EMV cards to see heavy use by year's end

Chip cards based on the global EMV standard will be in heavy use by the end of 2015, according to a panel of credit card issuers held on Tuesday.

"2015 will be an important year for introduction of new chip cards. It is anticipated that hundreds of millions of consumers will receive chip cards and increasingly be able to use them in all retail locations," said Randy Vanderhoof, executive director of the Smart Card Alliance and director of the EMV Migration Forum.

EMV is a global standard for inter-operation of integrated circuit cards (IC cards or chip cards), IC-card-capable point-of-sale terminals and automated teller machines. It authenticates credit and debit card transactions.

"We are very encouraged by the engagement and progress we have seen to date on both the merchant and issuer sides," said Kimberly Lawrence, senior VP, global corporate initiatives, Visa.

"By late 2015, we'll see approximately 525 million chip cards enabled in the marketplace, and nearly half of all of the U.S. terminals are expected to be activated for chip over that time frame," she said.

This means about half of all cards and terminals will be enabled by the end of the year, said Carolyn Balfany, senior VP of product delivery, MasterCard. "The EMV migration is no longer just an industry event, it is also a consumer event. Consumers expect the migration, they are looking for chip cards and they are looking to conduct chip-on-chip transactions."

Widespread migration in the United States will take about three years, she said. While this won't be 100 percent, it will account for the majority of merchants and manufacturers. This has taken much longer in other international markets, she said.

The vast majority of American Express' processing partners' platforms now support EMV, said Karen Czack, VP of global chip products. "We are also working closely with our merchants to certify them. Many of our largest merchants are already in the advanced planning stages of implementing EMV."

According to MasterCard research, 63 percent of consumers want a chip card as soon as possible, "and they define 'as soon as possible' as immediately or within the next six months," Balfany said. "Eighty-seven percent of consumers indicate that they are comfortable with transitioning to chip cards, and when they get them, they adapt very quickly."

From a usability study, MasterCard found that 6 percent of participants initially inserted the card incorrectly, "which is really quite low," she said, and 27 percent removed the card too soon.

This is the main difference from the consumers' perspective in how the chip cards are used. "Rather than swiping and sticking the card back in our pocket, we've got to get used to inserting the card and leaving it there for the couple of seconds while that secure interaction takes place," Balfany said.

Industry collaboration will be essential to communicate with consumers, she said. "We need to be clear in explaining to the consumer what they can expect and how they are going to interact with the terminal. This is a place where all boats rise. We all need to coalesce around common language and common descriptions so that the consumer understands."

The deadline to migrate to EMV is October, but more than half of all retailers are still not prepared, according to a new survey by ACI Worldwide.

While the EMV chip cards are extremely effective at securing the card-present channel, that is, brick-and-mortar stores, it is also important to secure the card-not-present channel, that is, e-commerce, Vanderhoof told FierceRetailIT. "Right now the industry is looking at ways to leverage the secure, dynamic data used in chip transactions in the e-commerce channel; for example, putting the EMV security features into mobile devices so that consumers can conduct transactions online with the same security that they do in-store," he said.

"The migration to EMV is the foundation for the next generation of payment," Balfany said.

For more:
-See EMV Connection, a Smart Card Alliance website

Related stories:
Retail security issues move from CIO to the C-suite
Walmart banks on mobile payments, chip-and-PIN
Sam's Club first to launch chip-and-PIN card
Target accelerating $100 million chip and PIN adoption, finds just 25 registers at fault in breach
EMV migration won't save retail

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