The Truths and Myths of EMV

As with any technology shift, there are varying opinions about the migration to EMV in the U.S. Is it truly taking hold? Lets talk about it like it is already here. Why should merchants even bother undergoing the terminal upgrade process when mobile payments are evidently on the rise? In a recent report, Gemalto examines the circulating “myths” about EMV and highlights specific facts that may point in the other way. Find out their views on several buzzing EMV opinions and take a stance.

Is EMV Taking Hold in the US?

USA Today reported that 90 percent of U.S. cards will have an EMV chip by 2016, but the process in getting EMV “ubiquity” might take a lot longer than we expect – maybe even ten years, according to MPD CEO Karen Webster. Until every one of the thousands of issuers in the U.S. issues every card with EMV capabilities, she said, it’s mag stripes and EMV at the point of sale.

But according to a recent Gemalto report, “Four Myths and Truths About EMV Payments,” Visa has already issued more than 3.5 million cards in the US. In addition, major banks like Bank of America and U.S. Bank have begun issuing EMV cards, and retailers such as Walmart and McDonald’s are upgrading their POS systems to accept EMV payments. The U.S. payment infrastructure is therefore well on its way in readying itself for EMV by 2016, and the momentum is growing.

Shouldn’t We Jump Right Into Mobile?

PYMNTS’ recent article titled “EMV or Mobile: It’s a Risk vs. Rewards Choice” examines why some say it makes sense to jump right into mobile payments, while others stress that EMV is key. Among those who say that mobile payment methods are more important than EMV is Orange Leaf Frozen Yogurt, which is pro-mobile wallet and reportedly plans to “wait and phase in EMV as its existing payment terminals wear out, say over four to seven years.”

Mobile  payments and EMV go hand-in-hand, says Gemalto. But it’s not a question of EMV or mobile. EMV is all three, contact EMV cards, contactless EMV cards and Mobile EMV, all use the same underlying technology. Cards are not going away, and EMV chip cards and mobile payments with both act as “big players in the payment ecosystem.” Thus, several card issuers are offering dual interface cards that can be read by contact and contactless readers. And for the percentage of the population that doesn’t own a smartphone, EMV chip cards will be the more secure option.

Can EMV Protect Card-Not-Present Transactions?

Some say that EMV isn’t worth it because it doesn’t address card-not-present (CNP) fraud – ecommerce and online fraud are therefore left untouched.

On the contrary, EMV will be used to secure CNP transactions using tokenization and out-of-band mobile-payment mechanisms in the future. Today, cards include “additional security features designed just for CNP transactions, such as one-time passwords, on-card PIN codes, and personal card readers,” according to the Gemalto report. Many European countries have reduced CNP and e-banking fraud using these EMV tools, and MasterCard and VISA already offer CNP solutions to some of their customers.

But Isn’t EMV an Expensive Hassle?   

The process of upgrading payment systems to accept EMV card transactions is thought to be fairly expensive and difficult for merchants to deploy. What’s more, it’s fairly well known within the payments ecosystem that EMV is not the single fix in reducing fraud – tokenization and encryption will also be needed to truly keep cardholder data invulnerable. So why should merchants even bother with the hassle and cost of EMV?

Here once again, it’s not a question of EMV or Tokenization. The truth is that EMV is being deployed WITH tokenization to enable additional use cases. Also, there’s little hassle involved in installing EMV terminals, says Gemalto. The upgrades are a cost-effective way to enable EMV contact and contactless technology in addition to Mobile EMV, all in one transition. And to help offset the cost of upgrading terminals; payment brands offer incentives for merchants such as the elimination of mandatory annual PCI audits. But the big benefits for merchants come in the form of fewer fraud cases, happier costumers who can take advantage of quicker, more secure contactless (including mobile) checkout experiences, and overall increased revenue for merchants.

Merchants should turn on all 3 payment methods at the POS, so consumers have the option and can Swipe, Dip or Wave.

For a more detailed explanation of Gemalto’s “truths and myths” of EMV, download the full white paper by clicking the button below.