ATMIA: ATM deployers in Canada buckle down for massive security mandates

The conference theme, "Turning Challenges into Business Opportunities," could not be more fitting, or timely, says Gary Ferris, an independent financial services consultant and the show's emcee. IADs in particular are being called to change the way they view and do business, he said.

From a security perspective, Interac, which recently announced plans to become a private, for-profit entity, is pushing IADs against the wall, say independent operators Clifford Richstone and Chris Chandler. Interac, as Canada's primary ATM and POS network, has a stronghold on the market. And mandates passed down by Interac must be complied with.

 

Having a single network has its benefits and drawbacks, industry insiders agree.

 

From an EMV and compliance perspective, a single point of contact has been advantageous, says Wendy Macpherson of Interac. The country's ongoing conversion from the magnetic strip to chip and PIN has been relatively painless, because Interac has been able to set deadlines, guidelines and mandates without the need for a lot of collaboration between networks, switches and processors — collaboration that will be a necessity in the United States, should the U.S. ever take the EMV plunge.

 

In fact, the United States' diversity and complex infrastructure of networks, processors, etc., is often blamed for its resistance to EMV migration. That market complexity, experts like Macpherson argue, likely has left many U.S. FIs disillusioned about how much ATM and debit-card fraud is actually impacting them.

 

"With so many small FIs and networks, I think there could be more fraud in the U.S. than the banks realize," she said.

 

"Our decision to move to chip in Canada," Macpherson added, "was not easy. But when we looked at the cost of fraud, we were quickly able to come up with a business case for the migration."

Interac's decision to move to EMV, the Europay, MasterCard, Visa chip and PIN standard, was made in 2005. The country's deadline for EMV compliance at all ATMs is 2012. For POS devices, the deadline is 2015.

 

But those deadlines are a bit lofty, say IADs, given that to date, only the financial institutions in Canada have made EMV progress.

 

"The business case is not there for the independents right now to make the migration," Chandler said. "Right now, everything benefits the card issuers. We have to make the move, but I don't know what the answer is."

 

Richstone says he'd like to see Interac play a more active role in working with IADs to spearhead EMV migration, but not much has been done in that arena.

 

"Maybe if we could look at raising the interchange for a period of time, to help us cover the expense of upgrading and replacing our equipment, we would be more interested in looking at EMV," he said. "Right now, I don't see how IADs are going to make the deadline."

 

Couple the move to EMV with Interac's money-laundering initiatives, and it quickly leads Canadian IADs to shake their heads, wondering how all of the mandates and security initiatives will be met.

 

"White label ATMs are perceived as being less secure," said John Thomson, Interac's director of compliance and enforcement. "They will be watched closely for AML (anti-money laundering) compliance."

 

Interac will be reviewing certain ATM locations, and reviews can cost anywhere from CAD $200 to CAD $2,000.

Given those high costs, independents, which continue to dominate ATMIA's Canadian membership, are looking to ATMIA for assistance.

"There is a real opportunity for ATMIA to get more involved in this market and to focus on Canada as an individual market, not one that is lumped in with the U.S. in North America," said Sandra Hartfield, ATMIA's chairwoman.