On any given day, there are countless articles circulating about the issues associated with EMV and how it will soon be replaced by the next big thing. However, EMV is here to stay, and, despite some who claim otherwise, that’s a good thing.
Yes, there are challenges that accompany the shift to EMV. Networks, financial institutions and merchants expend significant amounts of time and money upgrading software, ATMs and POS terminals, and retraining their staff.
Consumers must adapt to inserting a card at the point of sale instead of swiping and then wait what can seem like forever before they can remove the card. To add to the frustration, consumers will insert their card at some retail locations while still swiping in others. Consumer behavior isn’t something that changes quickly or easily. However, even in the face of these challenges, the pros of EMV far outweigh the cons.
One important, but often overlooked, benefit of EMV is interoperability. The U.S. is part of a global economy; it is not an island unto itself. People travel all over the world for business and pleasure, so it makes sense that the major payment networks stress the importance of interoperability.
The U.S. accounted for about half gross card fraud losses worldwide last year. In addition, the U.S. is the source of a tremendous amount of cross border fraud. Overseas issuers may decline transactions initiated at U.S. terminals that are not EMV-capable because they don’t want to accept the risk. As the U.S. continues to adopt EMV, cross border fraud losses will diminish, and authorization rates for cross border transactions will increase.
While we’re on the subject of fraud, an obvious benefit of EMV is the reduction of counterfeit card fraud in card-present transactions. Fraudsters will target the most vulnerable businesses, which will be those without the protection of EMV.
As more businesses convert, those that resist will become even more attractive targets. This is especially alarming since many of those that are slow to adopt EMV are small- to mid-tier merchants, for whom post-liability shift chargebacks might mean the difference between staying in business and closing the doors. To those who believe “it can’t happen to me” – it can, and it will. Why would you walk through a dark alley at 3 a.m. and assume you will be safe? Why would you resist implementing EMV and assume you won’t be the victim of fraud?
EMV also serves as the foundation for many emerging payment technologies. Although some may claim that EMV is archaic because it has been around for several decades, EMV has survived because it has proven to be successful. If you want to take advantage of other technologies that rely on the same dynamic authentication principles as EMV, it’s essential to first establish a strong foundation; it’s also a good idea to learn how to walk before you try to run. U.S. payments industry stakeholders that do not fully embrace EMV will find it more and more difficult to support newer technologies, and new forms of payment, as they become available.
EMV is inevitable. Despite the challenges associated with the change, EMV is a major weapon in your anti-fraud arsenal, and a building block for even more secure payments in the future. Don’t be left behind.
Deborah Spidle is a director at Paragon Application Systems.
