EMV® chiphas had a staggering impact on the payments ecosystem since its introductionroughly twenty years ago.
Withmigration progressing at different paces globally and the way we transactcontinuing to evolve – as wearables and smartphones shake up the ecosystem evenmore – EMV sits at the centre of the payments world.
Butwhy is EMV so important, what do stakeholders need to know and what are thenext steps? We chatted to FIME’s EMV expert Joe Santana, to give us a globaloverview.
Q: Whywas EMV introduced?
Joe: EMV chip-based technology was initially introduced to tackle fraud andincrease the security of transactions while creating a globally interoperablepayment framework. It did this through the technical body, EMVCo, whichpublishes card and terminal specifications that define how transactions shouldbe processed and managed by each stakeholder in the payments ecosystem. Today,the body continues to support an advancing range of payment methods,technologies and acceptance environments.
Buildingon this framework, each payments system also specified its unique testingrequirements to enable stakeholders to process EMV transactions according totheir business rules. There was also a desire to implement additional, moresecure cardholder verification methods (CVM). Magnetic stripe-only cards reliedlargely on signatures for validation, but easy manipulation played into thehands of fraudsters. EMV brings CVM options that each payment system can decideto implement, such as encrypted PIN, cryptography, online and offlinepayment authentication to ensure that the transaction and the cardholder arelegitimate.
Q:What impact has it had on the payments ecosystem?
Joe: Firstly, EMV has been a huge catalyst in reducing payment fraud. Besidesthis, though, a few things really stand out for me:
Offline transaction management –The development of a sophisticated, secure method for authenticatingtransactions offline was an important advancement for the payments ecosystem.It brings big benefits to areas with less connection and reduces communicationcosts.
Multi-application cards – This is anarea that is being tapped into now, enabling credit and debit, for example, tobe managed on one card. Flexibility for consumers, less plastic in wallets andless issuance fees for banks.
New business opportunities – EMV hascreated a sophisticated payment industry and is enabling other business models.Tradespeople and market retailers can now accept secure payments with mPOS, andEMV is the foundation for mobile contactless and wearable payments, in additionto secure smart ticketing.
Q:What is the status of EMV migration globally?
Joe: So, EMV has been around for a number of years but the process isongoing. Even mature markets like Europe are not 100% migrated. Good progressis being made in Asia-Pacific and the U.S. is extremely interesting, as thescale and complexity of its migration has brought about initiatives likeQuickChip and M/Chip Fast which help to reduce transaction times and assistsome issuers by reducing certification testing. With this in place, I observeda lot of demand from banks for testing and training to help them ensureeverything is working correctly prior to launch.
We’realso seeing a strong trend from domestic payment networks to support EMVtransactions within the country or region that they serve. This is something Ithink we’re going to see more and more in the coming years.
Q:What should banks take into consideration when assessing EMV or contactlessroll out?
Joe: EMV is a constant process, with a big impact on infrastructure andmanagement. New technology, processes, departments, teams. The amount ofinformation, skills and expertise banks need to get to market and stay therecan be overwhelming. Even the biggest processors don’t have all of thisknowledge inhouse!
Training,knowledge and testing with the right partner keeps players ahead of the latestspecifications and updates. I can assure you that this expertise helps them toensure an efficient route to market.
Q:What challenges remain for the payments ecosystem?
Joe: Contactless is still a challenge, as each payment system has its owncontactless specification which has caused some headaches for the paymentindustry. Going forward, with EMVCo’s help to clearly define universalspecifications and certification processes, the ecosystem should have anapproval process for contactless kernels that is streamlined and more alignedto the certification of contact kernels.
Buildingon this, the move to mobile will also continue to shake up the paymentsecosystem. You can see that banks are increasingly expected to offer mobilepayments to their customers and the infrastructure is working hard to ensureseamless and secure payments.
Q:What expertise does FIME have in this space?
Joe: As EMV continues to evolve and migration progresses globally, issuers,acquirers, integrators, processors, schemes, manufacturers and certificationbodies all have a lot to consider. We work with the whole ecosystem, right fromthe start of projects to take away the pain with training, consultancy, toolsand certification services.
We’vebeen working in this space for over 20 years, are involved in EMVCo to supportthe development of the EMV Chip Specifications and therefore have theexperience and expertise to get projects completed quickly and successfully.Our tailoredtraining helps clients make sense of the constantly shifting paymentslandscape. By providing standard and customized training events and workshops,we equip attendees with the knowledge and skills needed to guarantee asuccessful project outcome.
*EMV® isa registered trademark in the U.S. and other countries and an unregisteredtrademark elsewhere. The EMV trademark is owned by EMVCo.