Expert Panel Discusses EMV ‘Chip and PIN’
By Dave Witts
As technological advances affect change in nearly everything around us in our daily lives, innovations in the way the U.S. pays with a credit or debit card have remained stagnant. That’s all about to change as businesses in the U.S. start navigating the transition to the so-called EMV Chip and PIN/Signature standard of payment, which refers to a computer chip embedded in a debit, credit or ATM card.
I had the opportunity at PIE 2014 to sit down with experts from parking operators to payments providers to discuss the future of parking.
We had a lively discussion about how the U.S. transition to EMV will impact customers, parking operators, manufacturers, financial institutions and payments processors. Here’s a look at what the collective group discussed:
The general public is still not fully aware of what changes are happening to the cards in their wallets and what changes are happening when they pay for a transaction. Other than the security breaches we had with a few major retailers late last year that caused some coverage of the U.S. migration to EMV, most of us aren’t completely well-versed yet.
As of now, it seems the general public has been made aware a more secure solution is coming, but do individuals understand other than that there’ll be a “chip” in the card? For example, do most people understand the differences between chip and PIN or chip and signature?
Interestingly, it appears (at least for now) that the U.S. will likely migrate to a Chip and Signature smartcard, first. Even though Chip and PIN is more secure, the cost implication for some means the U.S. is going to transition with Chip and Signature.
So what’s the big difference? If we were to move to a Chip and PIN only system, only the individual carrying the card and the chip on the card know what the PIN is. During transactions, the PIN that the customer enters is confirmed via the chip in the card for an off-line PIN. The merchant gets a confirmation that the PIN entered matches, but the PIN is never relayed to anyone or anything else.
Just having a computer chip on the card prevents thieves from copying that card. However, with a Chip and Signature system, someone can still steal a card and potentially make transactions before financial institutions have the ability to cancel the card.
2. Parking Operators
No matter whether the U.S. chooses to go with a PIN or a signature to authorize a purchase, customer expectations are that no matter where they park, they’re going to have the easiest and most secure way to pay.
Customers are much more aware now of payments security than ever before. Operators in Canada, for example, have seen a great reduction in fraud since the EMV payment standard was implemented there recently.
Unlike customers, most parking operators already know the shift to EMV is happening and have turned toward thinking how they’re going to implement it by developing timelines. By planning now, parking operators can meet the October 2015 deadline for liability shift.
Manufactures that build point-of-sale (POS) terminals, if they haven’t already started, are looking at designing new hardware/software to meet the EMV standard. In many cases, because of the vast number of EMV certifications required, chances are they will hit a bottleneck waiting for certifications if they don’t work with partners who are already pre-certified.
In the parking industry, we’re seeing that with a lot of the payments, the majority in the next three years are going to be via mobile app. Customers are increasingly paying for parking on their smartphones. Those manufacturers that build parking meters seem to be teaming up with mobile app developers or are developing their own to stay ahead of the curve.
4. Financial Institutions
The EMV standard of payment rollout means much better security, a bigger reduction in fraud and costs, and higher customer satisfaction because of fewer instances of suspicious activity.
The migration essentially starts with banks and credit card companies, which will begin adding chips to debit, credit and ATM cards. Part of the reason for the holdout in issuing new cards comes from financial institutions wanting to ensure that parking operators and device manufacturers have started supplying EMV-enabled hardware.
In addition to issuing the new cards, those same financial institutions will be working in concert to generate awareness among their customers about what the new cards are and what the benefits of having them include. Part of owning consumer education is that the credit card companies will educate consumers on how EMV transactions work once they have their cards.
5. Payments Processors
Overall, payments processors are seeing the biggest obstacle to EMV migration is the cost to the manufacturers to upgrade their equipment. While EMV-certified hardware is definitely a higher cost than what’s out there today, both customers and merchants are more protected because there is less fraud as a result..
Perhaps one of the biggest insights into how long the transition will take in the U.S. comes from how the EMV transition took hold in Canada. Data from Canada suggest the liability shift, on average, takes six years to reach 90% compliancy. So, even following the October 2015 liability shift, we’ll likely continue to see changes in the way we pay for parking through October 2021.
I’d like to thank those who participated in the EMV –Chip and PIN panel discussion with me. They are Jason Oxman, CEO of Electronic Transactions Association; Chris Sepp, Director of Business Solutions for Imperial Parking Canada Corp.; Simon Hurry, a Senior Business Leader at Visa Inc.; Wally Mlynarski, VP of Mobile Commerce Solutions division at Elavon; John Lovell, Managing Director & CEO of HUB Parking Technology Canada; Mike Hughes, NA Strategic Partner Sales at Moneris Solutions; and Jim DuFon, VP of Sales at Parkeon (US).
Dave Witts, President of U.S. Payment Services for CreditCall Ltd., can be reached at firstname.lastname@example.org.
Article Abstract from April, 2014