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Industry Unprepared For EMV, But Deadlines Appear Firm

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Much like the predicted end of the world on Dec. 21, 2012, the April 1, 2013 deadline for processors to adopt EMV chip card technology seems likely come and go without much fanfare, an official at an EMV education firm says.

The deadline will provide a goal, but it’s probable the credit card brands will push back the compliance date for chip card acceptance by at least a year, says Stewart Chalmers, executive director of the EMV Academy in Toluca Lake, Calif.

“The ability to meet that deadline is just nonexistent,” Chalmers says. “Nobody is anywhere near it.”

He joins a host of executives who participated in the EMV transition in the United Kingdom, Canada and other countries in predicting the U.S. payments industry will not be ready in time for the transition from magnetic stripe cards to EMV chip cards.

Those countries already have completed the switch to smartcards through government and private cooperation, veterans of the process say.

But Visa Inc. has no plans to move back its deadlines, a company spokesperson tells ISO&Agent Weekly. MasterCard Worldwide did not respond to phone messages.

Meanwhile, industry players are complaining that the deadline timetable is too short, Chalmers says, citing feedback his company has received from participants in its workshops.

The EMV Academy conducts online and in-person courses on EMV conversion and compliance and counts major banking institutions, such as Comerica, PNC Bank and U.S. Bank among its participants, he says.

Fronting the cost for new equipment and compliance also causes concern, Chalmers says.

In addition, payments executives in the United States say few merchants, acquirers and other industry players understand EMV and what it will mean for them.

That’s not to say the payments industry is ignoring EMV. The looming deadlines are prompting dialogue and planning, and players are learning what changes lie ahead in the coming years.

Visa Inc. has mandated that processors and sub-processors develop the ability to support merchant acceptance of EMV transactions by April 1, 2013. In October 2015, liability shifts from card issuers to merchants if the merchant processes on equipment that does not comply with EMV standards.

Chalmers doesn’t expect a huge increase in the number of chip cards deployed in 2013. But he has noticed an uptick in the demand for training and seminars, specifically from the banking industry, and Chalmers believes demand will provide a better gauge of EMV interest this year.

“There’s probably another year of education and planning, and I think 2014 is when you’ll see a sizeable deployment in the U.S. marketplace,” Chalmers says.

Mansour Karimzadeh, partner and chief technology officer for the EMV Academy, has helped develop EMV systems in the United Kingdom, Canada, the Middle East and Africa. The transition was a painful process in those countries, but in time participants ultimately saw the benefits.

“I think long term, the advantages will outweigh the problems and costs,” Karimzadeh says of the U.S. market. ISOs and acquiring banks will find opportunities upgrading merchants with new EMV-capable equipment. Meanwhile, acquirers will have to upgrade their offerings and increase their knowledge of EMV, and that will take time.

 

 

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