The credit card industry is currently involved in another cycle of technology upgrades, under the guise of security, by requiring a new merchant equipment upgrades. The change to EMV capability is “required” to minimize merchant liability if there is a data breach, forcing the merchant to comply.
What do the letters EMV mean? EMV, which stands for Europay, MasterCard, and Visa, is now a global standard for inter-operation of integrated circuit cards (IC cards or “chipcards”), and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions. This is a catch-up move for US credit card processing since Europe has used chip card technology for years because the communications systems in Europe were not as extensive, reliable, or cheap as in the United States.
Despite recent reports that predict widespread adoption of EMV technology by retailers and payment providers will not occur until 2020, it won’t be the fault of major credit card issuers, according to a report recently from the Payments Security Task Force (PST). The PST, a cross-industry group made up of card networks, issuers, acquirers, processors and large retailers, said that nearly all (98 percent) of the cards issued by the “eight largest card issuers”—accounting for about half of U.S. payment card volume—will contain EMV chips by the end of 2017.
However, the “eight banks” said 63 percent of their credit and debit cards would carry the chips by the end of this year, The Task Force did not comment on issuers’ readiness outside of the eight largest banks.
EMV technology has been criticized by some for its exclusion of protection for card-not-present transactions. This exclusion is problematic in light of the fact that card not present transactions are accepted under diverse conditions. Furthermore, there is the illusion that the technology prevents data security breaches. The Payments Security Task Force (PST) is continuing on its course of bullying the migration, right or wrong to the EMV standard.
A typical industry comment use to promote the myth that it is a security issue was recently made by a MasterCard executive and reported in the CNP Report. “The industry is delivering on its commitment to continue to provide a secure and convenient way to pay,” said Chris McWilton, president, North America Markets, MasterCard. “These numbers show real movement from plans to action as issuers, merchants and others in the payments system engage collaboratively to bring chip cards to the U.S.”
Unfortunately the segment of the industry that suffers through this EMV process and incurs the greatest expense is the retail merchant who must go through the cost and hassle of a required upgrade while the service providers pad their pockets.