What’s happening with EMV
The migration to EMV started on the 1st of May 1997, when the first transactions in the world took place in a canteen in Basildon, Essex, east of London. So we have been migrating now for over 15 years, but there are still quite a few areas of the world still to complete or even start the migration.
In many ways, things have got a good deal easier as the levels of expertise have risen, third party hardware and software comes ready upgraded and the tools, like test simulators, now make life much less difficult. It is still the most complex migration we have ever undertaken in the card business, certainly in my lifetime and the lifetimes of many others.
So is anything changing? Well yes, with the US starting down this route, we now have the largest card country in the world starting the process. The main driver in the US is somewhat different to the driver 15 years ago. That driver is interoperability; too many magnetic stripe cards from the US and other countries are now being turned down in areas like Europe, that have already migrated, and the liability for magnetic stripe transactions has now moved to the merchants (if they can’t process EMV). Merchants know that they need to protect themselves from fraud and it is most likely to involve a magnetic stripe card from a region outside their own. So they refuse to accept these types of cards, and that is the main problem for the US and many other countries.
So as the US starts on this process the pressure is now own the other countries around the world as well who are still to migrate, areas such as parts of Africa, The Caribbean, The Philippines, India and China. These are the main areas but there are still banks in many parts of the world that have still not started the migration.
Where is this pressure coming from in these areas? From three main groups: The Card Schemes, where some countries have delayed migration because the US was doing nothing. The Central Banks, who are now under pressure from other central banks, international banking organisations and the card schemes to get their banks to conform. With both of these there will be pressure applied in the form of fines, increases in the cost of magnetic stripe transactions and so on. The third group probably applying most pressure are the fraudsters, organised crime groups that are very good at what they do and see the opportunity in the countries still using magnetic stripe or in the process of migrating when the level of confusion will rise and can be exploited.
When will we complete this migration on a worldwide basis and then be able to lay the magnetic stripe to rest, probably not for 15 – 20 years at least. This is not a quick process and anyone who thinks it is are just storing up problems for themselves and their banks. But with the expertise and tools we now have available it will be much smoother than the first migration over 15 years ago.
