Mobilizing EMV in the US
By Karen Cox, vice president of payment and retail solutions, Moneris
Soon, U.S. consumers will be "dipping" and "tapping" their credit and debit cards at the register instead of "swiping," just like consumers in other parts of the world. To combat fraudulent card transactions that continue to plague businesses across the U.S., banks have been rolling out Europay, MasterCard, Visa (EMV) cards, or "chip cards." allowing consumers to make more secure transactions. Why? On October 1, 2015, liability shift will apply to all U.S. merchants. Liability shift simply means that if a Chip capable credit or debit card is presented at a terminal that cannot process it as an EMV transaction, the merchant becomes responsible for any fraudulent transactions.
Although some in the U.S. doubted the move to EMV when it was first announced in 2011, the Payments Security Task Force estimates that close to two thirds of general purpose credits cards will be chip-enabled by the end of 2015. Wells Fargo/Gallup Small Business Index found that amongst business owners who report accepting point of sale card payments, only 31 percent say they can accept a chip card, while a whopping 51 percent of those surveyed reported being unaware of the impending liability shift.
With the transition to EMV payment technology, some questions have arisen as innovations including mobile wallets like Apple Pay, Android Pay and Samsung Pay are being introduced in market at the same time. How these technologies interact and with increased consumer adoption of mobile wallets, may drive merchants to enable contactless or Radio Frequency Identification (RFID) functionality in their POS system(s) during the implementation process of EMV. POS terminals today come equipped with RFID capability, which is required for Apple Pay and Android Pay acceptance. What many don't realize is that as part of their overall security, these mobile wallets leverage EMV technology standards. Samsung Pay does have a magnetic stripe solution that may remain relevant as long as magnetic stripe only terminals continue to exist in the U.S.
The chip card difference
EMV chip-enabled cards may take some time to become standard among American consumers, but just as Canada and Europe learned to adopt EMV technologies, Americans too will realize how simple it is to use chip cards. Similar to magnetic-stripe cards, EMV cards are processed for payment in two steps: card reading and transaction verification. The difference involves card insertion: instead of swiping the card, consumers will insert or "dip" the card into a terminal slot rather than having the merchant slide it through a card reader. Once the data is read, consumers will be asked to either enter a PIN number to verify their identity or authorize the purchase with a signature, completing the transaction.
Chip cards provide the added security that merchants and their customers want. Every time the card is used at an EMV-certified terminal, the chip generates a unique code that is sent to the issuing bank in the authorization. This cryptogram generation uses static or permanent data from the card, but also uses unique transaction data that is validated by the issuer. This makes card cloning extremely difficult and unlikely. Mercator estimates that by 2016, U.S. consumers will complete EMV transactions totaling $950 billion using credit cards alone.
EMV and mobile payments go hand-in-hand
As consumers continue to adopt EMV payments, mobile and contactless solutions will also become more commonplace in the U.S. The global security standards for EMV and contactless payments intertwine with innovative mobile implementations that incorporate even more security such as biometrics. According to Deloitte's annual "Technology, Media & Telecommunications (TMT) Predictions" report, around 32.5 million smartphones will be used to make a mobile payment at least once a month by the end of 2015, up from less than 2.5 million in mid-2014.
The surge in EMV adoption will better position mobile payments that leverage these standards to gain more ubiquitous acceptance in a relatively short timeframe by employing the card brand contactless footprint of acceptance in place, much like Moneris recently launched PAYD Pro. PAYD Pro is an EMV-enabled mobile point-of-sale solution. The PAYD Pro PIN pad is coupled with an intuitive mobile app that allows businesses to enhance cash flow, access real-time reporting and send digital receipts in an instant via email. Tools like this empower entrepreneurs and business owners to grow their businesses by serving the increasingly mobile customer through EMV solutions.
Chip-based payment platforms like PAYD Pro offer an integrated and convenient experience for both consumers and merchants to easily utilize and accept mobile wallet, contactless and chip card payments. This enables consumers to pick the method of payment that works for them without sacrificing the secure technologies that EMV provides.
Be payment ready with emerging payment technologies
With credit card fraud at an all-time high with $8.5 billion in annual fraudulent credit card transactions experienced in the U.S. alone, it's time for the U.S. to make the move to EMV as a foundational payments security layer. Canada is ahead of the U.S. in EMV–where Moneris played a major role in successfully transitioning more than 95 per cent of their 350,000 merchant locations–and saw significant drops in credit card fraud after implementing EMV technology. EMV is a crucial step to curbing card fraud in the U.S., and mobile payments are one more way to implement this advanced new industry standard.
While EMV may seem like a daunting, time-intensive and costly transition, both merchants and consumers will reap the security benefits of this card technology and gain peace of mind knowing they are doing the most they can for their customers. Merchants that do not implement EMV may signal a lax attitude towards payment security and influence how their customers feel when they present their card. Check EMV off the list by turning to a partner that can help make the implementation of EMV seamless. The October 2015 liability shift is not avoidable, but the burden of a potential breach is.