The road for EMV in the US...

Guest blog post by Guy Weber, risk manager, SIX Card Solutions

The debate over whether the United States will move to chip and PIN security continues to rage on, even in 2012. Ever since Europe adopted EMV technology back in the early noughties, pressure has been applied on the US to join its European counterparts and take up chip and PIN to help eradicate the ongoing problem of counterfeit fraud and enhance international card acceptance. While many organisations have made attempts to sway the US in favour of chip and PIN, it was Visa’s announcement last summer of its three-step plan to encourage the US to invest in EMV technology that sent a flurry of excitement through the payments industry. This is because it was the first time a major player in the cards industry had provided a clear route to EMV migration.

Although promising, a lot of confusion remains around Visa’s roadmap and exactly how the card scheme is proposing to implement EMV in the US. In an effort to clarify some questions, Stephanie Ericksen, head of authentication products at Visa, recently provided some guidance around the issue and highlighted that a transition to EMV in the US would not necessarily mean a move to chip and PIN. She has suggested that online authorisation could be a more practical and cost-effective solution while there has been speculation that should the US implement a card fraud strategy, it would opt for the next generation of payment security technology in a mobile solution. This is perhaps why Visa has set out a programme to drive the adoption of dual-interface chip technology and compel merchants to invest in terminals that support both contact and contactless chip acceptance, including mobile NFC.

These alternative implementations for EMV technology are still better than the age-old ‘magstripe’, and would certainly help reduce skimming incidents. However, if the US were to skip chip and PIN altogether, the fragmented nature of card protection would remain and do little to encourage interoperability and wider card acceptance around the world. chip and PIN has been tried and tested in Europe and as a result, the European Central Bank (ECB) in October recommended that from 2012 onwards, all newly issued cards in the Single Euro Payments Area (SEPA) should be issued, by default, as 'chip-only' cards. As such, it looks set to stay in Europe for a good while longer.

With these disparities, it is clear there needs to be broader and more far reaching regulation, as well as an industry agreement, on how to move forward with this issue. The reality is that until a common standard is introduced around cardholder verification, criminals will continue to exploit gaps and regional differences in card acceptance, and the cards and payments industry will ultimately lose out.