MasterCard today made the first move to begin talking with rivals and customers about exactly how the U.S. will adopt the EMV chip-card standard.
Purchase, N.Y.-based MasterCard on May 21 announced plans to start a broad, cross-industry group to collaborate on the U.S. EMV conversion, pulling card networks, issuers, merchants, acquirers, processors, terminal makers, card manufacturers and other players together in discussions to resolve critical questions that are already simmering.
Chief among the dilemmas issuers and merchants face is whether the U.S. will take the more common chip-and-PIN route to EMV, or a somewhat simpler approach requiring only a signature to authorize transactions that some issuers are already embracing.
"The PIN or signature question no doubt will be a key topic," Marc Abbey, a managing partner with First Annapolis Consulting, tells ISO&Agent Weekly. "So far there is a lot of nuance in the positions of the card networks on that notion and it remains an open question how the various parties will proceed. It's one topic where industry coordination will probably be valuable."
Any such effort would require leadership from MasterCard or Visa, Abbey says, and MasterCard is as good a choice as any.
"MasterCard is in a position to make things happen, and now we have to see if other networks follow their lead," he says.
Visa did not so far offer a statement on MasterCard's move.
Visa was the first to announce incentives for U.S. issuers and merchants to adopt EMV as a defense against counterfeit card fraud emanating from magnetic-stripe cards when it laid out chip-card incentives in August 2011. Visa suggested then that U.S. card issuers will eventually phase out PINs.
MasterCard early this year laid out its own guidelines to U.S. EMV, seeming to lean toward PIN authorization.
"Industry collaboration has proven to be critical to the successful migration to EMV in other parts of the world," Chris McWilton, MasterCard president of U.S. markets, said in MasterCard's press release. "It's our goal to bring the industry together in an objective forum."
Cross-industry collaboration is a positive move for the U.S. to move forward with EMV, Randy Vanderhoof, executive director of the Smart Card Alliance, tells ISO&Agent Weekly.
The alliance plans to play a role in the effort, and by drawing on its existing industry representation the organization could help "give everyone a place around the table," Vanderhoof says.
Several U.S. issuers including JPMorgan Chase & Co. last year began issuing signature-only EMV cards to certain U.S. cardholders; others, including Citigroup Inc. and Bank of America Corp. are issuing EMV cards to commercial users requiring a PIN.
But certain merchants, including Home Depot Inc. and Wal-Mart Stores Inc. have come out against the signature-only approach, insisting that PIN-based EMV is more secure in blocking all types of card fraud, including losses from lost and stolen cards.
Pressure to find common ground on other EMV issues rose when the U.S. PIN-debit networks last month announced the formation of an EMV technology working group.
A MasterCard spokesperson provided few details about who is participating in its cross-industry group so far, but Total System Services Inc. is among its early partners.
"MasterCard is taking an active role to work with industry leaders like TSYS as we inform and collaborate with our clients to prepare for the launch of EMV in the U.S.," Marie Jordan, Director, Enterprise Business Compliance, TSYS, said in MasterCard's press release.
"Every industry and entity who will be involved in the implementation of EMV technology in the United States is invited to join with us," the MasterCard spokesperson said in an emailed statement.