September 22, 2015
During the next few weeks, many U.S. retailers will begin transitioning their point-of-sale systems to accept EMV (Europay, MasterCard and Visa) technology. EMV-ready cards are most frequently recognized by the presence of a small security chip embedded in the card itself. This technology is not new – it has been in use in Europe, Canada and much of the world for years.
However, while the technology is widely used, transitioning the U.S. market to the same system is complex, due to the size and number of organizations, the complexity of implementations at the merchants’ point-of-sale and the challenges of U.S. regulations. Still, it can be done.
Oct. 1, 2015 has been designated as the official EMV liability shift date set by the major U.S. card brands. While the process will take some time and effort to complete, it also provides a golden opportunity for the U.S. payments industry to revamp old systems, strengthen the security of their payment ecosystem and pave the way for future technologies. In order to help ensure a smooth transition, retailers should keep a keen eye on the following factors.
1. First and foremost, migrating from magnetic-stripe card technology to EMV will have an impact on merchant businesses. Decisions that retailer make will impact whether or not this experience is fun or frustrating for customers. If done in the right way, the transition can be seamless and entertaining.
EMV technologies have been shown to be no slower than swipe technologies, but if employees are not trained or the terminal is installed improperly, there could be some disruptions at first. For example, with 70% of revenue for the restaurant service industry coming from drive-through purchases, the right implementation choices will be critical to ensure speed and ease of transaction.
Retailers should, therefore, become educated about how this technology could impact their business operations in order to make the right business and technology decisions to ensure the desired customer experience at their stores.
2. Secondly, EMV alone will not eliminate all fraud seen in the market today, but it will make card present transactions more secure. So, when retailers examine their payment systems to make all systems more secure, they should look at all aspects of their security infrastructure and not just their point-of-sale terminals. In order to truly secure a merchant’s financial transactions, EMV should be paired with complementary security technologies such as tokenization and end-to-end encryption.
3. Thirdly, while retailers are migrating to EMV technology, they should make sure their payment infrastructure is flexible for future technologies. Take the opportunity to consider a more holistic approach to the next generation of payments while investing the resources into system upgrades for EMV. For instance, these new POS solutions should be enabled to accept new technologies, such as Apple Pay, Samsung Pay, Google Wallet and contactless payments.
Today’s terminals are currently capable of providing a variety of payment options. If multiple payment options are desired, make sure that the terminals are verified by an independent third party and installed appropriately with all required features enabled.
In closing, EMV transition projects take time, and they involve multiple stakeholders, but they will result in a stronger payment system. A retailer’s finance, treasury, operations and IT departments will all be impacted by this transition, which will require collaboration with all stakeholders.
Retailers who do not start this project until just before the deadline will most likely not be ready by Oct. 1, 2015. Businesses need to begin their EMV transition planning now, if they haven’t already, as the process can be complex. As we continue to see more and more data breaches, retailers should keep in mind that starting in October, not only will they be liable for fraud when customers don’t use EMV cards, but they will also be more susceptible to attacks.
Hackers may target older technologies explicitly because they are more vulnerable. A retailer’s reputation is at risk, and as attacks continue to occur against those who use magnetic stripe card technology, consumers will lose confidence in retailers who use older systems when a more secure technology is available.