By Joe Radest
Senior Vice President of Sales
March 30, 2015
Much has been discussed recently in the news and in publications about the “Chip Cards” which are known in the industry as EMV (EuroPay, MasterCard, Visa). EMV was originally developed in Europe and was launched/adopted in Canada as a means to authenticate a card present transaction thereby reducing fraud at the counter. I mention the counter because EMV is essentially chip read and it will initially require a signature and eventually a pin as adoption increases between all parties – issuers, processors, merchants and consumers.
Originally the plan was for widespread adoption of EMV by October 1, 2015 when EMV was announced a few years back. Unfortunately, as we roll closer to that date, I believe it certainly will not occur for a number of reasons:
- Card Issuing Banks– These are the banks that issue credit and debit cards. They face significant costs in issuing cards. Consider that the typical magnetic stripe card costs a bank in the neighborhood of $25.00 fully loaded – card number issuance, plastic embossing, mailing, etc. A chip card is significantly more expensive than magnetic stripe to produce and the early EMV cards will consist of both magnetic stripe and chips to provide flexibility of use at the point of sale for consumers.
- Card Acquirers (Payment Processing Companies)– Acquirers are in the midst of gathering the data requirements to support EMV since they will need to program their networks to support chip based data. As they write the “certification code,” they will then decide which hardware “payment devices” will be initially certified for EMV with additional hardware being certified at later dates.
- Hardware Device Manufacturers– The Payment Terminals & Device manufacturers – such as Verifone, PAX, Ingenico, and Magtek — have all created “EMV Capable” terminals and peripherals. But capable means just that. It does not mean they are EMV certified and will be ready to handle EMV transactions day one, week one or month one of a processor’s launch. There will be a certification queue to validate a terminal and/or peripheral to be certified to support EMV transactions. Be very cautious of any payment processing professional saying “this terminal is EMV certified/compliant” because that would be incorrect.
- Consumers– That’s you and me. Right now, pull out your credit and debit cards in your wallet. How many have chips on the front of them? Did you recently receive a new card that did not have chip? If the answers are no chips in my wallet and my new card was only magnetic stripe enabled, then you are the majority of card holders. As I noted in the first bullet, the cost for chip cards are significant for the “Card Issuing Banks.” Some issuers have started deploying chips cards but those are on their high earning card accounts – typically commercial level on the business side or high spend on the consumer such as “Black, World Elite” type cards.
- Merchants – Ah, now onto the majority of the audience of this piece. You are certainly not the last, but it was worth covering the landscape first to then relate to what you can expect. Remember you are a consumer, so recall the above first. Now onto the business end of your life – the card acquirer is determining which devices will be EMV certified in phase 1, 2 and on. So we waiting for what hardware device before we can make a recommendation to you. As of today we await!
As EMV certifications roll out, you have the commitment from me and Intrix to keep you abreast of the latest details. Hopefully we will be able to provide you with more than one choice. Our ideal solution will be a device supports EMV, magnetic stripe and even NFC (Near Field Communications). What is NFC? You have heard of Apple Pay, MCX, Google Wallet, those are all NFC enabled mobile wallets.
I hope this clears up some of the mystery surrounding EMV. Unfortunately, misinformation exists in the market. So, if someone talks to you about a terminal that is now EMV certified/compliant, it would be worth questioning them further or reach out to me for clarification. For those of you using software that is integrated for payments, it’s even more important to be careful as devices that route via a payment gateway are not the same as a countertop credit card terminal.