EMV standards moving closer to global acceptance

Managed by EMVCo, the company has discovered that one third of all card-present transactions now involve EMV.

Originally developed by Europay, MasterCard and Visa, many countries around the world, including Australia, Brazil and most European countries, have been utilising EMV for years.

According to EMVCo, Europe Zone 1 is close to full market EMV chip deployment with 97% of all card-based payments using EMV technology. This is followed by Latin America at 87%, and Africa and the Middle East at 84% of payment transactions EMV chip-enabled.

Asia showed impressive growth with the number of payment using EMV chip technology increasing by 73%, representing 34% of all card-present transactions. Europe Zone 2 also saw a significant rise of 30%, to 65% of all face-to-face payments based on EMV.

Mike Matan, current chair of the EMVCo executive committee, commented: “The figures published represent a 10% year-on-year rise in the number of card-present transactions using EMV chip technology, from nearly 30% of all transactions a year ago to 33% in the most recent reporting period.

“It’s great to see that not only are the cards in the marketplace, the infrastructure is also in place to accept and process secure chip payments worldwide.”

The US taking on EMV
Other countries and regions are catching up. For example, US consumers still mainly use swipe-and-sign cards that rely on magnetic stripes. The lag is due to the sizable investment associated with upgrading payment cards and card acceptance infrastructure.

Increased EMV card circulation in the US is set to increase interoperability between nations and reduce customer inconvenience when travelling abroad where EMV standards have already been implemented, such as SEPA, Canada and key regions within the Asia-Pacific market.

With approximately 1.4 billion payment cards in the US, the migration to chip cards will represent a significant cost for issuing banks. The cost to migrate around nine million POS terminals is estimated at $10bn. Chip cards can cost anywhere between five to ten times more than that of a magnetic stripe card, the commonplace device in the US.

A combination of infrastructure quality, fraud size and costs of switching to EMV has created a very different cost-benefit picture in the US compared to the rest of the world.

European countries required chip cards because their telecommunications infrastructures were underdeveloped. Due to this, it was costly and problematic to verify a card purchase using a phone line and a POS terminal. Merchants and acquirers were forced to rely on batch processing. Card transactions were stored in POS terminals and sent to issuers in giant batches for verification.

This system gave fraudsters plenty of time to commit fraud at the POS. The solution was a PIN matched to a chip on a card or an offline PIN.

The different in the US is that its telecommunications network can handle large-scale transactions. This means the card approval process is relatively cheap, easy and reliable, as well as reducing the need for batch-process card transactions. Considering the US payment system hasn’t added PINs to cards for a long time, it has performed remarkably well.

Despite large retail payment breaches, card fraud rates in the US remain relatively low. Card-present fraud is estimated at $8.6bn a year, according to Timetric, the equivalent of a mere few cents per every $100 spent.