Visa on Unique EMV Challenges in U.S.Why U.S. Chip Payments Still Rely on Legacy Practices
Visa's Kimberly Lawrence contends that U.S. migration to EMV is progressing more rapidly than in other markets that have made the transition, requiring outside-the-box rules for debit transactions and cardholder verification.
By the end of 2015, Visa estimates that some 70 percent of credit cards and 40 percent of debit cards will be EMV-compliant, Lawrence notes in an interview with Information Security Media Group. On the merchant side, Visa acquirers estimate that about 50 percent of U.S. retailers will have point-of-sale terminals in place by year's end that are equipped to accept contact EMV chip transactions.
"The U.S. is moving at a pace that no other markets have seen," she contends.
But the speedy transition creates challenges, says Lawrence, senior vice president of global corporate initiatives for Visa, who is the keynoter at this week's Smart Card Alliance 2015 Payments Summit in Salt Lake City.
Credit is ahead of debit on the EMV migration path, Lawrence says, namely because the rules for processing credit transactions allowed issuers to rely on EMV implementations similar to those already deployed in other global markets. For debit, because of routing and interchange nuances unique to the U.S. market, those EMV implementations would not work, she adds.
Over the last 12 months, however, issuers, processors and acquirers finally agreed on a common EMV implementation for U.S. debit that met all regulatory requirements for debit processing.
Lingering Mag-Stripe Processes
Additionally, because of the U.S.'s need to quickly migrate to EMV, U.S. issuers, acquirers and merchants have had to come up with methods to facilitate and verify EMV transactions in ways that mimic legacy mag-stripe purchases, Lawrence says.
"Everyone we see to date is really focused on mimicking the current mag-stripe environment, with regards to how they're setting up cardholder verification methods," Lawrence says. "Everyone is focused on getting to chip as quickly as possible, and trying to minimize the actual development and changes that are needed to get to this new and more secure environment."
But at some point soon, the market will have to move beyond the temporary bridges it has built to ensure EMV in the U.S. is implemented in ways that more closely resemble other global markets, she says.
"We want to ensure that as the industry moves forward, nobody gets left behind the curve of movement," she says.
During this interview, Lawrence also discusses:
- Why consumer education about EMV is going to be such a critical focus;
- How industry groups, including the Smart Card Alliance and the Payment Security Task Force are working to help issuers and acquirers address common debit concerns; and
- How mobile payment options, such as Apple Pay, are expected to spur more retail adoption of contactless payments.
At Visa, Lawrence is responsible for the strategic direction, development and deployment of critical business initiatives, including the U.S. transition to EMV chip technology. Lawrence oversees a team responsible for developing and deploying strategies and policies focused on Visa's growth in support of client and partner relations around the world. Previously, Lawrence served as Visa's head of consumer product platforms and strategic initiatives. Prior to that, she held roles leading Visa's cross-border programs, as well as the consumer debit product team.