A Move to the EMV Standard? If So, Here is What the US Card Market Needs to Do, Says Auriemma Consulting Group

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NEW YORK, July 22, 2013 (GLOBE NEWSWIRE) -- Much has been discussed about the move to the EMV Chip in the US. Slowly but surely, the US appears to be headed in that direction. Not long ago, the UK made the move to EMV in a seamless, coordinated fashion. What lessons can we learn from the UK to increase our likelihood of success?

Lesson 1: There Must be a Full Commitment to the Effort

In the UK, the Association for Payment Clearing Services (APACS) led the effort, mobilizing all critical stakeholders. APACS brought together issuers, acquirers and networks, and integrated the participation of the British Retail Consortium (BRC) which represents the major retail establishments.

The UK move was successful because it recognized that rolling out Chip technology required Information Technology (IT) experts to lead the way. Collaboration required Chip production, authorization and settlement, testing, and retailer involvement. Without the coordinated effort of APACS and BRC, the UK rollout would not have been nearly as smooth.

In the US, The EMV Migration Forum (EMF) has laid the foundation for a similar effort, but there is much to be done. The key is educating stakeholders about the EMV implementation steps needed for global payment networks, regional payment networks, issuers, processors, merchants, and consumers. There needs to be industry-wide coordination on timeframes, best practices, shared solutions and communication.

Lesson 2: There needs to be a Greater Sense of Urgency

Even with an organized approach in the UK, it took several years to complete the migration. The EMF must move quickly to develop a migration plan or the US will risk being left lagging behind other first world countries and potentially becoming a hot-bed for fraud activity across the rest of the world. US cardholders will have increased difficulty using their cards overseas. Above all, issuers and acquirers need to act now since EMV migration is a complex, lengthy process involving several key strategic decisions which need to be addressed as early as possible in order to meet the networks' liability shift deadlines.

For example, key issues will include the decision to use Chip and Signature, or Chip and PIN, or both. The importance of this decision can't be underestimated. Without this critical decision point determining which approach will prevail, card issuers cannot institute consistent customer education and there cannot be any level of coordination across industries.

Lesson 3: A Consumer Education Plan Should be Developed

A blueprint for consumer education was provided by the UK. A successful marketing campaign with the message "safety in numbers" was powerful, promoting how Chip technology makes card payments much less vulnerable to fraud. Best practices included:

  • Build consumer confidence
  • Educate the customer early

Advise consumers it is for their protection; "it's your money."

Lesson 4: Assure a Seamless Transition for Consumers

In the UK, key stakeholders were prepared and worked in tandem to:

  • Ensure ATM networks accept cards
  • Ensure 3D-Secure (an additional security layer) is in place at the time, or before roll out, to reduce the inevitable migration to Card Not Present (CNP) fraud seen in other countries (in the UK, CNP fraud increased significantly after the Chip and PIN rollout)
  • Use strategy and prevention teams to look at other types of fraud such as fake addresses, family fraud, abandoned house applications, deceased, etc. as 'analogue' fraud attempts increase when the technological side has been suppressed

Lesson 5: Look Beyond the Immediate Rollout to Future Business Opportunities Enabled by EMV

Chip technology is continuously evolving and there have been many developments in the UK market since the 2004 launch as stakeholders realized that EMV supports added value opportunities such as:

  • Remote Chip authentication
  • Secure offline contactless and mobile payments
  • Offline and unattended terminals
  • Multi-application cards

These kinds of solutions tended to be "bolted on" to the UK EMV infrastructure in a sub-optimal manner. In the US, there is a great opportunity to embed them in the new card payments landscape from the outset.


It seems as if the US is headed down the EMV road, perhaps with a bit of kicking and screaming along the way. If migration is a foregone conclusion, then all stakeholders need to get on board and work together to determine the right approach from an operations, technology and customer communications perspective. If the US is going to make the move to EMV, let's do our best to ensure success. ACG can provide consulting support, please contact us for more information.

About Auriemma Consulting Group

Since 1984, ACG has offered comprehensive management consulting, research, Industry Roundtable, and benchmarking services to the financial services industry. ACG consultants are experienced practitioners, drawn from the credit card, private label, auto finance, mortgage, and retail banking industries that we serve. ACG clients include credit card issuers and networks, commercial banks, auto and mortgage lenders, merchants, and industry vendors. With offices in New York and London, ACG offers actionable solutions to help clients make important business decisions to maximize their efficiencies and revenues. For more information, contact Bob Taglin at 212-323-7000 or bob.taglin@acg.net.

Source:Auriemma Consulting Group, Inc.