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Is Your Institution Ready for the EMV Transition?
By Tom Driscoll
Recently, MasterCard announced that, beginning in October 2016, a liability shift will take place on ATM transactions. This news comes on the heels of the announcement of other critical EMV compliance dates. April 2013 for the passage of EMV chip data and October 2015 for the liability shift for POS transactions.
The emphasis on EMV implementation comes with a good reason: it’s been proven to be perhaps the most reliant deterrent toward reducing credit-card fraud. EMV compliant smart cards contain an embedded microprocessor in addition to a magnetic stripe. Cards that meet the EMV standard are effective at reducing fraud because they successfully zero in on the number-one ATM fraud practice: card skimming, whereby criminals copy data from the card’s magnetic stripe. The embedded chip, on the other hand, contains the additional information needed to use the card for payment, but is also protected by various security practices, and has proven so effective that countries have gradually been adopting the practice around the world. When France, the first country to enable the first level 1 EMV compliant cards, implemented EMV, they noticed an 80 percent reduction in fraud. Today, the vast majority of ATMs in Europe are EMV compliant and skimming incidents are down by 26 percent. While those numbers are impressive, the more recent problem is that the fraud is simply migrating toward countries which have yet to adopt the EMV standards—and since the United States is one of the remaining countries yet to become EMV compliant, we are a prime target, with potential losses of upwards of $1 billion annually from card skimming alone.
While migrating to an EMV compliant system is a large undertaking, it doesn’t have to be a hassle. Here are three tips to ease your EMV transition, resulting in peace of mind for both you and your customers to protect yourself against fraud.
- Don’t wait. Much of the world has already become EMV compliant or is in the process of doing so, and it’s clear that EMV compliance is the wave of the global future. Recently announced deadlines means that the time is ripe to start thinking about the process, which could take up to 12-16 months. With that in mind, don’t put this on the backburner, those who lag behind are the ones who will be hardest hit while potentially absorbing the enormous costs of fraud. The cost of waiting is not only financial, but could also hinder your brand reputation if your customers are a fraud victims simply because you haven’t migrated toward EMV compliance.
- Know what to expect. Undergoing an EMV transition can be a long process, so it’s good to know what you’re getting into beforehand. What you can expect is a four-pronged experience: First, new cards equipped with a new processor chip technology will be created (which will be the responsibility of the card issuers). Secondly, a consumer POS and ATM card reader hardware will need to be EMV-capable or “smart card” ready. The next phase is implementing a EMVCo Level 2 compliant kernel into the ATM application. Finally, the acquiring network will be configured and tested end to end.
- Hire some help. Established 128 years ago, NCR has a long history with helping EMV transitions. Since 1998, when the transitions started taking place around the world, NCR has assisted banks all over the world (in Europe, middle East and Afrcia, South America, Australia, Asia, Mexico and Canada) in this process. Today, there are roughly 250,000 ATMs using NCR EMV Software.
It’s clear that EMV compliance successfully reduces credit-card fraud, and the United States is severely lagging behind in adopting the practice. The entire process can go smoothly if you start now and hire the right help. In the end, the benefits—not only financially, but also with your customer’s peace of mind, and your institution’s reputation—greatly outweigh the risks.
Tom Driscoll is the solutions manager at NCR. To find out more about how NCR can help your company transition to EMV, go to http://www.ncr.com/newsroom/resources/emv-compliance.