London-based Retail Banking Research Ltd. reports what it calls "outstanding" opportunities for banks to leverage the new chip and PIN infrastructure with added value applications.
According to RBR, EMV chip technology is being successfully deployed around the world, initially with the objective of reducing levels of card fraud. Now, as the number of cards and terminals reaches critical mass in many countries, innovative banks are increasingly leveraging their investment in this new infrastructure with applications which enhance or go beyond payment.
But RBR has found that many banks are not gaining full benefit from the core payment functions of the EMV chip. Furthermore, there is an increasing range of added value EMV applications from which banks and others could benefit. Examples include remote chip authentication, contactless payment, pre-authorized payment, multipayment cards, transit cards, loyalty cards, mobile payments, and a new generic breed of entitlement applications. The future development of such applications is complex and forecasting is difficult, RBR says, but RBR in its report uses various models, coupled with lessons learned from deployment experiences worldwide, to uncover the most promising business opportunities and how best to make them work.
The potential rewards are "significant," RBR says, offering outstanding opportunities for issuing banks to grow their markets and increase card usage; acquiring banks also have the ability to extend card payments to new acceptance environments. Beyond this, there are longer-term opportunities for both retail and corporate banking to develop new lines of business, particularly in partnership with other industry sectors.
For markets such as the United States, which have not yet started EMV migration or are still in the process of migration, opportunities for learning from earlier migrations and building added value features into emerging infrastructures exist.
