4 Significant Factors That Will Determine the Course of EMV Migration

There are many issues regarding the onset of EMV into the US payments infrastructure that have yet to be ironed out and/or fully understood. But there are four right now that stand out, and on which the shape of the U.S. EMV implementation rests.  Discussions over the last year have turned up a raft of issues that have to be resolved.  But these four stand out because how they are decided will ultimately help determine what EMV will look like here.

Over the coming weeks, EMV Update will explore these four factors along with others that emerge as the U.S. payments industry continues its evolution into the realm of smart card technology. 

Here are the four issues EMV Update sees as most significant in determining how EMV will roll out in the U.S.:

1.       U.S. Common Debit AID –This is the chip’s payment application that identifies the available networks to which an authorization request can be routed.  It’s up to the merchant to actually put the transaction into the routing infrastructure.  Four viable applications are available for use under different licensing agreements from either the major card brands like Visa or MasterCard or a consortium called CommonCo.  CommonCo. was formed by 10 ten of the 18 PIN-debit networks (PDNs) in the U.S. under their affiliation with the Secure Remote Payment Council or SRPc.  Issuers have been waiting for one of these applications providers to produce a set of specifications.  To date, a spec is missing and, with it, the pathway for implementing PIN debit in the U.S. under EMV.

2.       The EMV Business Case – Many of the merchants who must bear the brunt of EMV’s implementation costs, are saying they don’t have the kind of fraud that justifies EMV’s costs.  They’re essentially saying they’re indifferent regarding the liability shift.  This issue will be explored further in coming weeks.

3.       Card Not Present Fraud – Every country that has implemented EMV has watched their CNP fraud grow exponentially.  To date, there doesn’t seem to be a solution.  But is there?  Can we develop one?  With whose help?  Another hot topic.

4.       Contactless – Is there a role in EMV for contactless technology?  Can we find ATMs in the world that can be activated with a contactless EMV card?  And if the answer is ‘no,’ what does that mean for Near Field Communications technology?  For a future blog post.

EMV implementation in the U.S. leaves much to be discussed in future posts.  C’mon back. We’ll give you an honest analysis of what’s happening with these four issues and how they’ll impact what may or may not be in your wallet in the coming years.http://www.cvent.com/events/emv-migration-forum-meeting-june-13/custom-19-403fa5c3460d4d8e81eb221ee1b2a08f.aspx

EMV-A Struggle to Find Consensus

The EMV Migration Forum issued a press release on July 2, following its most recent meeting in Chicago. The EMV Migration Forum is an industry group trying to provide guidance on the best way to implement EMV in the U.S.

EMV for the uninitiated is a security standard for debit cards thought to provide a higher level of protection against fraud than the current technology used for those cards. It is recognized in most industrialized countries with the exception of the U.S. and Israel.

While it sounds like a simple change, it’s actually extremely complicated because of the large number of stakeholders involved in the implementation process and the fact that many of them have competing interests.

According to the press release four of the mainstream payment industry participant groups (issuing banks, merchants, merchant acquiring processors and issuing processors) say they recommend a set of principles for implementing EMV PIN debit in the U.S. that would result in encoding a “single common U.S. debit payment application identifier (AID) on a debit card that represents each of the debit networks enabled on the card.” 

For U.S. PIN debit transactions initiated at POS and ATM devices in the U.S. this is a reasonable approach.  Where it would begin to break down is when consumers carry these cards issued by U.S. banks to Europe, Latin America or Asia where either POS or ATM routing will not include any of the debit network brands found in the US. 

Indeed, what do we find in Europe, Latin America or Asia?  MasterCard.  Visa.  American Express. 

U.S. retailers have expressed a desire for a single US debit application.  That is not the same thing as a single US debit AID.  The identifier is like a macro in Excel®, where the application is like Excel itself.  Here’s the kicker – the press release incorrectly states they want a single AID.  What they meant to say was they want a single application.  There will be multiple AIDs on PIN debit cards unless issuers all of a sudden decide to disallow their debit cards to be used outside of the US. 

Doubt that will happen. So the press release, rather than clarifying the issue, has added more confusion to an already confused situation.