This presentation provides an overview of EMV chip technology, including EMV history, usage statistics surrounding EMV around the world and in the US, myths surrounding EMV, and risks/implementation considerations that face merchants who must update their payment systems to accept EMV cards.

1. EMV FOR
MERCHANTS

2. EMV 101
History, What is EMV, Types of Transactions, and Fraud Trends

3. EMV HISTORY
History
• The EMV acronym originally referred to the
founding organizations from 1994 – Europay,
MasterCard and Visa. Today the EMV trademark
is owned by all of the equity owners of EMVCo:
MasterCard, Visa, JCB, American Express, China
UnionPay and Discover.
Today
• Within the payments industry, “EMV” has often
been used to refer to the original EMV Contact &
EMV Contactless Specifications. When used in
this manner, EMV refers to payment chip cards
that contain an embedded microprocessor, a
type of small computer that provides strong
security features and other capabilities not
possible with traditional magnetic stripe cards.
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4. WHAT IS EMV?
EMV – Technical standards for cards and terminals that
also impact end-to-end payment process.
EMV uses an embedded microchip in the card to
authenticate both the card (Card Authentication Method)
and the cardholder (Cardholder Verification Method)
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5. W. Capra Consulting Group
International standard defining interoperability
of secure transactions
• Introduces dynamic data specific to the
transaction
• Devalues transaction data, reducing the risk of
counterfeit fraud
World-wide adoption, including U.S. neighbors
Canada and Mexico
• Affecting U.S. multi-national retailers
Enabler of future payment types
• Contactless, Mobile
Chip & PIN ≠ EMV
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WHAT IS EMV?

6. W. Capra Consulting Group
Chip on card uses cryptography to provide
security
Utilizes 2 forms of cryptography
• Digital signatures – ensures data is authentic
• Encryption – ensures PIN data is kept confidential
Digital signature devalues the data
• Even if data is intercepted, signature cannot be
replicated
Encryption is only used to protect the PIN
• EMV does not encrypt all transaction data
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WHAT IS EMV?

7. HOW WIDESPREAD IS EMV
ADOPTION?
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8. A DIFFERENT VIEW
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9. EMV CARD-PRESENT
TRANSACTIONS
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10. GLOBAL FRAUD TREND
Counterfeit Fraud
Volume
(Visa only)
Europe
(Liability Shift
in 2005)
Asia Pacific
(Liability Shift
in 2006)
U.S.
(Liability Shift
in 2015)
- 56%
- 52%
+ 307%
2011
2004
U.S.
$…
ROW
$5.9
B
U.S.
$5.1T
ROW
$16.
5T
U.S. and
Rest of
World Sales
Volume
2012
U.S. and Rest
of World
Fraud
Volume
2012
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Source: Vantiv, and Bureau of the Fiscal Service; http://fms.treas.gov/cas/EMV_Merchant_101.pdf

11. U.S. LEADS THE WORLD IN
FRAUD
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12. WHAT’S DIFFERENT WITH EMV?
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Current U.S. Standard
• Confidential data
stored on magnetic
stripe
• Authentication is via
PIN or signature
• Susceptible to
skimming
• No data is “written”
to magnetic stripe
Current Global
Standard
• EMV terminals read,
write data during
transaction
• Multiple methods for
authentication
• Dynamic authorization

13. MARKET DRIVERS FOR EMV
Counterfeit, Lost and Stolen Fraud Losses
• Currently, Issuers are liable for counterfeit fraud-related
losses
• When EMV cards are issued, liability for counterfeit
fraud will shift to merchant if the merchant is not EMV
enabled
• When used with a PIN, also protects against lost and
stolen fraud. Most card brands assign fraud liability
based on the least secure party to the transaction
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14. Global Interoperability of Chip Cards and
Payment Devices
• Worldwide standard used by all countries
• Support for international commerce
Contactless and Mobile Payment Schemes
• Demand for new and trending form factors
› NFC (Near-Field Communications)
› BLE (Bluetooth Low Energy)
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MARKET DRIVERS FOR EMV

15. MYTHS: EMV AND DATA
BREACHES
Myth: EMV would have prevented the recent high-profile
breaches
• Although EMV would have lessened the aftermath of the recent
breaches, it would not have prevented them from happening
• Even with EMV in place, a portion of the card-related data can
still be unencrypted, or transmitted, in plain text
• The benefits of the EMV standard would only have kicked in
after the breach occurred, by preventing the reproduction of
cards from the stolen data
Myth: EMV is powerless related to the growing CNP fraud and
should be skipped as we move towards an e-commerce
consumer environment
• EMV does not have much impact on CNP fraud, but in-store
purchases on cards is expected to reach $7.1 trillion in 2017
• Skipping over EMV will leave cards vulnerable and drive fraud to
that payment channel, much as criminals are targeting the U.S.
because it is the only major country without EMV
Source: https://www.bai.org/bankingstrategies/print.aspx?id=9242b7f7-b2ec-46a8-bf9e-686f2668a00f
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16. Myth: EMV isn’t worth the time and cost associated
with the technology implementation and consumer
education efforts
• Security solutions have to be viewed as worth the
investment in order to stop fraudsters and protect
customers
• For example, Target experienced significant stock price
decreases and lower sales as a result of its December
2013 breach
• For some companies, the damage to the brand’s
reputation could be worse than the financial costs of a
security issue.
• With the introduction of EMV cards in the UK, fraud losses
from counterfeit cards fell more than 63% between 2004
and 2010
• Card fraud resulting from lost or stolen cards dropped
more than 61%.
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MYTHS: EMV AND DATA
BREACHES

17. WHO IS PARTICIPATING IN THE
CHANGE?
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Payment Brands & Debit
Networks
• Brands have affirmed
October 2015 fraud
liability shift
• Debit EMV framework in
place
• Brands have cross
licensed each other’s
Common Debit
Applications
• Visa and MC also
working together on
Encryption, tokenization
and other security topics
Acquirers
• Investments already
made in their back
end; ready to support
EMV Apr 2013
• Still need to develop
POS specs and
complete front end
changes
• Constrained on
resources for
merchant testing &
certification

18. Issuers
• Chip card issuance has
begun
• Card manufacturers
seeing significant
increase in orders from
issuing banks
• Customers can request
cards now; most issuers
will replace as cards
expire
• 5000+ issuers and 1 billion
cards; migration is
accelerating but will take
time
Merchants
• Several large
merchants have had
active projects for
over one year
• More interest and
activity due to recent
breaches
• Average time from
start to certification is
18 months, assuming
acquirer, tech
vendors are ready
and no testing
bottlenecks
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WHO IS PARTICIPATING IN THE
CHANGE?

19. WOULD YOU LIKE TO LEARN MORE
ABOUT HOW EMV WILL IMPACT
YOU?
W. Capra Consulting Group 19
W. Capra Consulting Group
221 N LaSalle St #1325
Chicago, IL 60601
(312) 873 -3300
www.wcapra.com

20. W. CAPRA SERVICES
W. Capra Consulting Group
Retail
Technology
Provide project
leadership, retail
technology
expertise,
architecture
guidance,
deployment
management,
process
improvement
and operational
strategies
through a full
lifecycle
methodology
Payments
Provide
merchants the
best
opportunity to
construct a
right sized
payment offer
that meets the
retailer’s
business
objectives while
minimizing total
cost
Data
Security
Provide
merchants
retail specific
security best
practices to
ensure
consumer data
and credit card
data is
protected
without
impacting your
day to day
business
Back Office
Provide
operational
guidance
around retail
inventory and
workforce
management
to insure
inventory
margins and
labor cost are
in line with
established
goals.
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21. W. CAPRA EMV EXPERIENCE
W. Capra Consulting Group
Engagement Verticals
Advisory Currently engaged
Grocery, Petro C-Store,
Pharmacy & QSR
Education Currently engaged Petro C-Store & QSR
Strategy Currently engaged
General Retail, Petro C-Store,
QSR, and Private Label Issuer
Planning Currently engaged
General Retail, Petro C-Store &
QSR
Delivery Currently engaged
General Retail, Petro C-Store
and QSR
Leadership
EMF: W. Capra has multiple resources attend and
participate in the EMF
MAG: W. Capra consistently provides educational
content and sessions
to the MAG and its members
NACS: W. Capra has multiple resources attend and
participate in the
working committees
W. Capra has recently been, or is currently, engaged
in all phases of EMV delivery in the U.S.
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