U.S. card issuers may one day adopt EMV chip-and-PIN technology, and they also are taking an interest in Near Field Communication technology for mobile payments. But mixing the two technologies may not work, says one industry observer.
“Personally, I think it’s a mistake to make a decision to 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, tells PaymentsSource.
More than one panelist at the organization’s annual conference in Chicago suggested EMV migration in the U.S. might be accomplished by skipping directly to handsets and bypassing plastic cards.
But it remains unclear exactly how NFC will alter the payments landscape, Vanderhoof suggests.
“The global market is still just feeling its way through the mobile space,” Vanderhoof says . “The mobile payments market introduces a whole new layer of complexity and challenges because of the other players that don’t exist in the traditional space.”
Indeed, Google Inc. on May 26 announced plans to test an NFC-based mobile wallet with partners including MasterCard Worldwide, Citigroup Inc., First Data Corp. and Sprint Nextel Corp. Apple Inc. is also rumored to be involved in separate NFC mobile-payment plans.
Isis, a joint venture between AT&T Inc., T-Mobile USA and Verizon Wireless, is set to begin its first major test in Utah.
NFC’s primary obstacle so far has been determining how the card brands, issuers, mobile operators and handset manufacturers will divvy up transaction revenues, observers say.
“To consider incorporating all of those unknowns at the same time as you’re making a major change in the core infrastructure [with EMV] would be a mistake,” Vanderhoof says.
He concedes mobile payments technology will likely play some sort of role with EMV in the next five years.
“My consideration would be to do some analysis of what would be the incremental costs of adding contactless capability to any EMV rollout,” Vanderhoof says. “That will ensure some future proofing for mobile if mobile becomes another important part of the payments ecosystem in the next five years.”
