Payments

Skepticism around EMV adoption continues, awareness required

The EMV adoption is gaining traction slowly and many retailers/merchants are implementing EMV enabled POS. But it is noticeable that in the U.S. adoption of the chip based payment card technology has been slow. However, recently retail players like Target and Wells Fargo have increased their efforts in adopting EMV. Verifone, a payment terminal provider in U.S., has made most of its terminals EMV-compatible. There are issues inhibiting widespread adoption of EMV in U.S.:

  • Merchants and concerned institutions have been compelled to upgrade their payment terminals in view of EMV otherwise they could be held liable when fraudulent cases occur after October 2015.
  • The overall cost for EMV transition has been estimated at $11 B. This is giving merchants second thoughts over upgrading the terminals.
  • There is concern that fraudulent activities might shift more towards online transactions especially in card-not-present (CNP) e-commerce transactions.

EMV

“The EMV Chip Specifications are designed to be flexible and can be adapted regionally to meet national payment requirements and accommodate local regulations. Our statistics indicate that the regions that have migrated to EMV chip technology are now close to offering full adoption of EMV terminals. Having this acceptance infrastructure in place is key to ensuring the creation of a secure and globally interoperable payment environment,” said Christina Hulka, current Board of Managers Chair.

EMV technology is capable enough to bring about effective security measures through in-builtas well as add-on features:

  • The chip technology can target fraudulent credit card problem since EMV cards cannot be cloned that easily.
  • In case of CNP transactions, EMV cards are equipped with security measures like one-time-passwords, on-card displays and others via personal card readers.
  • In case of online payments NFC readers as USB accessories for PC or NFC capable phones can be used for authenticating transactions.

The Payment Card Industry (PCI) Security Standards Council has already set the rule that merchants and financial institutions who have already adopted EMV will be protected against fraud liability effective from October 2015. With these rules leaving no choice for merchants and other players, what they can do for now is initiate the transition at a slow pace. They must focus on gaining more insights on what the technology actually has to offer. Merchants can also adopt mobile payments, through EMV-enabled mobile POS solutions, which would be more cost-effective to implement. The mPOS will add extra layer of security to the payment solution. EMV can become a powerful tool if combined with other technologies as well (like NFC).

"What's been most glaringly omitted so far is consumer education, EMV is a big change in payment habits," said Nick Holland, a senior analyst at Javelin Strategy & Research. "If consumers aren’t trained to use cards, you will have significant lag times in checkouts."

There is a need to show how the benefits of EMV transition can outweigh the issues merchants and other players in the market feel. Only then will there be a behavioral change towards EMV adoption. The road to transition is difficult but not impossible and can bear great results.

Ray

Ray has keen interest in the area of devices, OS and wireless technologies. He is a Mobile Technology enthusiast and believes that Mobility is going to completely change the way we do Payments and Commerce. He wishes to share this belief with the world by providing such content through LetsTalkPayments. Ray has done his engineering as well as MBA.

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