Article

Opinions on U.S. EMV implementation differ at ATM, Debit & Prepaid Forum

A risk management consultant urges adoption, while major bank and ATM players express resistance.

November 6, 2011 by Kim Williams — Reporter, NetWorld Alliance

Opinions at the ATM, Debit & Prepaid Forum, held in Las Vegas Nov. 1-4, differed on the urgency with which the U.S. should be adopting EMV technology.

A Credit Union National Association Mutual Group risk manager told a breakout session audience Friday that magnetic stripe card technology is going away, but it continues to pose a significant fraud risk for debit card issuers still using it.

Ann Davidson, senior risk management consultant, encouraged card issuers to move away from magnetic stripe cards and adopt more secure chip technology.

"The U.S. is a magnetic stripe fraud hot spot particularly for debit cards, since we're among the last country to migrate to chip technology," Davidson said.

Citing a recent Nilson Report study, Davidson said U.S. card fraud is double that of global fraud. The U.S. loses 9 cents to fraud for every $100 worth of credit and debit card transactions, while the global average is 4.5 cents.

Interestingly, when asked to speak a bit about his company's plans to implement EMV, Steve Rathgaber, Cardtronics' CEO, told an audience member during his presentation that he could speak very little about it because, at the present time, he has "no intention of doing it."

During the Q&A portion of Rathgaber's presentation, "Convenience, Cash and Commerce: The Role and Future of the Retail ATM," he called EMV another technological solution in search of a purpose that is being fostered and thrust upon the industry, just like Triple DES, by parties that have "incredibly conflicted self-interests."

"Take a close look. There are things that could go on with EMV, under the unintended consequences page, that may startle you," Rathgaber said.

He cited things he is hearing within the industry, such as difficulty rerouting the way in which the chip card transaction is processed, as issues that could cause major complications from a business operations perspective.

Similarly, during a panel presentation titled "Running a Large Bank ATM Network: Lessons From the Leaders," Alicia Moore, Wells Fargo's head of ATM banking, said the bank has no immediate plans to move forward with EMV implementation at this time. The bank did, however, begin piloting an EMV program for international travelers in April. Representatives from M&T Bank and Sovereign Bank echoed Moore's sentiments on EMV adoption plans.

Davidson said accelerating the deployment of chip technologies will create a much more secure payment environment. It will also continue to move the U.S. payment infrastructure toward using mobile payments by building the necessary infrastructure to accept and process chip transactions that support either a signature or PIN at the point of sale, Davidson added.

Some U.S. merchants are already accepting contactless transactions today, she said. Visa will require U.S. acquirer processors and sub-processor service providers to be able to support merchant acceptance of chip transactions no later than April 1, 2013.

On Sept. 1, MasterCard announced that it will extend its existing EMV liability shift program for inter-regional Maestro ATM transactions to ATMs in the U.S effective April 19, 2013.

As cards are issued and reissued (both Visa- and MasterCard-branded products), Davidson said CUNA Mutual Group is encouraging credit unions it insures to adopt chip technology to secure payments into the future.

"Ultimately, consumer education will be key as more debit card issuers offer chip technology and more merchants accept or require chip technology for payment transactions," Davidson said.