As the payments industry progresses through the first stage (POS terminals) of the EMV liability shift and gets closer to the second stage (ATMs), a lingering question that can be asked is: why would any card issuer not want to get certified for EMV?
The answer can be found in the benefits of migrating to EMV, a greater understanding of the challenges the industry has experienced in terms of usability or access, and how the industry has worked together to resolve those challenges posed by the movement to EMV.
To discuss the benefits of the migration to EMV, we must first step back and examine the environment that presented opportunity for fraudsters. As we have seen for the past several years, hackers have targeted the U.S. market due to its lack of EMV technology. The use of mag stripe cards in the U.S. market provided hackers with an opportunity to skim and create counterfeit cards.
The movement to EMV provides issuers the ability to push any card present fraudulent activity (on transactions over $25, as of the most recent Visa change) occurring on the account back to the merchant if the merchant did not get its POS terminals certified for EMV. Is it working? Yes. According to Visa, some of the biggest merchants who are EMV certified have reported an 18% reduction in fraud as of April. These steps have instilled confidence in consumers that issuers and merchants are working to reduce the occurrence of fraud.
The second area to address for those issuers still on the fence is the challenge associated with the migration to EMV. The education required of consumers and merchant staff remains an industry opportunity. Some issuers did a great job educating their cardholders with inserts in statements, important information on the card carrier and updates to their website. However, others did not provide enough valuable actionable data to cardholders and as such created increased inquiries to their financial institution. And, on the merchant side, the perceived increase in time it takes to process an EMV transaction is a consumer complaint to address.
How is the industry working to resolve these challenges? First, many issuers are re-purposing best practices of those institutions that created successful education programs around the EMV migration. They are learning that continuous education on the migration will alleviate calls and visits to the institution and increase consumer satisfaction. On the merchant side, the associations are working to implement Quick chip and M-chip. This process is expected to speed up the checkout line as the EMV card will just be inserted and removed versus inserted and left until completion of the transaction.
All things considered, should any issuer still be hesitant to migrate to EMV? The answer is ‘no’ as the industry is moving to more secure transactions via EMV on the card present side and tokenization on the card not present side. If an issuer is not keeping current with these newer payment technologies, it should expect a reduction in transactions and loss of cardholders as consumers are becoming more educated on understanding how essential these technologies are to protecting their data.
Dr. Arthur (Art) Harper is the director of card payment solutions at PSCU.
