Much has been said recently in the news about the “Chip Cards” which are known in the industry as EMV (Euro MasterCard, Visa). EMV was originally developed in Europe and was launched/adopted in Canada as a means to authenticate a card present transaction thereby reducing fraud at the counter. I mention the counter because EMV is essentially chip read and will require initially signature and eventually pin as adoption increases between all parties – issuers, processors, merchants and consumers.
Originally the plan was for widespread adoption of EMV by October 1, 2015 when EMV was announced. Unfortunately as we roll closer to that date – it certainly will not occur for a number of reasons which I will summarize below;
• Card Issuing Banks – They are the banks that issue credit & debit cards. They face significant costs in issuing cards, the typical magnetic stripe card costs a bank in the neighborhood of $25.00 fully loaded – card number issuance, plastic embossing, mailing, etc. A chip card is significantly more expensive that magnetic stripe to produce and the early EMV cards will consist of both magnetic stripe and chips to provide flexibility of use at the point of sale for consumers.
• Card Acquirers (Payment Processing Companies) – They are in the midst of gathering the data requirements to support EMV and need to essentially program their networks to support chip based data. As they write the “certification code” essentially they will then decide which hardware “payment devices” will be certified for EMV initially with additional hardware being certified at later dates.
• Hardware Device Manufacturers – Payment Terminals & Devices – typical examples are Verifone, PAX, Ingenico, Magtek, etc. have all created “EMV Capable” terminals, peripherals, but capable means just that. It does not mean they are EMV certified and will be ready to handle EMV transactions day 1, week 1 or month 1 of a processors launch. There will be a certification queue to validate a terminal and/or peripheral to be certified to support EMV transactions. Be very cautious of any payment processing professional saying “this terminal is EMV certified” because that would be incorrect.
• Consumers – right now, pull out your credit & debit cards in your wallet. How many have chips on the front of them? Did you recently receive a new card that did not have chip? If the answers are no chips in my wallet and my new card was only magnetic stripe enabled, then you are the majority of card holders. As I started off these bullets with “Card Issuing Banks” the cost is significant. Some issuers have started deploying chips cards but those are on their high earning card accounts – typically commercial level on the business side or high spend on the consumer such as “Black, World Elite” type cards.
• Merchants – now onto YOU. You are certainly not the last but it was worth covering the landscape ahead to then relate to what you can expect. Remember you are a consumer so recall the above first. Now onto the business end of your life – the card acquirer is determining which devices will be EMV certified in phase 1, 2 and on. So we waiting for what hardware device before a recommendation can be made towards you. As of today we await!
As the EMV certifications roll out, you have the commitment from me and my organization to relate details to you. As hopefully the choice will be more than one, our ideal solution will be a device that can support EMV, magnetic stripe and even NFC (Near Field Communications). What is NFC? You have heard of Apple Pay, MCX, Google Wallet, those are all NFC enabled mobile wallets.
I hope this clears up some of the mystery surrounding EMV. Unfortunately misinformation does exist in the market and if someone communicates with you about a terminal right now being EMV certified, as mentioned above, it would be worth questioning them further or reach out to me for clarification. For those of you using software that is integrated for payments, most certainly be careful as devices that route via a payment gateway are not the same as a countertop credit card terminal. SSA
Joe Radest started his career in card payments in 1998 working for the industry giant First Data. Since FDC, Joe has worked with other notable processors – TSYS, Global Payments and Chase Paymentech. Nearly 3 years ago, Joe branched out on his own; providing complete end to end business process management and secured payment technology solutions, which affords business clients the ability to securely transact payments without having sensitive data touching their environment. He can be reached by phone at 770-731-0414 or by email at [email protected]