Saturday, January 17, 2015

EMV migration in the US.

The inertia building up among card issuers in the US toward EMV chip card migration has become significant. However, the executive order passed by President Obama in October of this year to help speed up adoption of EMV-compliant cards ready for the country to make the transition to the EMV standard by October 2015 has done much to drive awareness and convince card issuers that it’s time, finally, to make the switch.
Of course it’s not entirely the fault of the US payment industry that EMV has been left sidelined for so long. With the game-changing entrance of Apple into mobile payments, demand and the pull of the consumer is essential for the success of any new technology or form factor – even if, as in the case of EMV, that technology is about protecting the consumer from fraud.

A series of high-profile fraud attacks that have resulted in loss of payment card details as well as others leaked data scandals not directly related to the payment industry is creating a perfect storm that is driving awareness among consumers of the need for new measures to protect their payment data.
Speaking to PCM at Cartes, Cathy Medich, director of strategic programmes at the EMV Migration Forum, explained that there would be 120 million EMV cards in circulation by the end of 2014 and that this number would likely triple over the next two years. A number that still pales in comparison to the estimated 1.6 billion EMV-compliant cards in circulation around the world at the moment.

It’s still too early to sound the bell for the death of the magnetic stripe. True to form, the scale of the US marketplace and a tradition of US exceptionalism means that while chip and PIN will become commonplace, use of PINs to authenticate payments transactions will remain optional.
Karen Czack, vice-president of global chop products at American Express explained that, despite heightened consumer fears around payment security, there are still considerable obstacles to overcome in convincing consumers to switch to chip and PINs that will take time to address.

Oliver Manahan, vice-president of emerging payments at MasterCard, drew attention to some recent research carried out earlier this year to assess the potential of EMV among US consumers. Speaking at the conference he remarked: “Consumers will start to identify not accepting chip cards as an unwillingness to protect consumer data consumer sentiment is shifting.” 
Interestingly, with the proportion of EMV transactions accounting for only around 0.3%, the company’s market research revealed that 15% of consumers polled in their survey said they would consider changing their bank for one that issued chip cards. An even higher proportion of consumers – 32% said that they would prefer to shop at a chip and PIN retailer. Concerns around lack consumer awareness of EMV might therefore be over- reached.

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