I’m excited to have guest author, Docia Myer, Vice President of US Financial Sales at CPI Card Group, share her assessment of EMV Market Trends. As she mentions below, EMV is the new normal and I look forward to seeing what’s next. — Greg
Now that EMV chip cards are here, some people may wonder how long they’ll last. Are they just another incremental technology that will fade out after a while, replaced by the next big thing? Are chip cards another cassette or VHS tape?
The answer is no. EMV isn’t going anywhere. It is here to stay.
The main reason for this is that EMV is more than a chip—it’s the infrastructure enabling a more secure payment ecosystem. Reduced identity theft, stolen credit information, and fraud are all well-known advantages of EMV. The less-known, but equally important, driver of the transition is that EMV forms the basis for future payment innovation.
The ability to pay with your watch or with your phone at the point of sale is based on the EMV infrastructure. New and innovative payment forms, such as contactless payments, will likely be next and, perhaps, wearable payment forms, such as clothing and accessories. These new “form factors” are possible because of the EMV ecosystem.
Deborah Spidle, Director of EMV Solutions at Paragon Application Systems, said in a recent article, “Although some may claim that EMV is archaic because it has been around for several decades, EMV has survived because it has proven to be successful.”
She added, “If you want to take advantage of other technologies that rely on the same dynamic authentication principles as EMV, it’s essential to first establish a strong foundation … U.S. payments industry stakeholders that do not fully embrace EMV will find it more and more difficult to support newer technologies, and new forms of payment, as they become available.”
The process is slow, but as merchants, cardholders and issuers adapt, we’ll begin to see EMV’s momentum grow—as we’ve already seen since October. The Payments Security Task Force (PST) made a forecast late last year that the number of chip cards in the U.S. issued by its members (which represent 50% of U.S. payment card volume) will grow to 98% by the end of 2017. We’ll see if that number holds true.
In terms of magnetic stripe cards, will they go away? For payment card issuers, yes, but slowly; we’ll still see them in other markets where payment security isn’t required. Nevertheless, the late adoption of EMV in the U.S. will contribute to the slow demise of the magnetic stripe, affecting other countries like Belgium, which accepts magnetic stripe cards to accommodate international travelers.
In fact, this year, a large retailer will be the first to introduce a private label credit card (PLCC) with an EMV chip and no magnetic stripe on the back. The U.S. might be the catalyst for an entirely non-magnetic stripe environment for payment cards.
Regardless of whether the magnetic stripe goes the way of cassette and VHS tapes, EMV will not. It’s just a matter of time before it becomes the new normal, and what comes next will build on the foundation of EMV—not replace it.
We’re on the brink of something great, and it’s exciting to see where EMV will take us in the years to come.
Watch Card Chat: EMV® Market Trends to learn more about the EMV transition experience.
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