CARTES America: U.S. EMV Adoption Brings Consumer ‘Cool Factor’ but Business-Case Challenges (April 24, 2013)
The U.S. EMV migration poses many challenges, but a few issuers and merchants already getting their feet wet with chip-and-PIN conversions told attendees at CARTES America this week that U.S. consumer response to EMV cards so far is positive. The first U.S. commercial bank to roll out EMV cards to its customers in mid-2011, Santa Clara, Calif.-based Silicon Valley Bank, completed the process very smoothly, said Lauri Moss, head of the bank’s deposit and investment services. The U.S. payment networks have set October 2015 as the date when card-fraud liability shifts to those that have not adopted the EMV chip-card standard, but Silicon Valley Bank got a jump on things with its MasterCard credit portfolio for the convenience of its tech-savvy customer base that includes frequent international travelers whose cards were often declined overseas where EMV is the standard, Moss said. “I’m not going to tell you [EMV] is generating any additional revenue,” she said, but for customers there is “a cool factor” in having advanced-technology cards and “the best experience wherever they travel.” Preparing to make the investment in EMV cards can be tough, “but once you get over the hump of the initial business case, it’s not that difficult,” Moss said.
Walmart is testing acceptance of EMV cards in some of its U.S. stores near its Arkansas headquarters and also in Orlando, Fla. The results so far have been generally positive, John Drechny, Walmart senior director of electronic payments, told conference attendees. During a store test, “we discovered we had lots of international cards coming through,” Drechny said. Approving more transactions by enabling EMV card acceptance is a plus, but building a business case to migrate to EMV has been a struggle for Walmart, he said. “Fraud will be reduced, but there is no reduction of fees,” he noted.
For most issuers and merchants, EMV migration will happen gradually, according to Stephanie Ericksen, Visa’s head of authentication product integration. “Many issuers recognize it will take three or four years to convert their entire portfolios,” she said. Visa expects many issuers to get started on EMV conversions next year, “so that about one-third to 50 percent will be [EMV-compliant] by 2015,” she said, with about two-thirds of issuers compliant by 2017. “We know there’s going to be a bell curve” to the process.