U.S. Wary of Repeating Europe's Mistakes as EMV Advances

One of the biggest problems American travelers faced when chip cards became mainstream in Europe was buying tickets at self-serve kiosks in train stations. With no ticket attendant, travelers risked becoming stranded because their mag stripe cards weren't recognized.

Faced with the same potential problem in the U.S., Las Vegas-based terminal maker SlabbKiosks is casting a wide net while waiting for Chip and PIN cards to became the main way to pay.

"The issue has always been there in some way, shape or form, but now it's clearly defined with the risk associated with not addressing EMV," said Mike Masone, Sales Director at SlabbKiosks, which is in the midst of a major project to update its 27,000 kiosks at parking lots and other ticketing venues to accommodate chip and PIN, chip and signature, NFC and magstripe payments.

With the card network-imposed liability shift about six months in, the EMV migration is still posing more questions than answers, particularly for specific merchant categories such as restaurants. Self-serve venues such as parking lots and ticketing booths, which don't have staff on hand to help consumers, also face challenges such as threats from human attackers as well as Mother Nature.

"Our customers are scrambling for clarity on this," Masone said. "The unattended devices have to be physically more durable to handle rain and snow, but also be durable against attacks such as someone trying to steal a PIN pad. There's chip and PIN and signature and an NFC reader, so there's really no way that you cannot pay at this device,"

There's also different legacy technology on the kiosks.

"There may or may not be a PC inside the kiosk," said Greg Burch, vice president of strategic initiatives at Ingenico. SlabbKiosks is a member of Ingenico's unattended partner program, which launched in January to address the EMV and NFC migrations, among other concerns.

Ingenico's goal is to place EMV and mobile contactless capabilities on unattended kiosks, but also maintain magstripe as an option. For devices that have a PC, a download can handle the upgrade and connect the device to a processor or gateway partner, while non-PC terminals require a manual upgrade to add a connected device.

The upgrades also add protection—if any part of the device is tampered with, such as the PIN pad—the entire system shuts down to prevent fraud.

The array of options enables kiosk operators to accommodate the gradual EMV migration, with some vendors moving slower than others, while others opt for Chip and Signature over Chip and PIN.

While Chip and PIN and contactless acceptance are widespread across Europe, the same 'stranded' problem is less likely in the U.S. if a range of options is available, according to Gareth Lodge, a senior analyst at Celent.

"One thing that isn't on [European readers] is magstripe, but that then that applies to pretty much any payment device in Europe," Lodge said. "Pretty much all magstripe swipes globally are U.S. only."

While there's some debate, Chip and PIN is considered more robust than Chip and Signature as a security option while Chip and Signature has fewer hurdles to adoption. Given the broad concerns over security and the challenges for self-serve kiosks, Burch anticipates an uptick for Chip and PIN that will remove some of the confusion going forward.

"As we move into next year we will see more [Chip and PIN] cards," Burch said.

Unattended kiosks are known to be complicated, which is one reason why gas stations have two extra years to become EMV compliant, said Michael Moeser, director of payments at Javelin Strategy & Research.

"While many stations are manned, the attendant is typically working in the convenience store selling merchandise and handling the occasional fuel pump sale," Moeser said. "Now imagine if all eight pumps at the station were unable to handle EMV transactions, forcing every single customer to leave their vehicle and go into the store to complete the transaction. It would cause such a problem that most customers would leave the station in frustration and never return."