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The State of EMV Smartcards in the U.S.?

EMV smartcards are the card standard in Europe, many countries in Asia and most recently in Canada. U.S. issuers have been reluctant to adopt the technology. But now, the prospect of widespread adoption of smart cards in the US is finally gaining some traction, indicating a desire to offer the greater security of smart cards and align itself with the rest of the world. Most recently, MasterCard Worldwide unveiled its EMV roadmap, five months after Visa, Inc. announced their guidelines and deadlines. A handful of U.S. issuers are piloting EMV chip cards, albeit to very select group of customers. Large retailers, most notably Wal-Mart, which pushed for EMV conversion two years ago, are supporting the effort.

Since many view the growing fraud dangers as the weakest link in the U.S. payments chain, the impetus to move EMV along could only grow stronger.

But many questions remain.
•Are the compliance dates from the major networks realistic?

•MasterCard’s plan explicitly states that the party–the issuer or merchant–offering the least secure method would be held liable for a fraudulent transaction. A liability shift by Visa and MasterCard has worked elsewhere in the world. Will it work in the US?

•Will there be any interchange rate relief? Will the Fed consider the cost in its bi-annual review of Durbin pricing for debit cards?

•Large merchants may be behind the conversion, but will smaller merchants follow? Can the smaller merchants afford the technology upgrade?

•Are there other technology enhancements (like NFC) that , if included, might strengthen EMV’s value to merchants, issuers and consumers?

•Will the move to the EMV standard at the POS speed-up or slow down the adoption of mobile payments?

•How will the EMV standard impact the growth of prepaid?

Stay tuned on this one…

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