Article

MasterCard and EMV: voluntary, but inevitable

The card company emphasizes that migration is a choice for ATM channel providers (if an obvious one).

May 16, 2012 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

When MasterCard introduced its roadmap to EMV implementation, the company said in its announcement that it "will support current industry timelines," in short, Visa's.

There is just one significant difference in the card giants' current published plans: MasterCard's April 2013 cross-border Maestro ATM liability shift to non-EMV ATMs. Other liability shift dates coincide. Additionally, the companies share the vision of EMV as a gateway to alternate payment methods, including contactless and mobile wallet.

In the absence of a central banking regulator or association to impel a move to EMV in the U.S., MasterCard emphasizes that the choice to migrate lies solely with the ATM channel provider. MasterCard's role in that process is simply that of advisor and collaborator — not mandate imposer, explained Leland Englebardt, group head of debit channel management for MasterCard in a recent interview. Still, he's unambiguous about the inevitability of a U.S. shift to EMV. 

Can you provide a quick flyover of the MasterCard roadmap?

What's been published to date by MasterCard addresses the point-of-sale exclusively — it does not yet address the ATM channel. But we're working very closely with our customers in all channels, including ATM, to come to a set of recommendations, and eventually to set some milestone dates when some network rules will change [to] balance the need for the United States to upgrade its infrastructure to address the fraud issues … and also to respond to the commercial realities for our customers.

As of now, it seems that the only roadmap date for the ATM industry is April of 2013 for acquirers.

That's quite right … The liability shift will kick in in the United States in April of 2013 and it will apply to interregional Maestro cash disbursement transactions conducted at United States ATMs.

Where are acquirers now in respect to the deadline?

Different acquirers are at different stages of readiness. According to the conversations that I have had, there are some acquirers that plan to be fully upgraded by April of next year, which is delightful for us to hear.

Some are prioritizing the rollout according to which terminals do the most cross-border business because, obviously, this particular liability shift is restricted to cross-border. Others are upgrading their entire footprint because they see that as a more efficient way to do it. Frankly they acknowledge that it's not a question of if, but when.

If you look farther out to the roadmap that we've already made public for the overall market migration to EMV — we've not yet addressed ATMs, but certainly we will do so in the near term. So I think there's a general acknowledgement in the market that it's time to start seriously planning for and taking steps toward implementation of EMV.

What is the compelling reason for ATM operators to make the change to EMV?

There are several compelling reasons. We know from experience in other markets that when points of interaction begin to migrate to EMV, the fraud shifts from the EMV points to those that have not yet been upgraded.

In the ATM channel, of course, practically every issuer is an acquirer. So they are looking at this issue holistically and recognizing that regardless of which side of the transaction, there's the liability. It's the same entity at the end of the day that's exposed.

But I really want to emphasize that we are not setting mandates … We are working very cooperatively to set guidelines and the final decision on when [ATM] migrations happen — or even if migrations happen — rests with each individual banks and other entities in the ATM channel. Obviously, the processors and the non-financial ATM operators all have their own decisions to make.

The industry in that way is a bit fractured, so they may have different motivators driving their decisions …

That's absolutely right. Each of those business owners needs to take their own decision based on all of the evidence that is presented to them. Our objective is to establish a framework in which every customer is free to make choices.

Certainly on behalf of the payments systems, we want to encourage people to do what we believe is best for the overall integrity and interoperability of the payment system. But it's up to each individual customer to make that decision about EMV and their own timetable.

After ADA implementation, it seems ATM deployers are feeling upgrade fatigue.

I agree ... that's setting in throughout the points of interaction. And here's what I would like to emphasize, because there is a fundamental misconception, I think, in the marketplace about EMV: EMV is not a computer chip on a plastic card. EMV is an infrastructure that supports dynamic messages. If you view EMV that way, you will see that fundamentally what we are encouraging the industry to do is migrate to an infrastructure that will not only support chip cards, but will also support RFID, will also support mobile.

Now that is not to say that the specific reading hardware device will always support all of those media. But the underlying infrastructure, once you migrate from the static information on a magnetic stripe to the dynamic information that EMV can support, it is much easier to embrace mobile and embrace RFID.

And what we're saying is, the sooner you invest in this infrastructure, the sooner each customer will be able to make and implement decisions about which of these media they will support at each point of interaction.

So you see it as a MasterCard customer-driven plan.

Yes, It's MasterCard's fundamental position that we're trying to foster an environment of heightened awareness and proactive consideration. Then it's up to each customer to make the decision when they move, what they do and how fast they move.

For more on this topic, visit the EMV research center.

About Suzanne Cluckey

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Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.