Page 82 - Pay Magazine s2014
P. 82
finance & strategy
Countdown
to Chip-Card Migration
U.S. EMV shift sparks frenzy of activity in final months before liability shift.
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By Kate Fitzgerald, Emerging Payments Editor
Activity around chip-enabled cards and POS terminals in the U.S. is accelerating fast, as the October 2015 liability shift nears. The migration is expected to succeed in achieving its original goal of cutting counterfeit card fraud at the POS, but because of uneven industry awareness and preparation, there will be plenty of last-minute scrambling.
In less than three years, the U.S. has made major progress in updating payments cards and hardware for accepting EMV cards at retail locations. More than half of all U.S. credit and debit cards and slightly more than half of all payment terminals will be EMV- compliant toward the end of this year, according to industry esti- mates. (See Fig. 1.)
Because the U.S. is the last major market predominantly relying on lower-security magnetic stripe cards, completing the EMV migration will close an important fraud gap. But EMV only goes partway toward resolving broader card fraud problems, which have escalated in the last two years with major data breaches at retailers exposing sensitive consumer information. Close to1 billion customer records
Image courtesy of Visa Inc.
were compromised in 2014, accord- ing to industry sources, and EMV
is regarded as a key element in adding layers of defense to protect card data in all environments. End- to-end encryption, tokenization and emerging cardholder authentication processes also are important sec- urity measures for stemming fraud beyond the POS, including in card- not-present transactions.
The U.S. payments industry this year is on a “critical path” in its EMV card migration, according to Kimberly Lawrence, Visa’s senior vice president of global corporate initiatives. “We’ve made a lot of progress, but it’s a little too early to celebrate. There’s a significant amount of work to do, particularly to bring both debit and credit implementations together and
