Showtime!

We’re into October. The leaves are turning, the bow hunters are in the trees, the World Series is around the corner and it’s conference season for the financial services industry.

Two weeks ago we had the ATM and Mobile Executive Summit, jointly hosted by the ATM Industry Association and the ElectronicFunds Transfer Association. Last week we had Money 2020 in Las Vegas. Up next is the ATM, Debit and Prepaid Forum, followed in early November by EBT—the Next Generation 2013, the premier e-government payments show in the country.

The message of mobile wallet weaver Isis its Money 2020 audience was “you seen seen nuthin’ yet.” The Isis dream weavers see a world reshaped with mobile technology by the end of this decade. Theirs is a world where half of all transactions will be mobile by 2020.

If anything, Money 2020 showed the payments industry that its horizons must expand.  It’s no longer enough to have a single-focus show that just caters to ACH, or ATMs, or POS.  New technology like mobile will re-define all of those payments technologies and more. You can’t look at them in a vacuum. Make way for the inter-industry show.

Despite the focus on alternative payment technology, Money 2020 also showed that EMV continues to hold center stage as the topic most on the minds of the people who design and manage our payment systems.

The message about EMV was clear.  The fraudster factory continues to turn out taller and taller ladders to breach higher and higher payment-security walls. So the mission remains to find the best way to secure consumers’ transactions at the point-of-sale. Until somebody comes up with something better, that looks like EMV.

Some people will argue that as the world’s biggest economy we don’t have to march to the rules of other countries. We get to make our own rules. Others will say there is no business case for EMV. Still others will say that the venerable magnetic stripe will be around for a long time, making the argument for global interoperability a red herring.

All of this may or may not be true.

But its too bad consumers don’t get to vote in this debate. Because I think they’d say that anything that reduces their chance of being defrauded and incurring the pain of rebuilding their financial accounts and reputation is a good thing.

So, in the final analysis, the business case doesn’t matter, what the good folks in Lichtenstein are doing doesn’t matter, nor do the two EU tourists a year that visit Kelly Galloup’s fly shop in Cameron, Montana matter much. What matters is that U.S. consumers retain their historic confidence in the electronic payments system—a confidence that wanes with every skimming story in the local news—and continue to pull out the plastic at merchant locations. That’s what really matters in this debate. 

Certainly there are legal and political dimensions to EMV. But the Durbin Amendment and the Leon smack down of the Fed should be sideshows to the center stage. And that remains occupied by a vast cast of characters trying to overlay EMV on the world’s biggest payment system.

Sure, Money 2020 showcased many alternative payment schemes, including Bitcoin—either the most liberating, democratizing payment event in he history of man or payment disaster waiting to happen, depending who you talk to. Interesting. Provocative.  But at the end of the day, over cocktails in the bar, where business really gets done, the story was still EMV.  

It's Time to Move Forward with an EMV Debit Solution

It’s becoming clearer that the EMV Forum’s Debit Working Committee is struggling to maintain the momentum it built on the back of the double debit debacle caused by, first, Senator Durbin’s eponymous Amendment, and now, Judge Richard Leon’s Federal Reserve Board interchange interdiction.

  The Big Brands, Visa and MasterCard, continue to give the industry the silent treatment when it comes to questions about their proposed EMV debit application solutions and which might be issuer-worthy.  Their cover for going dark is the uncertainty caused by Judge Leon’s ruling and the FRB’s appeal.  This could go on for a year, maybe more. If it does, what do the PIN debit issuers do for EMV while they wait out the appeal process?

The payments industry has always functioned with a degree of uncertainty.  That uncertainty is managed by risk controls that consider the alternatives and then build solutions accordingly.  But in the case of EMV, that uncertainty is providing the Brands with deep cover against any unwanted scrutiny by the people outside of the Brands’ inner circles.  So we wait.  Until when?  Note that EMF Debit Working Committee meeting normally scheduled for Tuesdays was repeatedly canceled during July and August. Tough to have a conversation when one side won’t talk.

The waiting game is good for relationships, maybe.  It’s like surprises, which are good for our kids, our mates and our courtships.  But it has no place in business. 

 

Business abhors inertia. And surprises. We plan. 

We consider the possible alternative outcomes, assign probabilities to those outcomes and calculate the ‘expected value’ for any given outcome or situation.  So why is that not happening now?  Indeed, is this a case of ‘any port in the storm?’  Are the Brands rethinking their involvement in EMF?  What did they think they had to gain by joining an industry working group in the first place?

The Debit Working Committee of the EMF is soliciting agenda items for the September 17 and 18 EMF meetings in Dallas.  The Tag Group will present their proposed solution but is refusing to put that solution in writing until the Leon dust settles.  At least we’ll know what their proposal is and hopefully, be given the tools to know whether it’s something issuers can live. 

And the AID issue?  It will remain unknown at least until mid-September.  Of course, at that point in time, we’ll be two weeks away from the formation of CommonCo.  And launch of that entity should lead to a comparison of the AID solutions being proposed by SRPc, Visa and MasterCard. 

We’ve submitted an agenda item for the September meetings – to allocate time for the technology providers to show everyone the value their solutions bring to the industry.  We hope Debit Working Committee accepts this agenda item for the Texas meeting.

Time’s running out. As they say down in Texas, time to git all the liars ‘round one table…