APEX EMV Panel: U.S. Adoption Moving ‘At a Fast Clip’ (March 5, 2014)
Lawmakers in Washington, D.C., today are hosting the fifth in a series of hearings to discuss data breaches, their effect and possible methods to prevent them, as the All Payments Expo (APEX) wraps up four days of hot-topic discussions in Las Vegas, including payments security and fraud trends. Today the House Financial Subcommittee on Financial Institutions and Consumer Credit will hear testimony from consumer advocates and payment card security experts about data breaches and card security. Coincidentally, one question a panel of payment card industry experts discussed at APEX on March 3 was whether government intervention could possibly compel U.S. card issuers and merchants to speed up their adoption of EMV, which helps block counterfeit card fraud at the POS. 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 prepared to process transactions with EMV chips.
The U.S. began its shift in 2012 and issuers already are moving “at a fast clip” to position themselves for massive reissuance of credit and debit cards in a much shorter time frame than many other countries that previously made the shift to EMV, Philip Andreae, Oberthur Technologies’ director of field marketing for North America, told attendees. He suggested it’s unlikely that U.S. issuers, already finalizing the specifications of their EMV strategies now with 2015 as their goal, could accelerate that process easily. Andreae emphasized that U.S. issuers are taking a “chip and choice” approach to EMV, in which some issuers plan to roll out EMV cards that require a PIN and other issuers will support EMV cards with only a signature, at least at first. “Each issuer will make its decision according to its own preference [and business model],” he said. With tens of millions of EMV cards already in the manufacturing pipeline, experts estimate that one-half up to 80 percent of all payment cards could be EMV-compliant by October 2015.
Merchants also are making “good progress” on replacing POS terminals with EMV-capable hardware, said Philippe Benitez, Gemalto’s vice president of marketing and business development for secure transactions, North America. “As in other markets that shifted to EMV, we expect to see about 45 percent penetration of EMV-ready terminals by the liability shift date,” he said.
Even if all issuers and merchant aren’t EMV-compliant by the liability shift date, the U.S. will immediately begin to see benefits from the change, Carolyn Balfany, MasterCard’s group head, U.S. product delivery, told attendees. “What we’ve seen is that when you get to about a 60 percent penetration of EMV [cards and terminals] in a market, you begin to see the counterfeit card fraud rate begin to decline dramatically,” she said. “The U.S. is the largest and most complex market ever to migrate to EMV and participants already have been hard at work on the process for better than two years.”