Aconite has published initial advice and guidance to US banks and will be presenting a series of Europay Mastercard Visa (EMV) seminars developing those themes. Aconite’s aim is to help issuers to achieve cost-effective migration and maximise the benefits from EMV.
Visa’s plans to accelerate migration to (EMV) card technology in the US and prepare the ground for near field communication (NFC) based mobile payments will enable significant changes in the US card payments market. Within Visa’s broad roadmap, banks have a number of options for the timing and method of migration.
According to Aconite, merchants have an incentive to install contact and contactless chip and NFC enabled terminals. From October 2012, merchants handling 75% of their Visa traffic through such terminals will not need to validate their compliance with the Payments Card Industry Data Security Standard (PCI DSS). Issuers also benefit from October 2015 when the fraud liability shift takes effect but Aconite says issuers can benefit from starting their EMV migration well before then.
Some of the key reasons Aconite cites for this are:
- High risk of accelerating increases in fraud losses: with the rest of the world rapidly adopting EMV, fraudsters are increasingly targeting US magnetic stripe cards as the soft option.
- Reduction of existing card fraud losses: as the number of EMV terminals in the US rises, an issuer that replaces magnetic stripe cards with EMV cards will experience tangible reductions in fraud levels.
- Issuing EMV cards to cross-border travelers improves acceptance and customer service: magnetic stripe cards are not now accepted at many locations. JP Morgan Chase, Wells Fargo and US Bank have already taken this course and Citi has recently announced co-branded and corporate EMV cards.
- Migrating a niche segment of the overall card portfolio can provide valuable experience to de-risk migration of the much larger mass market element of the portfolio.
- Planning the move to EMV well ahead of the liability-shift allows an issuer time to identify the optimum approach for the bank. Leaving matters to the last minute has seen issuers in other countries adopt sub-optimal approaches in order to migrate close to liability shift dates.
- EMV cards offer opportunities to market added-value services and innovative products, such as display cards that can, for example, show account balances, loyalty point balances and security codes. New and updated applications can be added to cards in the field.