Swifter EMV Certification Will Aid Chip Card Transition—And Terminal Makers

Getting point-of-sale terminals through the EMV-certification process should become a bit quicker thanks to the card brands’ efforts to “streamline” the testing process. That should bode well for POS terminal maker VeriFone Systems Inc., says Vin D’Agostino, executive vice president of VeriFone Services.

MasterCard Inc. and Visa Inc. separately announced programs that would hand acquirers more responsibility to either follow the network’s testing procedures or conduct alternative test procedures if they wish. In this way, MasterCard says it is reducing by 58% the number of required tests to which acquirers must subject terminals to certify them as EMV-ready. Visa said its own policy change reduces its roster of recommended test scripts from about 35 to 14.

They also announced plans to ease the number of EMV chargebacks, which have spiked for some merchants as more consumers use their chip cards.

While the programs will take a little bit of work to get into place, D’Agostino tells Digital Transactions News the testing changes will shorten the adoption of the EMV technology.

“Ultimately, it helps merchants,” D’Agostino says. “These changes Visa and MasterCard made will allow more merchants to get EMV acceptance enabled in their stores sooner than if they’d not been made,” he says.

Getting more terminals activated for EMV on merchant countertops will accelerate EMV adoption, which potentially could boost the fortunes of POS terminal makers like VeriFone, Ingenico Group, ExaDigm Inc., and Equinox Payments.

D’Agostino anticipates VeriFone could post a record revenue figure for another quarter this year, like it did in the second quarter. The second quarter, however, was saddled with lower profits because of EMV certification delays, a slowdown in advertising revenue from taxicabs, and price competition in VeriFone’s emerging markets.

The certification delays have been particularly vexing for terminal makers’ reporting of sales on services such as tokenization and estate management. VeriFone, for example, can’t recognize EMV service revenues until systems are actually processing chip card transactions, VeriFone chief executive Paul Galant noted in an earnings call early this month. It recognizes terminal sales when devices ship from the warehouse to customers, D’Agostino says.

Historically, the second quarter is weaker than the other quarters, D’Agostino says. What many customers did was move their purchases to the third quarter, he adds. “We have a big wind at our back because the fact of the matter is more countries are adopting electronic payments,” he says. “When that happens more devices and more services from VeriFone will be consumed.”