Page 104 - Pay Magazine s2014

finance & strategy
EMV Migration: The Final Stretch
implementation began in 2008, according to Interac, Canada’s No. 1 debit network. “Each time a country implements EMV, its counterfeit card fraud rates plunge,” says Stephanie Ericksen, Visa’s vice president of risk products. “We expect that will happen in the U.S. when the majority of issuers and retailers are processing EMV transactions,” she predicts.
Competition will be a major factor in driving EMV forward following the liability shift, Ericksen believes. Research suggests that consumers perceive an EMV transaction to be safer, and issuers and merchants will respond to that, she adds. “There’s an ongoing cross-industry effort to educate consumers and businesses about the benefits of EMV through direct communica- tions, online and in social media,” she notes, pointing to the Website GoChipCard.com—launched in the spring of 2015—which promotes EMV (see sidebar at right).
Millions Aren’t Ready
Though issuers and merchants had about three years to prepare for the transition to EMV, that wasn’t long for such a large card market, experts say. The U.S. accounts for about 1.2 billion cards serving around 313 million account hold- ers. The biggest financial institu- tions and merchants, with larger technology budgets and resources, were ready more than a year in advance. But some issuers with smaller card portfolios, and millions of small and midsize merchants,
are still scrambling to get EMV-
ready, for a variety of reasons, including the cost and complexity of upgrading.
It’s not surprising many payment industry participants are still not EMV-compliant, notes Carolyn Balfany, group head, U.S. product delivery for MasterCard. “The U.S. payments market is especially huge and diverse, and not everyone is moving at the same pace,” she explains. For consumers, this means that for the next several months they’ll see “a mix” of payment terminals with chip and mag stripe acceptance, according
tOtaL U.s. Card fraUd by type
Chip Card faCts
Chip Card Vs. Mag stripe Card
An EMV chip embedded in a payment card creates a unique cryptogram
for each in-store transaction. Unlike magnetic stripe cards, the one-time code an EMV card generates makes it difficult for thieves to counterfeit or copy account data for fraud. All network branded payment cards in the U.S., including credit, debit and reloadable prepaid cards (such as government benefits, GPR and payroll) eventually will have EMV.
at the pOs
EMV-ready POS terminals prompt customers to insert, or “dip,” cards into the EMV card slot. Customers may swipe cards the traditional way at non-EMV terminals.
WhO’s LiabLe NOW?
The party with EMV at the POS is protected from financial liability for card- present fraud losses for counterfeit and lost cards after Oct. 1, 2015.
CARD:
POS:
LiAbiLiTy AfTER OCT. 1, 2015, LiES WiTh:
Mag Stripe (Only)
Terminal is not EMV-Enabled
issuer
Mag Stripe (Only)
Terminal is EMV-Enabled
issuer
Chip Plus Mag Stripe
Terminal is not EMV-Enabled
Acquirer/Merchant
Chip Plus Mag Stripe
Terminal is EMV-Enabled
issuer
Counterfeit Mag Stripe Card
Terminal is not EMV-Enabled
Acquirer/Merchant
Counterfeit Mag Stripe Card
Terminal is EMV-Enabled
issuer
Counterfeit
37%
45%
18%
Card Not Present/Online
Lost/Stolen/Other
Source: Aite Group Financial Institution Survey, June 2014
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