EMV Transition: What s Happened and What to Expect Next

Transcription

1 EMV Transition: What s Happened and What to Expect Next Sam Schieber Thursday, February 16 1:45 2:20

2 W. Capra Overview W. Capra Consulting Group is a professional services firm focused on identifying, integrating, leading, and delivering technology solutions. Payments Practice Areas Data Security Store Ops & Retail Tech IT Advisory Services infrastructure Our Knowledge Base Retail IT Systems and Infrastructure Payment processing Data Security Store Operations and Business Processes What We Do Help you understand how your IT systems can best support your business processes and objectives Deliver successful projects

3 Learning Objectives We will review the current state of the US transition to EMV, including key adoption figures, and the identification of common challenges that merchants have encountered along the way. We will also review recent EMV related updates and changes that will impact merchants and the US EMV transition over the next 2-3 years. Objective 1: Review the current state of the US EMV transition Objective 2: Identify recent updates/changes in the EMV landscape and what they mean for merchants Objective 3: Predict the next 2-3 years of the US EMV transition

4 EMV Transition by the Numbers Card Replacement is Still Occurring Visa reported that M* of their credit and debit cards are chip enabled as of December 2016, representing a 2%** increase over November, and a 92% increase for 2016 Merchants Continue to Enable EMV Visa reported that 1.81 M* merchants are chip enabled as of December 2016, representing a 5%** increase over October 2016, and a 135% increase for %*** to 39%* of US storefronts accept chip cards Chip transaction volume increased 309%* from December 2015 to December 2016 Counterfeit Fraud is Falling Counterfeit fraud in the US has decreased 14%* across the board Merchants who have implemented EMV are seeing a 52%* - 54%*** reduction in counterfeit card fraud * ** ***

5 The US Transition to EMV So Far The US EMV transition made great strides in 2016, but we still have a long ways to go EMV enablement remains concentrated at the tails You are more likely to see EMV at large national merchants and small mom and pop stores than a regional midmarket retailer Speed of EMV adoption is a function of a merchant s: Chargeback exposure Industry, geographic region, etc. Payment infrastructure complexity Fully integrated POS v. single stand alone PIN pad Access to internal and external resources Dedicated payment teams + budget for external resources Demand for EMV certification resources/support still exists in 2017 Merchants are still completing initial certifications and others are certifying additional functionality

6 Merchant Challenges with EMV Two years ago, merchants were dealing with a specific set of challenges. In 2017, some of the initial issues have been resolved, but new challenges continue to emerge Managing Chargebacks Debit Routing Requirements Certification Support Supplier Availability Unclear EMV Design Specifics PIN Steerage Automated Fuel Dispensers Unknown AID Fraud Pay at the Table MPOS Certification

7 Changes and Updates The payments system in the US is extremely complex as a result, guidelines, requirements, and regulations are always changing Since the last MAG meeting, the following major changes/updates were announced: Fuel Liability Shift Date Debit Transaction Routing Requirements

8 Fuel Liability Shift Date Late last year, payment networks announced that the liability shift for fuel purchases made at the dispenser will move from Oct 1, 2017 to Oct 1, Payment networks are still identifying the specific details of their plans, but merchants can expect some restrictions Some networks are looking to expand their fraud monitoring program to include specific AFD requirements

9 What Does This Mean for Fuel Merchants? The date change is the result of many factors, including: Complexity of petroleum site and payment infrastructure Cost of upgrading/replacing forecourt hardware Availability of HW and SW Certification requirements Resource availability Deployment length, cost, and complexity (coordination of service techs, site visits, downtime, etc.) Although 2020 seems distant, it will approach faster than you think fuel retailers are strongly discouraged from delaying their EMV planning activities, and strongly encouraged to begin planning for EMV (if they have not yet done so)

10 Debit Transaction Routing Requirements On November 2, the Federal Reserve published clarifying information on debit transaction routing requirements as established by the Durbin Amendment Section 235.7(b) of Regulation II of the Electronic Fund Transfer Act states: A payment card network shall not inhibit the ability of any person that accepts or honors debit cards for payments to direct the routing of electronic debit transactions for processing over any payment card network that may process such transactions." A payment card network inhibits a merchant's ability to route electronic debit card transactions if it requires the merchant to allow the cardholder to make the choice of EMV chip application on a debit card, where one application routes only to a single network.

11 Debit Transaction Routing Requirements As a result of the clarification, Visa revised rule of it Transaction Acceptance Device Guide and revised its Acquirer Implementation guide What does this mean for merchants? Merchants are not required to prompt customers to select an AID when processing debit cards Merchants can use AID filtering to automatically select the Common Debit AID and maintain compliance with the Durbin Amendment

12 Looking Ahead Where Will EMV be in 2-3 Years? Greater penetration of EMV at mid-size merchants, including merchants in the hospitality and restaurant space For merchants that are already EMV enabled, expansion to new channels (MPOS) and business units Initial rollout of EMV at the fuel pump 95+% issuance of EMV credit and debit cards Increased issuance of dual interface cards Increased functionality, including faster EMV and NFC at merchants Increase in CNP fraud as fraudsters focus on e-com and mobile transactions Repeal of Durbin?

13 Questions?

14 Disclaimer This presentation contains general information only. The MAG and its guest speakers are not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Neither the MAG nor its guest speakers shall be responsible for any loss sustained by any person who relies on this presentation.