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The US Payments Forum, which helps oversee the US chip-card migration, updated its EMV Minimum Requirements Matrix, to reflect recent developments from major card networks.
The document outlines the minimum chip card implementation requirements for major card networks, including American Express, China UnionPay, Discover, MasterCard, PULSE, STAR, and Visa.
The guide is meant to help stakeholders looking to implement EMV, including issuers, merchants, processors, and vendors, more clearly understand what’s required in order to seamlessly integrate EMV.
The updates reflect the following recent developments:
Major card networks recently debuted solutions that speed up EMV transaction times.Visa and Mastercard recently debuted their faster EMV solutions, which decrease EMV transaction times from 10-20 seconds to three or fewer. American Express and Discover, which launched similar solutions, will likely follow suit soon. Faster transaction times could push the large group of previously hesitant merchants to upgrade to EMV terminals, because shortening EMV transaction times could limit long lines, frustrated consumers, and cart abandonment.
And at the same time, these players are working to make the upgrade simpler for merchants that choose to do so. Terminal certification and activation is a time-consuming process for stakeholders in the POS migration, like merchants and acquirers. As merchant interest has increased, that complexity has led to a backlog and a delay between when a merchant receives their EMV terminal and when they can begin using it to accept chip card payments. This has pushed major card networks to change their certification standards in order to better support merchants and accelerate the process. As more merchants upgrade, the clearer guidelines that the new Matrix provides could simplify the process further without adding to the backlog.
Taking steps to increase clarity surrounding the EMV migration will likely accelerate the migration through the rest of the year. The simplicity that the clarified guide could bring will ease pain points associated with the US EMV migration for key stakeholders, especially on the merchant-facing side of the migration that’s experiencing the most friction. That in turn could accelerate the migration and push up the number of chip-on-chip transactions from the 2% counted at the end of 2015.
Fraud cost U.S. retailers approximately $32 billion in 2014, up from $23 billion just one year earlier. To solve the card fraud problem across in-store, online, and mobile payments, payment companies and merchants are implementing new payment protocols that could finally help mitigate fraud.
John Heggestuen, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on payment security that looks at how the dynamics of fraud are shifting across in-store and online channels and explains the top new types of security that are gaining traction across each of these channels, including on Apple Pay.
Here are some of the key takeaways from the report:
EMV cards are being rolled out with an embedded microchip for added security. The microchip carries out real-time risk assessments on a person's card purchase activity based on the card user's profile. The chip also generates dynamic cryptograms when the card is inserted into a payment terminal. Because these cryptograms change with every purchase, it makes it difficult for fraudsters to make counterfeit cards that can be used for in-store transactions.
To bolster security throughout the payments chain encryption of payments data is being widely implemented. Encryption degrades valuable data by using an algorithm to translate card numbers into new values. This makes it difficult for fraudsters to harvest the payments data for use in future transactions.
Point-to-point encryption is the most tightly defined form of payments encryption. In this scheme, sensitive payment data is encrypted from the point of capture at the payments terminal all the way through to the gateway or acquirer. This makes it much more difficult for fraudsters to harvest usable data from transactions in stores and online.
Tokenization increases the security of transactions made online and in stores. Tokenization schemes assign a random value to payment data, making it effectively impossible for hackers to access the sensitive data from the token itself. Tokens are often "multiuse," meaning merchants don't have to force consumers to re-enter their payment details. Apple Pay uses an emerging form of tokenization.
3D Secure is an imperfect answer to user authentication online. One difficulty in fighting online fraud is that it is hard to tell whether the person using card data is actually the cardholder. 3D Secure adds a level of user authentication by requiring the customer to enter a passcode or biometric data in addition to payment data to complete a transaction online. Merchants who implement 3D Secure risk higher shopping-cart abandonment.
In full, the report:
Assesses the fraud cost to US retailers and how that fraud is expected to shift in coming years
Provides 5 high-level explanations of the top payment security protocols
Includes 7 infographics illustrating what the transaction flow looks like when each type of security is implemented.
Analyzes the strengths and weakness of each payment security protocol and the reasons why particular protocols are being put in place at different types of merchants.
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