EMV/CHIP BASED REQUIREMENTS


With EMV deadlines approaching, merchants, acquirers, issuers and consumers are all going to be affected as new merchant terminals and messaging protocols must be developed and customers need to be educated about what EMV will mean for them. Today, there is a growing incompatibility between traditional magnetic stripe payment cards still used in the U.S. and widespread EMV acceptance abroad. EMV adoption is no longer an option, as the U.S. needs to catch up as well as lessen the risk of fraud migrating to the U.S. from other countries that use more secure EMV technology. In addition, mobile payment acceptance is quickly accelerating and will need EMV terminals to fully leverage this form of payment. EMV needs to permeate the payment system here, and there are now guidelines and deadlines in place to make it happen.


As of April 1, 2013, acquirer processors are required to support merchant acceptance of chip transactions; some infrastructure updates will be required. In October, 2015, the liability will shift to acquirers for domestic and cross-border counterfeit fraud card-present POS transactions if the merchant does not have an EMV-enabled POS device.


As these new standards come into play, EMV will affect the entire payment system and its players, from acquirers, to issuers, to consumers all in very different ways. Mandates and deadlines are quickly approaching, although banks and merchants tend to believe they have more time. In order for EMV to be successfully adopted, every player must do their part and be prepared for conversion. There are several steps, all along the chain, to best ensure that this happens.


It’s estimated that over 16 million devices will need to be upgraded to support EMV payments in the U.S. alone. The costs will range per device, a substantial expense for acquirers and a considerable change for the industry. As EMV certification standards are very rigorous to ensure security, acquires need to make sure every EMV capable device or solution they install is in fact EMV certified. Each device will need to have the software in the proper EMV data, interfacing in applications with the appropriate function and feature parameters. With such a new dynamic and interactive environment, it is more important than ever to properly certify EMV card acceptance and equip merchants with the tools they need to be able to accept secure, safe and effective payments. Essentially, in conjunction with processors certifying their readiness to support EMV with the card brands, specifications need to be updated for POS software development to accommodate EMV.


Data from the chip will be examined by the issuer as part of processing each transaction, which prevents card cloning. Also, dynamic data will exist that is only pertinent for one transaction. If the card payment is compromised, a counterfeit attempt would not be usable at the point of sale; without the ability for multiple fraudulent transactions per card, this in turn makes the stolen cardholder data less valuable for criminals. Personal Identification Numbers (PIN) that are tied to a specific chip on the card prevents fraud as well.


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