With the EMV deadline looming ever closer — now fewer than eight months away — card issuers need to start ramping up consumer education efforts.
MasterCard SVP-Product Delivery Carolyn Balfany said one of the sticking points will be all about sticking — as in sticking a card into a terminal and having to leave it their for the duration of the transaction, rather than a simple swipe.
"Industry collaboration is important as we have to explain how consumers interact with the terminal," she said. "All of us will have to use common terms and descriptions so consumers will understand."
Balfany's comments came during her recent participation in a panel discussion at the 2015 Smart Card Alliance Payments Summit in Salt Lake City, along with Kimberly Lawrence, senior vice president of Global Corporate Initiatives for Visa, and Karen Czack, VP of global chip products for American Express. Vanderhoof, executive director of the Smart Card Alliance, served as moderator.
According to Vanderhoof, chip cards make card data nearly useless for counterfeit card purposes. He said other countries that have migrated to chip card technology have seen card-present fraud drop dramatically.
"Every card issuer has a choice on when to switch to chip cards, but Oct. 1 is the liability shift date to the party that has not switched to chip technology," he explained.
Lawrence said Visa is "very encouraged" with the progress being made on both the merchant side and the issuing side.
"It is estimated that by late 2015 575 million chip cards will be issued, and almost half of terminals will be activated by chip," Lawrence noted.
Czack of American Express said the vast majority of processing platforms AmEx works with already accept EMV, while many major merchants are in the "final stages of preparation." She added American Express has programs to help small merchants upgrade their terminals to become EMV compliant.
MasterCard's Balfany agreed "great progress" has been made across the market.
"Credit is leading but I expect debit will catch up," she said. "Consumers expect the transition and are looking for chip cards. By the middle of this year we will see both cards and terminals more often. Many retailers will have terminals installed, which will accelerate the consumer experience. It only takes one or two chip-on-chip transactions for most consumers to be acclimated."
Inserted, Not Swiped
AmEx's Czack said chip cards will be inserted either in the top or bottom of the terminal, depending on the model. The cardholder then will follow a series of prompts. One important note: consumers do not need to know in advance if the terminal is chip-enabled or not — if it is they will be guided to a chip transaction, she explained.
"One of the biggest differences is cardholders will have to get used to leaving the card in the fuel pump until after they finish filling their tank with gas," Czack said.
Balfany said a recent MasterCard study found consumers not only want chip cards, they want them as soon as possible: with ASAP defined as "immediately" or "in the next six months." In focus groups, once people are shown how to use the cards, 87% were comfortable with the transition.
"They adapt very quickly, the biggest difference is leaving the card in," Balfany said. "Security is important to people, so consumers expect the merchants they frequent to make the investment to ensure their cards are secure. That means merchants big and small."
Visa's Lawrence said there is a connection between chip technology and mobile payment technology such as Apple Pay. "An Apple device that is tapped to pay uses the same rails. They both secure the payment in the same way," she said.
Lawrence added Visa is "very encouraged" by the progress to date on EMV migration. "The industry has work to do in the coming months, of course, but chip technology lays the foundation for more payment security."
AmEx's Czack said the need for industry collaboration "cannot be understated" during what she termed a "pivotal time" for payments. "Chip technology is important for security, but keep in mind it will take several years for full migration."
MasterCard's Balfany noted the United States is the largest economy every to migrate to EMV, and will do so in a much smaller window. Some countries, she reported, took more than five years — and in some cases up to seven years — to fully switch cards and terminals, while the majority of the U.S. will do so in less than three years.
"This is a great testimony to collaboration," she said.
Vanderhoof said many questions about chip technology/EMV can be answered at: http://www.emv-connection.com/