Blog

EMV has a long way to go

March 17, 2014 by Jim Ghiglieri — Senior Vice President, Corporate Communications, SHAZAM

The looming October 2015 liability shift for mag-stripe cards used on EMV terminals, combined with recent media buzz regarding the U.S. payments industry's migration to EMV, is keeping this payment technology top-of-mind for many in the financial services arena.

However, as I recently wrote in an article for Iowa Bankers Exchange, EMV is not quite ready for prime time.

That certainly is not stopping the attention for the emerging payments standard. In a recent Credit Union Times article, for instance, Randy Vanderhoof, executive director of Smart Card Alliance, cited an FBI report, "Recent Cyber Intrusion Events Directed Toward Retail Firms," focusing on payment card data security as potentially driving retailers and card issuers to embrace EMV.

According to Vanderhoof, the upcoming liability shift deadline is holding even more weight with issuers and merchants investigating when to make the switch.

"The liability shift is coming quickly," Vanderhoof told CU Times. Adding, "I haven't heard of any of the card brands postponing it."

As the liability shift deadline looms and community financial institution leaders witness ramped-up media and consumer attention regarding EMV, the "wait-and-see" position many community FIs have taken thus far may be changing.

Even so, it's important for FIs to avoid the temptation to push through a solution simply because customers are asking questions.

As EMV technology stands today, the solution is not portable between networks. In addition, it does not maintain the merchant routing choice that was mandated by the Durbin Amendment.

This will have to change if our industry hopes to maintain FI and merchant choice and to preserve a competitive marketplace. Groups such as the Debit Network Alliance are working diligently to push for a solution to these problems and are continuing to make headway in the development of a common solution for EMV.

For several years, issuers rolling out EMV have been motivated by one of two things:

the need to maintain wallet share among cardholders who travel internationally; and
the desire to impress early adopter customers with a first-mover, tech-savvy position.

While these are valid strategies for some FIs, others will want to wait for a portable, compliant EMV solution that not only provides the best possible cardholder experience, but also maintains choice for them and their colleagues.