provide that pay- ment option to their cardholders, given the added convenience of “tap and go” and the widespread network in place to accept contact- less payments.
There de nitely are use cases and interest in dual-interface cards in the U.S., but the volumes are much more modest for a couple of rea- sons. First, we don’t have the ac- ceptance infrastructure in place right now. Estimates are that con- tactless acceptance is around 10 percent or in the high teens of all U.S. retail terminals. That’s changing as we transition to EMV and the new terminals all have contactless functionality built into them. Next, it’s a matter of programming them to accept NFC payments.
The biggest driver overall for dual-interface is the convenience factor. I think we’ll see more interest in dual-interface in the
U.S. due to the improved con- sumer experience from “tap
and go” contactless card pay- ments facilitated by an expanded acceptance network as merchants upgrade their terminals for U.S. EMV migration, and as additional use cases—such as more cities going contactless for their transit systems—build.
Paybefore: This is not CPI’s rst experience with a market shift to EMV. What’s most important when you’re talking clients through the process?
SM: One of the things we’ve really emphasized and continue
to emphasize is the need for prep- aration. This is not like ordering mag stripe cards. Moving to EMV is de nitely more time-consuming and complicated, and you need longer lead times to get every- thing done.
Another thing we emphasize is how important education is for the issuer and its cardholders. First, it’s about using our EMV expertise to help our clients understand the choices they need to make in terms of the chip card pro le, data preparation and key management. We provide the services packaged together to make it as easy as possible.
Next, it’s about making sure the client is prepared to educate customer service reps and call centers and the cardholders themselves, so from the beginning cardholders understand how to use