The massive transition to update magnetic stripe cards to EMV by the October 2015 liability shift has raised many questions. Some of those key questions can already be answered, through the work that technology providers are doing to pave the road for a smooth transition and to enhance security out in front of the mandated shift.
Question: Even though international travelers may use them, what are the benefits to U.S.-based cardholders from EMV, when there are no places to leverage the technology here?
Answer: The EMV migration is much more than just a card upgrade for the United States' payment system. It's a holistic transition for consumers, merchants, credit unions and other card issuers, and a necessary change to curb the startlingly high rate of card fraud in this country. As countries such as Canada and the U.K. migrated to EMV, they noted significant fraud reductions.
Now there is an incentive for U.S. merchants to upgrade their terminals. They will want to stay ahead of the October 2015 liability shift. With the shift, the party in a transaction (merchant, issuer or otherwise) that has deployed the "weakest" technology will become liable in case of a fraudulent transaction.
Question: Why should the U.S. bother implementing EMV when mobile payments could eliminate the need?
Answer: Mobile payments technology is launching in parallel with EMV, and is complementary, but will not replace cards in the foreseeable future. Similar to how cards haven't eliminated the need for cash, mobile payments won't eliminate the need for cards. Rather, we will continue to see the coexistence of multiple payment methods, including other new technologies that will continue to emerge. But as cards will continue to be used for many years, it's important that we implement EMV technology to heighten the security capabilities during these everyday transactions.
Question: How have EMV rollouts for consumer and business credit card customers been different, in terms of timing?
Answer: Many issuers started rolling out EMV with business or travel reward credit cards; first because travelers were experiencing acceptance problems at merchants in EMV countries that refused to take magnetic stripe cards. And since those cards have a higher level of spend than traditional consumer payment cards, providing dual-interface or contact EMV cards to those users was a logical first step for issuers to begin their migrations. Since then, EMV adoption has taken off all over the world, including the U.S.
Question: Are EMV cards with magnetic strips on the back still vulnerable to skimmers? Wouldn't that bypass the enhanced security features of EMV?
Answer: No. Even though EMV cards have a magnetic stripe on the back, they are not vulnerable to skimming fraud. The difference with an EMV mag strip card is that the card's data includes information that identifies it as a chip card, making it undesirable for fraudsters. If the card were to be duplicated on a plain mag strip card and used at an EMV terminal, the terminal would say "insert chip," thereby making that fraudulent card unusable.
Question: Wouldn't it be prudent to delay the debit/EMV transition until after the Durbin settlement?
Answer: While some argue to delay EMV migration until the debit routing requirements are established, members of the EMV Migration Forum emphasize the importance of continuing to move forward while the final regulations are still being worked out. Stakeholders can focus on a number of crucial prefatory items, such as making sure teams are educated about EMV technology, making key technology decisions, migrating credit card portfolios and exploring the institution's options for next steps, even in the face of incomplete information regarding the impacts of new legislation.
Question: Issuers are preparing, but are merchants fully aware of the impact that EMV will have on them?
Answer: We've found that all the big-box merchants are talking about EMV. The caveat is that the migration won't happen overnight, as there's a five-year average reissue cycle for point-of-sale terminal upgrades.
Philippe Benitez is VP of marketing at Gemalto.
