Some Folks See EMV as a Curse, but Others See a Blessing

By Jim Daly
@DTPaymentNews

If there’s one thing about EMV chip card payments that always works, it’s their ability to elicit strong feelings from those in the payments industry. It happened once again on Wednesday, when attendees at the Mobile Payments Conference 2016 in Chicago met for a closing panel session titled “EMV—Blessing or Curse?”

For some, EMV is a curse cast on merchants by the payment card networks and card issuers. “It was a massive case of the Golden Rule—those with the gold make the rules,” said a panelist, Rich Stuppy, chief operations officer at Boise, Idaho-based risk-control technology provider Kount Inc. “They [merchants] were basically cajoled into doing it. If you don’t do it you run a substantial risk of loss.”

Stuppy was referring to the card networks’ EMV point-of-sale liability shifts that took effect last Oct. 1, under which a merchant whose terminal can’t read a cardholder’s EMV chip card bear liability for any counterfeit fraud resulting from the transaction. Until then, issuers had to absorb most fraud losses. Similar liability shifts take effect this October for ATMs and in October 2017 for fuel pumps.

Indeed, merchants have seen “a huge uptick” in chargebacks since the POS liability shift, said another panelist, Jacob Bennett, vice president of risk and underwriting for the National Merchants Association, a merchant-advocacy organization and independent sales organization based in Temecula, Calif.

But a third panelist called Stuppy’s views “a bit extreme.”

“The benefits of EMV are very clear,” said Hitesh Anand, vice president of commerce enablement and mobile at San Jose, Calif.-based VeriFone Systems Inc., the leading U.S. POS terminal maker. “If I’m a retailer, I no longer have liability for fraudulent cards.”

What’s more, most EMV terminals are equipped to process near-field communication (NFC) transactions, which lays the foundation for contactless mobile payments, he said.

EMV has been a blessing for VeriFone for the past couple of years as merchants, beginning with national retail chains, began retrofitting their checkout counters for chip cards with new equipment. But sales slowed for VeriFone earlier this year because of delayed certifications for EMV hardware and software. The company is scheduled to report its latest quarterly financials Thursday.

Bennett said that although the EMV rollout has been slower than many people expected, it affords ISOs an opportunity to begin “re-engaging merchants.”

The relation between EMV and mobile payments spurred an active discussion between the panelists and conference attendees. One attendee questioned whether mobile payments can take off until the U.S. completes its EMV transition. “I think that EMV is one big elephant that has to be digested first,” he said.