Acknowledging the growing movement toward EMV chip-and-PIN technology in the U.S., most card-security professionals believe banks eventually will move away from issuing magnetic stripe cards, albeit slowly, a new survey report suggests.
For the report, Aite Group in April surveyed 76 North and South American card-security professionals at the MasterCard Worldwide Global Risk Symposium.
Less than half the respondents believed EMV migration in the U.S. could take five to seven years, while 55% believed it would take longer than seven years.
Still, overall pessimism about the U.S. migrating to EMV cards has decreased significantly over the past two years, the research found. Some 17% of respondents believed the U.S. never would embrace EMV compared with 36% who said so at the same MasterCard conference in 2009.
U.S. issuer risk-management executives that participated generally did not believe fraud losses would drive migration to EMV in the near term because credit card losses have been flat over the past few years.
The general lack of U.S. merchant acceptance of chip cards also remains a major obstacle to EMV adoption, the report says, noting most merchants do not see a compelling business case to upgrade their point-of-sale terminals to accept EMV payment cards.
Wal-Mart Stores Inc. is one of the few merchants equipped to accept EMV in the U.S. and has expressed the belief the technology brings the highest level of security to in-store payments (
Indeed, most survey participants believed EMV would have a major impact in reducing card-fraud losses over the next three years worldwide. Some 73% of respondents rated the technology as having a “high-to-very-high impact” in preventing fraud. So-called “end-to-end” data encryption also received high marks, with 65% of respondents rating it similarly.
Card-security professionals are more bullish regarding mobile Near Field Communication payments adoption in the U.S.
Some 53% of respondents believed NFC will make inroads within the next three to four years, while 23% believed it will happen in the next one to two years. Only 7% of respondents believed NFC never will be a factor in the U.S.
NFC as a fraud-prevention mechanism received high marks from respondents, as 42% believed the technology could protect sensitive information better than mag-stripe cards do.
Some observers have discussed an eventual marriage between NFC and EMV. And panelists at the Smart Card Alliance’s conference in May suggested skipping directly to handsets and bypassing issuance of new plastic cards could better accomplish EMV migration in the U.S. (
At least one observer believes that would be troublesome.
“Personally, I think it’s a mistake to make a decision to [delay a] move to EMV in some form or capacity [because of] what’s going to happen in mobile payments,” Randy Vanderhoof, executive director for the Smart Card Alliance, told PaymentsSource in a May interview.
In the near-term, Aite suggests industry players should prepare for a payments environment in which the mag stripe’s relevance has disappeared.
“Whether the replacement is EMV, NFC or a combination of the two, industry stakeholders believe the mag stripe’s useful days are numbered,” the report says.
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