A global shipping crisis and other challenges have impeded ATM industry efforts to upgrade its U.S. fleet in accordance with mandated EMV (Europay, Mastercard and Visa) guidelines. The industry's attempts to delay EMV liability shift deadlines due to supply chain issues have been unsuccessful: October 2016 deadlines for Pulse and Shazam networks (Oct. 1) and Mastercard (Oct. 21) are now in effect. The Visa Inc. liability shift is set for Oct. 1, 2017.
In contrast to previous compliance initiatives, the EMV mandates could have severe consequences for noncompliance that go beyond penalties and fines. Industry leaders are urging card brands for leniency while warning ATM owners and deployers of threats and vulnerabilities.
The National ATM Council Inc. asked Mastercard to push the EMV liability shift back to Jan. 2, 2017, citing the global shipping crisis, which impacted member companies and was caused by Korean shipper Hanjin Transportation Co. Ltd. NAC Executive Director Bruce Renard said, "We have many members who ordered EMV kits in August. It's not that they don't want to be compliant."
George Sarantopoulos, incoming NAC Board Chairman, President and Chief Executive Officer of Access One Solutions/Access One ATM concurred. "The bankruptcy of South Korean shipping company Hanjin has disrupted the supply chain, leading to a massive backlog, unavailability and surge pricing of EMV kits in the market," he said. "Mastercard should understand that and give some relief to the [ATM] ISOs who have bought into EMV and are doing their best to implement it. Additionally, processors are having a learning curve with integrating EMV with ATM terminals."
"Based on the numbers I've seen, one fourth of ATMs will be EMV-ready on Friday [Oct. 21, 2016]," stated Deborah Spidle, Director of EMV Solutions at Paragon Application Systems. "This is not like ADA or Triple DES [previous industry compliance mandates]. It will be self-enforced and the chargebacks will start."
Spidle and Renard co-moderated a panel discussion on EMV implementation at NAC's annual conference, held Oct. 17 to 20 in Orlando, Fla. The panel included executives from Visa, banks, equipment manufacturers and service providers. Executives who had weathered the POS liability shift that became effective Oct. 1, 2015, urged ATM owners and deployers to implement EMV quickly to avoid taking on additional liability.
Roger Myers, President, ATM Services at Switch Commerce LLC said, "You've never experienced that before and can't imagine the millions in fraud incurred by big banks. Update as quickly as you can. Don't let them push fraud on you; don't take their liability."
Elizabeth Bohlen, Senior Vice President and Chief Payments Officer of Sponsorship Services at The Pueblo Bank & Trust Co., has seen a spike in chargebacks since the October 2015 liability shift was instated. Some chargebacks were not even EMV-related, the bank's reports indicated. "Get ready for it, and work on each chargeback to make sure they are what they say they are," she said. "Be diligent in what you see being debited. It was pretty bad the first 60 days. It's not pretty."
Jason Kuhn, Vice President of Product Marketing and Product Planning at Nautilus Hyosung America, said his company is working with the South Korean government to free up product and has bumped up production in Korea and China to produce kits as quickly as possible. "The Hanjin crisis created a perfect storm," Kuhn said. "Of the approximately 70,000 kits we've shipped, not all are installed; some are installed but not configured with the most current version of software. There's a lot more involved to make sure [a kit] is properly configured."
Shaun King, Vice President International Sales at Triton Systems of Delaware LLC, noted that stocking shelves based on anticipated volumes is not the norm for most manufacturers. "We've encouraged people to move quickly," he said. "Those who have already requested kits are covered, because we've ordered for them in advance."
LeRoy Huntimer, Director of ATMs and POS Sponsorships at MetaBank added, "Fraudsters are going around with fraudulent cards, draining your ATMs. The only way to protect yourself is to implement EMV." Mike Nelson, Vice President Business Development at Payment Alliance International, said criminals will focus on noncompliant ATM terminals. "Basically, the bad guys will figure out where the non-EMV compliant ATMs are and go get them," he said, adding that location guides on many bank websites indicate which ATMs are ready to accept chip-enabled cards, creating a virtual roadmap for criminals.
Marc Cleven, Senior Director, Global Chip Operations at Visa, said operators want customers, particularly those who travel internationally, to know which ATMs accept their chip cards. "Visa came under pressure to add the [ATM] locator," he said. "By the end of Q1 2017, the United States will be a chip card nation. The U.S. is currently the largest chip card issuer in the world."
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