Payments Innovation

Payments 2016: The Year Of EMV-Enabled Cards

Payments Year of EMV

PYMNTS consulted 21 payments executives from across the industry to share their insights on the biggest takeaways from 2016 as part of the “Payments 2016, The Year Of…” eBook. We posed the same question to each executive:

If you had to answer the question, Payments was the year of …, how would you answer, and how does your answer change your world — and the world of payments, more broadly?

Here is the response from Ray Wizbowski, CMO of Entrust Datacard

Payments 2016: The Year Of EMV-Enabled Cards

When asked about the state of payments in 2016, I immediately thought of the famous Charles Dickens quote from A Tale of Two Cities: “It was the best of times, it was the worst of times.”


Best of Times

While the EMV liability shift took place in October 2015, many of the effects of that shift were felt throughout 2016.

At the transaction level, consumers began to feel like they were more protected from fraud with the introduction of the EMV chip card. While customers were not exactly sure how that fraud protection occurred or about the significance of the chip card, they felt more secure when making their purchases. At the same time, consumers continued to navigate through a somewhat confusing world — especially when making purchases.

As chip cards rolled out, merchants raced to ensure that their POS terminals were dated for the October 1, 2015, deadline and that they could accept the new chip cards. That said, today, while many merchants have a POS terminal to accept the chip cards, many are still not doing so, causing consumers to hesitate each time they make a payment and leading to short-lived frustration.

Throughout 2016, financial institutions continued to roll out new EMV-enabled cards to their consumers.

For financial institutions, the new cards allowed for the opportunity to relieve at least a portion of the burden of fraudulent transactions from their books and a unique opportunity for conversations with their consumers — especially those instantly issuing their new chip cards. Many banks and credit unions seized the opportunity to engage with and educate their consumers when instantly issuing the new chip cards — from educating the consumer on how to use the card to explaining the benefits to spending time discussing additional services offered by the financial institution.


Worst of Times

But with the good comes the bad. And unfortunately, we saw a variety of bad in 2016.

While the new EMV chip cards begin to mitigate fraud at the transaction level, much like other regions who utilize chip cards, card-not-present fraud began to take rise and, in my opinion, will continue to rise over the coming years. Financial institutions and consumers will need to work together to ensure that these types of purchases have necessary safeguards in place, such as strong authentication solutions, to keep consumers safe.

While financial institutions and merchants were working to ensure that consumers’ transactions were protected, they neglected to realize what was going on right in their own branches, and a whole new kind of fraud was exposed. The exposure of fraudulent account openings that came to light in the second half of 2016 left consumers confused, concerned, angry and looking for answers from what was supposed to be one of their most trusted institutions that were supposed to protect their from fraud, not subject them to it.

Financial institutions that experienced this level of fraud are left to pick up the pieces and work to restore the trust of their customers. Going forward, these institutions must ensure they are putting processes in place and utilize technologies and innovations that will allow them to better self-govern and ensure that fraudulent activity is eradicated from their branches. By putting safeguards in place such as notifications to consumers for account-level banking activity, financial institutions can work to gain back the trust they had lost.

As we’ve seen over the past few years, banking is continuing to evolve, and consumers and financial institutions will need to remain nimble in order to continue to navigate these changing waters. By taking advantage of the technologies and innovations available to them, both banks and customers will be able to better manage their relationship and ensure that it is one built on trust. This restoration of trust will allow for consumers to better utilize their local bank branches and for financial institutions to ensure a high level of customer satisfaction and provide an experience that not only satisfies, but wows the customer.

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