With just under 200 calendar days remaining until the Oct. 1 deadline for EMV (Europay, MasterCard and Visa) deadline, only 59 percent of U.S. POS terminals are predicted to be EMV-compliant by the end of 2015. Experts anticipate the U.S. migration will take at least until 2018 to be achieved — an adoption rate some onlookers feel is sluggish compared with the two-year transition several European countries accomplished almost a decade ago.
Some believe accountability lies on the shoulders of the payments industry, where more efforts could be made to provide critical information to merchants about the pending liability shift scheduled to take place Oct. 1, a deadline that was imposed by the major card brands. This shift means that after the deadline (with the exception of automated fuel dispensers, which have until 2017 to become compliant) the party that causes an EMV transaction to not occur "will be held financially liable for any resulting card-present counterfeit fraud losses," Visa Inc. stated.
According to senior analyst, Thad Peterson, from Aite Group LLC, nearly half of all domestic merchants could be unaware of the liability they will assume. He thinks the industry could help to bridge the gap. “Every organization in the payments space needs to increase its efforts to educate and inform the merchant community about the importance of moving to EMV chip,” he said.
While it is highly unlikely the United States will be able to produce full EMV-compliance in time for the deadline, it is never too late to educate. Therefore, to provide our readers and their merchants with an easy-to-digest EMV snapshot, The Green Sheet relied on information published by our friends at the Smart Card Alliance and Creditcards.com to answer several further questions in this article.
Embedded in an EMV smart card is a tiny, rectangular computer chip. Unlike mag-stripe cards, which use the same data repeatedly, an EMV chip card produces a unique code every time it is used. It is expected this change will significantly help reduce the rising incidence of card-present fraud in the United States.
EMV cards, just like mag-stripe cards, use two steps to process a payment: card reading and transaction verification. However, chip cards are read differently by terminals and will involve one of the two following methods:
Depending on the verification method associated with the card, a cardholder will be required to either sign or provide a PIN as a second verification step. All EMV cards, including both credit and debit cards, will require a second form of authentication. "If a terminal doesn't have the ability to accept a PIN, it will then step down to accepting a signature," said Randy Vanderhoof, Executive Director of the Smart Card Alliance. "There will always be a secondary option."
Initially, all consumer EMV cards will have both chip and mag-stripe capabilities. Consumers are being advised to insert their cards first before swiping them. If a terminal cannot read the chip, an error will prompt the cardholder to swipe it instead. Alternatively, if a consumer attempts to swipe a chip card in an EMV-enabled machine, it will prompt the individual to insert the card instead.
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