ISOs and Acquirers Advised Against Waiting To Make Their EMV Migration Moves

With 20 months to go until a major liability shift associated with the migration of the U.S. payment system to chip card, independent sales organizations and acquirers should not wait to get themselves and their merchants ready for the October 2015 deadline, advised Leland S. Englebardt, group head of the global ATM network at MasterCard Inc.

“Chip is coming, and with it a shift in liability for those who do not have chip,” Englebardt said during a presentation Wednesday at the Northeast Acquirers Association annual conference in Dover, Vt.

Chip cards will use EMV, a standard that is widely used globally. To implement EMV in the United States, the major networks have set timelines calling for a shift in counterfeit card liability by October 2015 to merchants if they are not equipped to accept EMV transactions. Petroleum marketers have an extra two years. Currently, issuers bear this liability. MasterCard says it has no plans to extend the October 2015 deadline.

Englebardt said some members of the payment system may intend to “wait and see” before they move ahead on their chip card plans. “It will become apparent that waiting and seeing is no longer a viable course of action,” Englebardt said.

That urgency is fueled by the growth of cross-border counterfeit card fraud in the United States, Englebardt said. Though he shared no data, Englebardt said that type of fraud has tripled in the past several years. “That trend has accelerated since our two closest neighbors have moved to chip,” he said, referring to Mexico and Canada. “Fraud is being driven from the rest of the world and it’s coming here.”

One risk of waiting until 2015 to get merchants is ready is an expected backlog of terminals, Englebardt said. “The point-of-sale manufacturers have told me they’re starting to see a backlog of a month to six weeks,” he said. “What do you think it will be a year from now?”