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MasterCard expects lightning-speed EMV compliance

November 15, 2011 by Kevin Christensen — Vice President, Audit, SHAZAM

Whenever a major network like MasterCard imposes a mandate on its participants, it's typically accompanied by a three- to five-year bleed-in period. That's what makes the network's recent announcement of its enforcement of EMV compliance by April 2013 so surprising.

In September, MasterCard explained to the ATM operators in its network that after April 2013, the operators will be responsible for any fraudulent ATM withdrawals if their units do not support chip cards.

This is a very significant shift in liability, not only for ATM operators but for debit and ATM card issuers, as well. That's because today the card issuers are the ones to take it on the chin every time a fraudulent withdrawal hits their cardholders' accounts.

So, what is the likelihood that these ATM operators will meet MasterCard's deadline?

Slim. Very few of the ATM units in the U.S. today are EMV ready, leaving tens of thousands of units in need of the upgrade. The EMV units that do exist were likely called into action by financial institutions catering to visitors from outside the country, such as those in large metropolitan areas on the coasts.

The other thing to consider is that the ATM operators are not being required to accept EMV; they are only being strongly encouraged. So, the choice to upgrade or not remains theirs.

Many will perform a cost analysis to determine whether or not the fraud liability is likely to cost them more than the upgrade to their entire fleet. For many operators that are currently spending upwards of a quarter of a million dollars to upgrade for ADA compliance, the "piling on" of more upgrade expense may be too much to bear.

Fair warning to those who decide not to upgrade based on a track record of low fraud incidents, though. Fraudsters go for the deepest pockets and the easiest pickings. After April 2013, these criminals will be on the lookout for the networks that haven't deployed EMV. After a while, that cost analysis may look quite a bit different.

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