The Europay, MasterCard and Visa (EMV) migration in the U.S. is underway, but complex migration guidance has created knowledge gaps among stakeholders in the card payment market.
Michelle Thornton is one of the people expected to be armed with answers for anxious credit union executives who still may be unsure about what the EMV standards — which replace magnetic stripes traditionally used by payments cards with embedded chips for authentication — will require of them, and when the requirements will go into effect.
Thornton is the senior product manager at CO-OP Financial Services, a credit union service organization that offers shared technology and other services for 3,500 credit unions. It's launched "Ask the EMV Expert," an online forum where credit unions can submit questions and receive replies from CO-OP. The "EMV expert" is Thornton, though she says a number of other experts from CO-OP and elsewhere will be made available to answer specific questions. CO-OP has also issued a white paper on EMV migration and will be holding webinars on the subject every four months, with the initial session on October 25 serving as an introduction to EMV, with subsequent sessions providing updates on new technology and announcements connected to the migration.
"A credit union can ask any question about EMV and we will respond and put that on our website. I will answer the questions and if I don't have the answer, I will go to our industry partners…if it's a question about the liability shift, for example, I have contacts at Visa that can clarify the timeframe," Thornton says.
Thornton says the free service just launched a few days ago, so there hasn't been enough activity to know what kinds of concerns about the migration are dominating the credit union industry. She says there are some general concerns that have come up in other venues regarding timeframe of the migration and the subsequent cost. CO-OP is also migrating its payments tech to comply with EMV standards, and passed its first EMV Visa compliance test and will next test MasterCard.
The major card networks — Visa, MasterCard and Discover — have all issued guidelines that pressure card issuers and merchants to adopt EMV compliance payments via a series of deadlines over the next few years-the deadlines differ from one card network to another. Card issuers and merchants that don't migrate won't be breaking the law, but will be held more accountable for fraud and theft connected to non-EMV compliance payments, such as those executed by magnetic stripe.
While the card networks have publicized the migration, there is still confusion, particularly down market among community banks and credit unions that don't have large compliance staffs and are also busy dealing with other card payment-related regulations such as the Durbin amendment. Also, the migration guidance and deadlines differ from one card network to another.
"There are a lot of concerns around 'when do I need to do this?'" Thornton says.
There has been a lot of discussion about the cost of migration and who will bear that expense as thousands of payment terminals are upgraded to accommodate EMV payments. Some early estimates put the cost in the billions nationwide, but those estimates have come down given the likelihood that most payment terminals will likely be replaced over the next few years to accept contactless payments, and naturally expiring payment cards will be replaced with EMV compliant cards.
"The questions are about the cost today versus the cost when the tech to support EMV becomes more standardized over time. After it's been in the market for a while, the cost should come down," Thornton says.
Other groups, such as the Smart Card Alliance, are also expanding EMV migration information sharing. The alliance, whose members include card manufacturers, payment processors and financial institutions, operates the EMV Migration Forum, an independent, cross-industry body to discuss issues that require cooperation and coordination across constituents in the payments space. CPI Card Group, which produces EMV-compliant payments cards, just joined the forum, which aims to align EMV implementation steps for payment networks, issuers, processors, merchants and consumers.
"One of our concerns is that this migration will be done in an orderly fashion and include the key requirements of all participants in the payments system. In other parts of the world the migration was led by governments or industry organizations that imposed conditions that got people focused … In the US we have a lot of different players and that makes the Smart Card Alliance and its formation of the EMV Migration Forum an important development," says Steve Montross, president and CEO of CPI Card Group.