What is EMV? What does it mean for the average Jack and Jill on the street? What does it mean for merchants everywhere? Some of those questions are easy to answer. Some lie in a bit more of a gray shady area. So, with the count down coming to a close on the United States’ decision over adopting the EMV standards; we will try to shed some light into the looming shadow of EMV.
Let’s start with the number one question for most people. What is EMV? EMV is a set of security standards for processing and transmission of card payment data. These standards are already widely used throughout Europe and Asia. The essential goal of the EMV standards is to ensure a global interoperability and acceptance of secure card payments. In English, a set of card processing rules that make processing easy and secure regardless of where you are, at home or in another country. EMV is an acronym of the original creators of the standards, Europay, MasterCard and Visa. Although these three groups started the process; all major card brands now back EMV.
EMV was introduced 15 years ago and has evolved from a simple data chip program to include EMV contactless readers and possible standardized payment tokenization. However at the moment the focus here in the United States is getting everyone agreed on EMV’s chip and PIN interoperability. EMV “chip and PIN” cards that require the customer to supply a 4-to-6 digit personal identification number (PIN) when making a purchase at PIN-capable terminals. The chips in these cards feature “PIN” at the top of the list of possible cardholder verification methods (CVM), but with a fallback option to signature (or even no verification at unattended terminals). That is EMV.
What does it mean to card holders? It means you will be getting new cards to put in your wallet. These new cards may or may not have a magnetic stripe across the back. It means you will have to remember a new pin number (4 to 6 digits) in order to buy anything, except online- there is no pin needed for that. Pin and chip cards help reduce card present fraud to almost 0%, but offers no such benefit for card-not-present transactions.
What does it mean to the merchant? Yes, it reduces fraud for you as well, but that is about it. It will not speed up transaction times. It will not lower your merchant fees. It may, however, cost you money. Here in the United States, where EMV has not been adopted, most of the existing terminals in most businesses are not EMV compatible and will need to be replaced. What will failure to update your equipment mean? I am not sure. Most certainly a grace period will be given to all merchants upgrade, but after that I would assume some sort of PCI non-compliance fee/fine will be issued against your account. What does the switch to EMV mean for merchants using mobile devices like smart phones and tablets- will they have to buy a new phone or tablet to accept EMV and be compliant? Most likely no, your mobile app will upgrade with the change.
In fact, many representatives in the payment industry believe that the implementation of EMV in the U.S. will cause many consumers to ditch their plastic cards in favor of mobile payments, a survey released by ACI Worldwide suggests. The survey, taken at the 2013 ACI Americas Exchange conference earlier this month, found that nearly half (49%) of the respondents from the payment industry said that they believe customers switch to mobile payments from physical cards after EMV implementation. The implementation of the EMV standards will be decided in October 2014 here in the United States as to whether we adopt these standards or not.