U.S. banks and merchants face many obstacles in preparing for EMV chip-based cards at the point of sale and the Web is no less reluctant to change.
Acculynk promises to improve security through its online PIN debit technology, which has gained momentum in markets such as India and China, but "I can't put the resources into the U.S. because there is not a huge demand for this product yet," says Acculynk CEO Ashish Bahl, as his company waits to see how banks and merchants will prepare for EMV smart card migration.
Acculynk's flagship software, PaySecure, is an online PIN pad that allows consumers to make PIN debit payments on e-commerce sites. As such, PaySecure can help fight the migration of fraud to e-commerce sites in countries that have switched to EMV chip-based cards at the point of sale, Bahl says. "In those foreign markets, PIN debit online is a here-and-now business and it is the standard."
But in the U.S., merchants remain wary about how consumers will adapt to new technologies, whether it is EMV or online PIN, says Julie Conroy, senior analyst and fraud expert with Boston-based Aite Group.
"The U.S. will be the most challenging because its consumers have the least tolerance for any friction [in the transaction process]," Conroy says. "Merchants will be looking for the system that is the least intrusive."
Countries adopting EMV have used additional security methods for online purchases, Conroy says. "There are a lot of different approaches, depending on the country and its consumers," including online PIN, 3D Secure and a direct debit to bank accounts, she says.
Visa, MasterCard and other card brands have set an October of 2015 deadline for most U.S. merchants to begin accepting EMV cards. Those that miss the deadline face a shift in fraud liability.
As merchants adapt to EMV technology and the changing outlook for fraud, they are also trying to determine which, if any, of the numerous available mobile wallets are worth supporting, Bahl says.
Apple's iPhone 5s, launched last week, adds fingerprint-reading as a further method of authentication for mobile purchases. However, Apple has not yet opened this technology to developers to use with mobile wallets or mobile e-commerce sites.
"Even if you want to try a technology such as biometrics, you have to ask if it would be scalable, and what type of connections and rules would be needed," Bahl says. "There would be so much to be done, you have to wonder why an independent third party would finance something like that."
Europe provides a case study in online security technology because many countries implemented Visa's 3D Secure for e-commerce, but later discovered it created a cumbersome process for consumers who would abandon their purchases.
However, Visa has received positive reviews for its recent changes to 3D Secure, prompting industry analysts to encourage online merchants to give it a second chance.
When EMV is eventually in place in the U.S., consumers should transition into chip-and-PIN at the point of sale or online PIN debit fairly seamlessly, Bahl says. "Many purchases consumers are making at gas stations and grocery stores are already PIN debit," he adds.