ORLANDO — To hear Canadian payments experts talk about the EMV smart card conversion that took place in their country three years ago, one mantra comes to mind: “He who hesitates is lost.”
The overriding message from a panel of experts sharing experiences and providing advice to attendees May 10 at the annual Card Forum and Expo here was that U.S. issuers and acquirers need to get cracking now in the EMV adoption planning process in order to meet card brand deadlines in 2015.
Outside the U.S., the major card networks in recent years established deadlines and liability shifts regarding the conversion to more-secure EMV card technology, which blocks most counterfeit card fraud by preventing replication of data stored on magnetic-stripe cards.
Visa last year announced incentives to encourage U.S. issuers and merchants to shift to EMV (
Three years is not a lot of time to prepare for such a massive conversion within a large market like the U.S., said Michel Chalifoux, former chair of the Canadian Chip Trial Steering Committee.
If competitors within the payments industry agreed on various aspects of how they want EMV to work in the U.S., it could go can a long way toward making the adoption process easier, Chalifoux said.
Debate continues to swirl about whether the U.S. will follow a chip-and-PIN route, the most common global standard, or whether issuers will require only a signature to validate transactions (
Competing U.S. PIN-debit network operators, concerned about a variety of challenges EMV adoption poses, last month announced formation of a working group to smooth the path to adoption (
However, the key element in EMV adoption remains early planning for issuers and acquirers, Chalifoux noted.
“If you haven’t already started planning, you will want to get started in early 2013, or you will be considered already lagging behind,” he said.
Robert Hayhow, vice president of POS Product Development for TD Merchant Services, warned that testing of merchant terminals and other aspects of the payments network for EMV acceptance is a time-consuming process.
“Get out to your merchants and explain the project, because sometimes it is tough to get all of the merchants through the certification cycle,” Hayhow advised. The acquirer should be asking merchants when they plan to upgrade equipment and explain that is a perfect time to convert or upgrade to EMV-capable equipment, he said.
“Merchants need to know that consumers are going to be calling and asking why the merchant doesn’t have EMV terminals, and the consumer will think that merchant doesn’t care about security,” Hayhow said.
Much in the same manner that Canadian payments experts can help advise those in the U.S., the Canadian issuers and processors received valuable guidance from the United Kingdom during Canada's conversion, Shirley Matthews, head of product platform for Visa Canada, told attendees.
UK advisers also stressed that EMV projects take much longer than expected, Matthews said, but they added a different twist: Lack of funds can slow things down.
“A big challenge is making sure the bank has the funds to address the EMV conversion project,” Matthews said. “You have to do this project in phases and keep the executives at the issuing bank updated as to what is going on.”
Chalifoux echoed that sentiment. “This is the largest project the bank will face in the next four to five years,” he noted.
However, the U.S. payments landscape “is not in bad shape” for the conversion because many U.S. processors and issuers have EMV expertise from their operations in other countries, Chalifoux noted.
Appropriate marketing and communications with customers is also important as issuers begin issuing EMV cards, the panelists agreed.
“The biggest challenge it seemed was customers leaving their cards in the EMV reader device,” said Oliver Manahan, vice president of Emerging Payments at MasterCard Worldwide, who was previously vice president of chip initiatives for Visa Canada.
Consumers used to swiping magnetic cards will have to be taught how the EMV card inserts into a reader, and that in some cases the card must stay in the reader until the transaction is complete, Manahan noted.
In addition to explaining the physical process of using EMV cards, issuers must be careful in how they market EMV cards to consumers.
“You need to say you are making a secure payments system even more secure, rather than painting a picture that mag-stripe is a terrible system,” Manahan suggested.
Chalifoux warned issuers that if they promote EMV too heavily as “the greatest thing,” the customers would make “a mad rush to get the card the first day it is available.”
“Obviously, you have to phase it [card issuing] in,” he added.
The panelists felt that they encountered few problems with consumers working with a chip-and-PIN card, even though initial fears centered on the customer potentially forgetting the PIN.
“People figured out the PIN aspect fairly quickly,” Manahan said. “Remembering PINs is not that big of a deal, mainly because we have PINs for everything from our cards to opening our garage doors,” he added.
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