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To EMV, or not to EMV ...

March 20, 2013 by Mark Smith — VP of Financial Solutions, Kahuna ATM Solutions

I've had the pleasure of attending several conferences recently and have listened to many points of view about EMV and the VISA/MasterCard timelines for the U.S. market. All had valid concerns and recommendations about deploying new payment devices and programs. However, we remain in a state of flux until it is defined how this all will be implemented in the United States. We should use the time wisely to prepare.

MasterCard and VISA have stated their deadlines and how they apply to various partners in card services. Card transaction processors will be first to update their systems; financial institutions will follow with issuance of EMV-capable cards to their cardholders. Point-of-sale terminals will be updated to first to accept EMV cards based on the sheer numbers of units in the field. But ATMs will ultimately have their turn.

There are many who say we cannot possibly meet the deadlines and there may be some truth to that. As we've seen with ADA, PCI, 3DES, etc., our industries do a great job of meeting timelines, but we are often waiting for locations to make the decision to upgrade and many tend to wait till the last minute. Don't be caught off guard — educate your business partners about your upgrade services and readiness.

What you need to know today:

Financial institutions

EMV migration has begun in the U.S., especially for institutions that support international travelers. Community banks and credit unions will also begin the process of providing cards to the next generation of consumers. FIs will need to be proactive and keenly aware of the EMV implementation timelines. EMV cards will be more expensive for the FI to have manufactured and they'll need to determine their immediate needs and budget accordingly.

Retail locations

Since POS devices are first to be affected by the EMV timelines, we've begun to see larger retail chains deploying card terminals that support EMV. Some use POS devices that support NFC, as well. They are preparing well in advance and are already using some of the advanced features of their new systems to address customer loyalty. Today, they accept traditional payment modes, but these payment devices are also ready for chip cards and mobile wallets.

Cardholders

Over the next few years, cardholders will see the evolution of the bankcard. Cardholders who often travel internationally will be first to receive these new cards from their financial institutions. Cards will have both a chip and mag-stripe in their first iterations, allowing for a gradual migration.

The main concern with the first wave of EMV implementation is that the consumer's card is physically captured by the card reader. This is much different than the dip-style readers they're familiar with, and their instinct will be to grab the card and retrieve it before it is taken by the reader. This obviously will have repercussions.

It is highly recommended that locations that accept EMV payments spend time training their personnel and customers. Having an attendant available to assist the customer someone will be beneficial in the early stages of EMV migration. Consumers will slowly adapt but will need help in understanding how the new payment devices operate. Once they successfully complete their first transaction, they'll be far less apprehensive the next time they use a terminal.

ATM manufacturers

ATM-makers are ready for EMV, and have been for a while. EMV-compliant ATMs have been shipping to to Europe and Canada for years — the technology has been in place for many years and has been well tested and deemed the most reliable method to prevent card fraud.

Service professionals

Once EMV is a part of ATM update requirements, service personnel will have to physically upgrade ATMs and load new software so that the terminal will be able to read the card media. Service companies are well informed and ready. Manufacturers have started training programs and are keeping field teams abreast of the coming technology.

Industry associations

Your voice is being heard by our industry associations. Most of them already have committees established, as well as point people making sure that our issues are being communicated at the highest levels. Associations are joining together to gain more leverage and power to negotiate with the major card brands. Wherever you are on the decision to implement EMV, you should be aware that multiple committees and associations are working on your behalf.

It's simple … we all want an end to card fraud. But it can't be done in such a manner that the costs for EMV implementation far exceed the benefits.

EMV will dramatically reduce card fraud and it has proven effective in many other countries. The United States will see the first deadlines hit in April of this year, so learn all you can about the timelines and how them may affect you.

Following are sources for important information on EMV Migration in the United States:

• EMVCo.com: best practices
• ATM Marketplace whitepaper: "Implementing EMV at the ATM — Challenges, Best Practices and Benefits"
• ATM Marketplace whitepaper: "Finding the Best Route for EMV in the U.S."

Much remains to be determined about how we will adapt to existing EMV programs elsewhere, such as Europe and Canada.

But while those decisions are being worked out, it could be a wise move to get the hardware in place and take advantage of pricing discounts that might be offered. Later, software can be loaded onto the terminal to fully support the technology.

Now is the perfect time to do your research, determine costs to upgrade your fleet, and to join the associations that are serving your interests.

About Mark Smith

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