In the U.S., the only country converting to the EMV chip-card format with more than one debit network and a federal mandate that covers debit routing, the lingering uncertainty about how to code EMV payments "is pushing away many issuers and forcing them to wait" before offering cards, says Thomas Grouard Lillelund, senior manager of EMV and new technologies for CPI Card Group.
The fact that the U.S. has 17 regional PIN debit associations prolongs the conflict, Lillelund says.
The top 30 issuers in the U.S. have full EMV teams and developers working with card manufacturers and other vendors to prepare for the eventual migration, but most issuers remain in the "very early stages of planning" and are affected more by delays such as the debit-code indecision, he says.
The card networks expect most merchants to be able to accept EMV-card payments by October, 2015. Credit unions and community banks planning on issuing EMV chip-based smartcards in the U.S. need between a year and 18 months of preparation time, Lillelund says.
Lillelund provided an EMV strategy update for credit unions and community banks through a June 17 online seminar hosted by The Members Group, a Des Moines, Iowa-based payments software provider.
"The Durbin amendment regulations are slowing down the process in the U.S. market, and you probably won't see a full conversion [by deadline] because of it," Lillelund says. "This is a complex ecosystem and it will take time for all parties to upgrade to EMV."
Currently, the regional debit networks of the Secure Remote Payment Council have chosen Discover's Pulse network's common code for routing, while Visa and MasterCard continue with overtures for use of their debit routing options. Though some are preparing merchants and issuers for the possibility of three routing applications on an EMV debit card, many prefer to simplify the process with the use of just one code.
"With EMV, the issuer needs much more core data in the chip than on a mag-stripe, and the risk of getting too many applications in the chip makes it a very complicated situation," Lillelund says. "Things should become much clearer in September, as to whether the other networks would agree to join in on a single-code technology."
Issuers have many other questions and concerns to address prior to sending EMV cards to customers, Lillelund says, but they should not question the security improvement the EMV standard establishes.
"If only 40% of an issuer's cards are EMV, he will see double the amount of fraud occurring on his other cards," Lillelund says.
Issuers should not view the card networks' EMV compliance timelines as mandates, Lillelund says. "There are no penalties or fines for not doing it," he adds. "It is just the risk of taking on transaction liability."
But despite the ongoing issues, there will likely be no extension in the deadline most merchants face for accepting EMV cards. "In the industry's mind, that Oct. 1, 2015 date is set into marble," he says.