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3 ways managed services can help FIs with EMV – and other changes

September 25, 2013 by Rebecca Hellmann — Marketing and Sales Coordinator, Welch ATM

FIs spent quite a bit of money to update their ATM fleets and meet requirements of the new ADA regulations implemented last year. Now financial institutions are faced with the daunting task of more upgrades in the forms of Windows 7, EMV and even U.S. currency updates.

It is possible to make these upgrades easier by partnering with a knowledgeable ATM company to take over management of the ATM fleet, a system known as “managed services” or “outsourcing”.

Knowledge

ATM operations and management companies are in the business of running ATM fleets efficiently and effectively. In order to do so, they must keep abreast of all upgrades, mandates, regulations and other requirements for the ATM. They are usually the first to move on making appropriate changes to ATMs they have under contract, as they are at the highest risk should they be found not to meet requirements.

Financial institutions are not always as up to date on ATM requirements and may lag behind on upgrades due to cost or lack of knowledge, putting themselves at risk for fraud losses and lawsuits.

Finding a partner that offers compliance guarantees can help ensure that the financial institution’s ATMs continue to meet the highest standards and significantly reduce risk.

Liability

EMV is not a government or security mandate but is meant to add one more layer of security to debit and credit card transactions through the communication of encrypted data via an embedded chip within the plastic card.

Compliance with EMV is required only to avoid the liability shifts that will be implemented by MasterCard and Visa. These shifts take effect in October of 2016 and 2017, respectively.

However, as the majority of Europe, Africa, Latin America and the Middle East as well as the Asia-Pacific countries, Canada and Mexico have already switched to EMV, studies have shown that card fraud, previously not as large an issue in the United States, is shifting to the U.S. as the least secure channel.

A recent Nilson Report found that the U.S. accounted for more than $5 billion (47.3 percent) of the more than $11 billion in global losses in 2012. That is up 14.6 percent from 2011.

After the liability shift dates pass, any portion of the payments chain that is not EMV compliant is responsible for fraud losses. A financial institution that fails to update debit and/or credit cards to EMV chip cards will be responsible for any losses incurred through unlawful duplication of their cards.

Similarly, the institution is responsible for any fraud perpetrated via non-EMV-compliant ATMs within their fleet.

It is possible for financial institutions to avoid the potential liability of owning and operating potentially non-compliant ATMS while still maintaining the consumer convenience of a fully operational fleet.

Many ATM managed services or outsourcing programs pass the ownership of the financial institution ATMs to the ATM management partner. The responsibility for most, if not all, upgrades then becomes the responsibility of the ATM owner, not the financial institution.

Cost

Owning and operating a fleet of ATMs, or even just a few, can be costly and time consuming. The additional risk of regular upgrades, lawsuits and fraud liability can make ATMs seem less like a consumer convenience and more like a serious money drain.

Using a managed services or outsourcing provider reduces not only risk and cost for upgrades, but also costs for equipment, operations and branding to a much more manageable monthly fee.

Managed services for ATMs can be extremely helpful in light of upcoming mandates, upgrades and requirements changes. These programs have the ability to maintain the highest level of operability for a financial institution’s ATM fleet while reducing the potential cost involved.

However, ATM managed services programs may not be the right decision for every financial institution and it is important to make sure that any outsourcing partner is both reputable and responsive in order to reap the full benefits such a program can offer.

Read more about outsourcing.

About Rebecca Hellmann

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