Shifting Strategies In An EMV World

The EMV migration in the U.S. has officially reached the one month mark. But things haven’t just shifted at the point of sale, financial institutions are also beginning to re-examine the far-reaching impacts of EMV. As the 30 day milestone approached, MPD CEO Karen Webster caught up with Kim Ohlrogge, Group Executive of the Global Product Group at TSYS, in an Oct. 23 interview about how the FI approach to mitigating risks and engaging cardholders has shifted as well.

KW: Does the liability shift cause any shift in the way that FIs are thinking about fraud and risk?

KO: It definitely has to cause some shift in their thinking. We have seen, with EMV implementation in other parts of the world, a shift from card present to card not present fraud so certainly you have to take that into consideration from an FI perspective. Also, as EMV is rolled out what we see is an incredible increase in the number of counterfeit cards that are happening prior to the actual re-issue of EMV chip cards. If a fraudster can get a hold of a set of cards that have not yet been converted, they will do their level best to counterfeit those cards and use the heck out of them before that transition actually happens. Financial institutions need to be aware and paying close attention to that as well.

KW: Given those things, both in a card present and a card not present environment, the risks seem to be very real. What should FIs be thinking about with respect to communicating those additional threats or risks to the cardholders themselves?

KO: There is this increased idea of engagement of the cardholders anyway and in this particular space I think it’s a perfect opportunity for the financial institutions to interact with cardholders. Providing alerts or card control are ways to actually put the power for the control of the card into the hands of the cardholders. These types of initiatives also give FIs the chance to communicate with cardholders by telling them that by signing up for alerts they would receive a transactional notification every time a particular card is used or that they have the ability to turn the card on and off when they want to use it or when they don’t. Things of that nature are important from the financial institution’s perspective to really engage the cardholder and get them involved in the process.

KW: There are some really neat things that can be done for sure, but I want to ask you about the shift in the mindset of the consumer. Cardholders have in some ways been able to live without having to worry about fraud because financial institutions have consistently communicated that if something happens they are there to protect them. The empowerment about which you speak does require engagement, but also an understanding of the reasons why they should now care. I’m just curious to get your view on how FIs are straddling that line.

KO: To be honest, it is not different today than it was yesterday or even 30 days ago with regard to the fact that a financial institution is going to reassure the cardholder that it’s safe to use their card. That’s really not changing. What is changing is the involvement of the cardholder – simply the fact that they can be involved, not that they have to be, but that they can and many cardholders, as we all know, really want to be involved. They want to be involved in the whole conversation and the whole process.

I think it’s really much more about the involvement aspect as opposed to the fear. Certainly we all want to be aware of fraud and we all want to be able to try to prevent fraud as much as humanly possible, but I see it more as an engagement tactic as opposed to a fear tactic.

KW: Given that the goal is engagement, it suggests the consumer experience needs to be a good one. As a consumer, if I’m going to get an alert every time I do a transaction, it needs to be delivered in a way that isn’t annoying so I don’t end up turning it off but instead find it provided in a way that is relevant but not intrusive. What are you advising FIs to do on that score?

KO: We are advising FIs to offer up the ability for the cardholder to be able to choose what channel they would like to receive their alerts on. Some cardholders really want to use SMS and others want to receive an email, while some even want to be able to receive an alert via voice. What we really have been trying to communicate to FIs is to deliver this multi-channel experience and let the cardholder choose the channel that will fit into their lifestyle, making it more accessible in a way that they can actually enjoy and get use out of as opposed to becoming annoying like you pointed out.

KW: Since we are 30 days in I’d love to get your perspective from being on the ground and talking to FIs about how it’s gone. What are you hearing? What’s it like? 

KO: The biggest challenge that everyone faces is the cardholder experience. Unfortunately, I don’t see that the cardholder experience is overly positive at this point in time. EMV is not yet ubiquitous so the cardholder doesn’t yet know if they need to swipe or dip when they get to the point of sale. Also, we do hear a lot of cardholder commentary about the fact that dipping takes longer than swiping, some have experienced dipping, standing there and waiting a few minutes and then worrying about remembering to bring the card away with them. From a cardholder experience perspective, it’s a little bit challenging right now.

KW: I’ve noticed that myself, the lines at Walgreens seem to be a little bit longer than they used to be for all the reasons that you mentioned. It’s habit to swipe and you have to learn to dip, and that extra couple of seconds to pull out your card and put it back in your wallet, it all adds up. Presumably, consumers will learn and get comfortable with it. At the stores I visited the sales associates seemed to be well trained in explaining what the process is and why it’s important and those things contribute to the experience as well. 

KO: Certainly, I do think that that’s something retailers have really had to embrace. Even though financial institutions have attempted to educate the cardholder, a lot of the education does come down to the retailer.