1. The Adoption of
EMV Technology in the U.S.
By Dave Ewald
Global Industry Sales Consultant
2. 1 The Adoption of EMV Technology in the U.S.
The global payment system continues to transition from magnetic-stripe to chip technology due to the increased
security it provides. In particular, many regions are transitioning to the EMV standard (an acronym derived
from: Europay, MasterCard, Visa — the specifications are now governed by EMVco) to combat the high rate of
card cloning fraud that is easily achieved with the current magnetic stripe technology.
The EMV standard, in its simplest form, is a global standard for a smart card chip-based payment application.
This includes all levels of interaction at the physical, electrical, data and applications levels used for
authenticating chip credit and debit card transactions.
The most widely known EMV-compliant cards on the market today are “contact” smart cards, which require
the card to be inserted into payment terminals and ATMs. This is in contrast to a magnetic stripe card that is
swiped at a terminal. While this may seem like a small consumer behavior change it requires a re-education for
consumers and cash register operators. These cards may also require use of a Personal Identification Number
(PIN) in each transaction. In general, the use of an EMV-compliant card with optional PIN security plays a
pivotal role in deterring fraud by providing strong protection against card counterfeiting, lost and stolen and
potential fraudulent use.
“Contactless” EMV-compliant cards can also be used; however, this would require the point-of-sale payment
terminal to use short-range wireless communications for the transactions. There already are many non-
EMV-compliant contactless cards issued within the U.S., as well as many terminals that accept the use of the
contactless cards. In addition, there are also “dual interface” or dual technology cards that provide both contact
and contactless communications in a single chip.
Visa Inc. and MasterCard recently announced plans to accelerate chip migration in
the United States by 2015. This includes the initial approach of migrating the payment
infrastructure over to accept EMV and NFC technology (contact and contactless).
Additionally, most other payment infrastructures around the globe already have or
are in the process of implementing chip-based methods with EMV technology as the
So, what does that mean for U.S. issuers and their cardholders? There is a new sense
of urgency for all players in the market to understand what EMV technology means to
them. Financial institutions and card issuers need to begin thinking about how this is
going to affect them and what the next steps are to ensure that they are well positioned
in the market as this migration happens. This paper is intended to help offer the various
stakeholders insight into why now may be a good time to re-evaluate business models
and card issuance programs.
3. 2 The Adoption of EMV Technology in the U.S.
EMV MIGRATION IN THE U.S.
Twenty-two countries have already adopted the EMV standard, including most of the European Union and
various Asian, African and South American countries, and both Mexico and Canada are currently migrating to
the EMV standard.
Global interoperability and acceptance, is a driver that is beginning to influence U.S. issuers. As Canada,
Mexico and the European market along with other popular international business and tourist locations complete
their migration; more and more U.S. card holders are experiencing card acceptance issues.
The payment brands have pushed increasingly hard to make EMV technology the new standard in the U.S. to
assure global acceptance of cards. This includes MasterCard’s announcement about how they are “solidifying
EMV as the foundation of the next generation of payments.” MasterCard has focused on the acquirer
infrastructure to ensure EMV readiness.
In addition, Visa’s roadmap includes the initial approach of migrating the payment infrastructure over to accept
EMV-compliant cards for both contact and contactless cards by 2015. Merchants whose point-of-sale terminals
accept both contact and contactless chips do not need to validate PCI compliance each year. Acquirers are not
required to support both contact and contactless transactions. In 2015 – a liability shift will go into effect.
This is important to note, as EMV technology and mobile payments require similar infrastructure requirements.
By implementing the EMV standard, this will inevitably help accelerate NFC adoption. Research has stated that
there are currently 4.6 billion mobile phone subscriptions worldwide, and that number is projected to increase. It
only seems appropriate to think about how the subscribers will influence the payment landscape.
4. 3 The Adoption of EMV Technology in the U.S.
And, let’s not forget about the current opportunity U.S. issuers already have with international travelers. With
roughly 70 million international trips made by U.S. citizens each year, there is a significant market and need for
U.S. financial institutions to issue EMV-compliant cards. For high net worth U.S. business and leisure travelers,
having their magnetic stripe cards be refused for international transactions in regions such as Europe and Asia
causes significant frustration that tends to make the card fall to bottom of the wallet and not get used, which
costs issuers valuable transaction revenue.
BENEFITS OF OFFERING EMV-COMPLIANT CARDS
As the payment landscape continues to evolve, financial institutions and card issuers need to begin thinking
about what the next steps are for how to offer EMV-compliant cards in their card portfolio to help ensure
that they are well positioned in the market as migration happens. Those that do will be in a prime position to
differentiate themselves, acquire new cardholders, and ultimately increase revenue opportunities.
If the rate of fraud continues to grow with magnetic stripe cards, consumers will begin to lose confidence in the
payment systems. Implementing EMV technology is the best way to protect their customers from fraud.
The EMV-compliant card can also provide support for a wide variety of other applications including secure
logon access to bank websites, loyalty programs, identity verification and more. In addition, by offering
EMV-compliant cards, U.S. Issuers Can:
• Increase Customer Service Levels
• Acquire New Cardholders
• Achieve Top-of-Wallet Status with International Travelers
• Increase International Transaction Market Share
• Increase Interchange Revenue with Global Transactions
5. 4 The Adoption of EMV Technology in the U.S.
best practices for Implementing EMV-COMPLIANT CARDs into
• Get educated. Financial institutions need to learn and understand the complete EMV standard, process
and architecture before they can get started. This includes understanding the implementation options and
infrastructure requirements needed to rollout such programs.
• Know your options. There are various EMV-compliant card programs that can help you get started. This
can include pilot programs that do not fully commit to the infrastructure investment of an in-house bureau;
central issuance or instant issuance of EMV-compliant cards; or PIN change and PIN selection. And, it can
mean determining what is right for you and your cardholders, such as offering contact, contactless or
• Costs Associated. This includes everything from infrastructure changes to cost per card.
• Understand how NFC personalization technology converges with EMV technology. The adoption of
a dual-interface chip technology will help prepare the U.S. payment infrastructure for the arrival of NFC-
based mobile payments by building the necessary infrastructure to accept and process chip transactions.
Understanding the migration to NFC is important to consider when we think about how NFC technology
will evolve in the financial and payment landscape.
• Educating consumers. Consumers will need to be educated on what EMV-compliant cards are, how they can
use them and what the benefits to them include. U.S. consumers are used to using their magnetic stripe cards at
payment terminals. With EMV-compliant cards, they will need to be educated on how to insert their card and
enter a PIN at each transaction, or ‘tap’ their card at contactless POS terminals.