EMVIt’s been one year since the EMV fraud liability shift went into effect in October 2015. As a consumer, the main impacts I’ve experienced is a slew of new chip-enabled payment cards in my wallet and some consumer confusion at retail stores where chip card technology is enabled. However, as a Security Officer, I’ve seen many benefits resulting from the introduction of EMV to the U.S., both expected and unexpected. Let’s review:
What is the liability shift?
In October 2015, the major processing banks implemented a shift that transferred fraud liability to merchants who accept fraudulent chip card transactions, unless they use EMV-capable point of sale (POS) devices. As a result, merchants across the U.S. upgraded their devices as consumers received brand-new chip-enabled credit and debit cards from their banks.
What’s the impact?
According to Visa, there are 1.46 million chip-enabled businesses and 363 million chip-enabled Visa cards in the U.S. In August, the number of Visa chip transactions surpassed half a billion, marking a 1,000+% annual increase in these transactions.
One of the major reasons for bringing chip-card technology to the U.S. was to prevent counterfeit fraud. Visa reports that this has been working: businesses that have completed the transition to chip terminals benefited from a 47% reduction in counterfeit fraud in May 2016, compared with the same period of time in 2015.
What are the challenges?
According to MasterCard, 87% of American consumers commonly use chip cards. However, many consumers express confusion about when and where to use chip cards (Cayan). This confusion is creating an unexpected effect of the liability shift: increased adoption of mobile payments. Apple’s third-quarter financial results in July 2016 support this trend, revealing that Apple Pay’s monthly users are up over 400% year over year.
Mobile wallets like Apple Pay are convenient because they are embedded within a consumer’s smart phone. If you’re like me—and many consumers—and you carry your phone with you everywhere you go, then a mobile wallet is always accessible. Healthcare providers that enable mobile payment functionalities at their POS touchpoints are appealing to consumer preferences for easy, convenient payment methods.
Preparing for Mobile
As more consumers shift towards mobile wallet payment options like Apple Pay and Android Pay, merchants must implement mobile-ready card terminals to support this preference. If you haven’t made the switch to EMV yet, seek out card devices that enable both EMV and mobile wallet transactions. We’ve talked before about the security benefits of new payment technologies like mobile wallets. While there tends to be uncertainty about the security of mobile payment options, the reality is these technologies are extremely secure. For example, Apple Pay leverages three different technologies to support the security of payments made through Apple Pay: Near Field Communication (NFC), the secure element and Touch ID.
By enabling both EMV and mobile wallet technologies at your POS terminals, you take a holistic approach to POS payment security while also delivering a convenient consumer payment experience.
So what’s the point?
One year after the EMV liability shift, we’re seeing decent consumer and merchant adoption rates, as well as a decrease in fraudulent card-present transactions. However, you don’t want to hedge your bets on EMV alone. Don’t stack the deck with EMV. Consider other attractive moves like mobile wallets to deliver a secure and convenient payment experience.
Wait, why the gambling puns?
I’ll be in Las Vegas presenting at NextGen UGM on November 8th at 9:00 AM. Be sure to stop by my presentation to learn more about payment security in healthcare, especially leveraging EMV with InstaMed in NextGen Practice Management 5.8 UD3!