Like many payments executives, Martin Ferenczi believes the U.S. payments market will not meet the card network-imposed October 2015 target for migration to chip-based EMV technology.
But the EMV shift is moving quickly in one area, says Ferenczi, Oberthur's North American president. "Every U.S. household will have an EMV card by the end of the year."
By that time, at least one of the five payment cards in an average consumer's wallet will be an EMV card, Ferenczi says. Deployment of EMV cards is accelerating, and the largest issuers are either issuing or are close to issuing EMV cards, he adds.
"Credit is a little ahead of debit, for obvious reasons, and we are starting to see other portfolios such as private label moving to EMV," Ferenczi says.
The recent spate of data breaches, including the highly publicized Target breach before the 2013 holiday season, has caused a spike in EMV card manufacturing, Ferenczi says. While EMV cards would have not stopped the Target breach, the incident drew attention to EMV and other security technology.
"The breach provided a very clear view that the payment world in the U.S. included a number of security frailties that needed to be solved," Ferenczi says. "Card security is a layered system and EMV is one important layer."
The migration in the U.S. will also be aided by the waning consumer awareness gap, Ferenczi says, another trend he attributes to the recent data breaches.
"People are becoming more aware of the shift to EMV cards," he says. "There was a lot of publicity of EMV that followed the Target breach and the subsequent breaches, and companies such as ourselves have taken a more aggressive approach to educating the public about the benefits of the EMV."
While Ferenczi's take on the migration is bullish on card distribution, he also says the overall migration will probably not be finished by October 2015 when fraud liability shifts to the party not capable of handling EMV transactions.
"I see no reason why the largest issuers and the largest merchants won't be ready by the liability shift date," he says. "But we will probably see some delays among the smaller merchants and probably not all of the institutions will be ready by the date."
The Columbes, France-based Oberthur, which recently partnered with First Data to accelerate its EMV push in the U.S., has more than 20 EMV issuance projects underway at three U.S. factories. It also has access to two card personalization centers in the U.S. through its partnership with First Data.
Other card technology companies, such as CPI Group, have also upgraded their ability to produce cards in anticipation of a spike in demand for EMV cards. And EFT Source reported an increase on EMV card orders since the Target breach.
"I think that one could easily underestimate the amount of work that is required to create any sort of technology ecosystem, and EMV is one of those systems," Ferenczi says.
The migration lag in the U.S. is not unusual, Ferenczi says, noting that other markets experienced similar delays in EMV migration.
"Whether it's Europe or Canada, it's always been a multi-year effort to get to EMV," he says. "Even in Canada, you still have a small percentage of the market that's not covered."