Visa: U.S. EMV Migration Gains Broader Awareness, Momentum (Feb. 5, 2014)
Momentum has accelerated in recent weeks for the U.S. shift to EMV, driven by growing public awareness of the need to enhance card security, Stephanie Ericksen, Visa’s head of authentication product, told attendees today at the kickoff keynote address at the Smart Card Alliance’s 7th annual Payments Summit in Salt Lake City. One benchmark of chip cards’ rise from relative obscurity in the U.S. a few years ago to a current topic of mainstream discussion is TV networks airing clips from this week’s Senate subcommittee hearings on safeguarding consumer financial data, Ericksen said. “It’s an example of how quickly people have become educated about the U.S. move to EMV and where we’re going,” she added.
The U.S. payment networks have set October 2015 as the date for shifting liability for fraud from counterfeit cards to the party that is not EMV-compliant, and progress has been slow but steady, Ericksen said. The urgency to convert to EMV from magnetic-stripe cards is rising, she noted, because counterfeit card fraud tends to migrate to markets with weaker protections. U.S. counterfeit card fraud rose 300 percent between 2004 and 2011, as markets around the world broadly adopted EMV, according to Ericksen.
But the U.S.’s size and scale—plus the experience of other nations that shifted to EMV—suggest it may take up to six years after the liability shift takes effect for EMV cards to reach 90 percent penetration here, she said. That is one reason Visa supports a chip-and-signature authentication and authorization approach to EMV, rather than the chip-and-PIN method many countries used when introducing EMV years ago. “Chip-and-PIN was invented for markets with offline authorization requirements, and today it doesn’t make sense for an all-online market. It certainly doesn’t make sense now for the U.S. We really strongly believe in chip-and-signature from a business point of view, for implementation, cost and speed and also for the cardholder experience,” Ericksen said.
Issuers now are ramping up for broad EMV issuance in the U.S. over the next 12 to 18 months. About 6.6 million Visa EMV cards already are in circulation in the U.S. and 95 percent of U.S. processors have certified and upgraded their platforms for EMV, according to Visa. One issuer moving quickly to embrace EMV is Target Corp. John Mulligan, Target’s chief financial officer, on Feb. 4 presented testimony to the Senate Judiciary Committee at a hearing on preventing data breaches and cybercrime. He announced that Target is fast-tracking its own migration to EMV cards, investing in chip technology for its decoupled debit Target REDcards and its stores’ POS terminals. “We believe that chip-enabled technologies are critical to providing enhanced protection for consumers,” he said, noting that Target is a founding member of the Smart Card Alliance’s EMV Migration Forum.