A lot of folks have been running around lately scaring merchants, businesses and the world about the dangers of not switching to EMV. Your card credit machine will stop working, cutting into your profits, shutting down business and maybe even exploding. Don’t worry, none of this will happen.
With those fears set aside just what is EMV? What does it mean for the average Jack and Jill on the street? What does it mean for merchants everywhere? Some of those questions are easy to answer. Some lie in a bit more of a gray shady area. So, with the countdown coming to a close on the United States’ launch of the EMV standards; we will try to shed some light into the looming shadow of EMV.
Let’s start with the number one question for most people. What is EMV? Introduced some 15 years ago, it has evolved from a simple data chip program to include EMV contactless readers and possible standardized payment tokenization. EMV “chip and PIN” cards that require the customer to supply a 4-to-6 digit personal identification number (PIN) when making a purchase at PIN-capable terminals. The chips in these cards feature “PIN” at the top of the list of possible cardholder verification methods (CVM), but with a fallback option to signature (or even no verification at unattended terminals). It is a set of security standards for the processing and transmission of card payment data. The essential goal of the EMV standards is to ensure a global interoperability and acceptance of secure card payments. EMV is an acronym of the original creators of the standards, Europay, MasterCard and Visa. Although these three groups started the process; all major card brands now back EMV.
That is EMV.
In English, a set of credit card processing rules and practices that makes taking plastic easier and more secure regardless of where you are, at home or in another country.
What does it mean to card holders? It means you will be getting new cards to put in your wallet. These new cards may or may not have a magnetic stripe across the back. It means you will have to remember a new pin number (4 to 6 digits) in order to buy anything, except online- there is no pin needed for that. Pin and chip cards help reduce card present fraud to almost 0%, but offers no such benefit for card-not-present transactions.
What does it mean to the merchant? Yes, it reduces fraud for you as well, but that is about it. It will not speed up transaction times. It will not lower your merchant fees. It may, however, cost you money. Here in the United States, where EMV is about to be launched, most of the existing terminals in most businesses are not EMV compatible and will need to be replaced. Not upgrading does not mean you cannot take plastic on your old machine, they will still work and not explode. Not upgrading simply means that you will be held responsible for any and all fraudulent transactions and security breaches.
How does this effect eCommerce and Card-Not-Present businesses? It really doesn’t at all, making the need to upgrade equipment not so urgent.
What does the switch to EMV mean for merchants using mobile devices like smart phones and tablets- will they have to buy a new phone or tablet to accept EMV and be compliant? Most likely no, your mobile app will upgrade with the change and maybe a new swipe device will be required.
In fact, many representatives in the payment industry believe that the implementation of EMV in the U.S. will cause many consumers to ditch their plastic cards in favor of mobile payments, a survey released by ACI Worldwide suggests. The survey, taken at the 2013 ACI Americas Exchange conference earlier this month, found that nearly half (49%) of the respondents from the payment industry said that they believe customers switch to mobile payments from physical cards after EMV. The EMV standards here in the United States go into full effect October 15th, 2015.
So what is next? Facial recognition software and retinal scanners for securing transaction? That might just be on the horizon.