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Discover a new, three-phased approach for companies considering implementing Europay, MasterCard and Visa (EMV) specifications to combat fraudulent credit and debit card transactions.
The Europay, MasterCard and Visa (EMV) specifications aim to reduce the global issue of fraudulent credit and debit card transactions.
Until now, the United States has been reluctant to embrace the EMV specifications. But as domestic fraud continues to climb and other countries demonstrate the positive results of EMV migrations, and in light of the fact that the major card brands—Visa, MasterCard, American Express and Discover—have mandated that acquirers support EMV in 2013, the United States is rethinking that stance.
The major credit card brands have also announced a “liability shift” to go into effect in October 2015, which will mean that when a chip card interacts with a magnetic stripe-only terminal, the merchant will be liable for counterfeit and fraudulent transaction losses.
In this report, Accenture discusses a three-phased approach for helping organizations reach the right decisions relative to their investment in EMV deployment strategies and the four key decisions participants within the payments ecosystem should focus on.
Learn about Accenture Payment Services.
In 1993, Europay, MasterCard and Visa (EMV) came together to tackle the global challenge of combating fraudulent transactions, due to the increase in fraudster’s abilities to copy the data from the magnetic stripe card. The mandate of this organization was to develop a set of specifications for both terminals and cards to address security and interoperability of cards with devices, which are today referred to as the EMV specifications.
The strong resistance to EMV in the United States has primarily been a result of not being able to justify the increased costs of issuing chip cards over magnetic stripe-only cards, which is one of the prerequisites for complying with EMV standards. Merchants have also not been motivated to adopt EMV primarily due to the increased costs required to upgrade their technology infrastructure to support EMV. Together, these economic forces have undermined the business case for US investment in EMV.
However, today the United States is rethinking EMV—particularly as domestic fraud continues to climb with the growth of skimming (the methods for electronically capturing the card data and sometimes the PIN without the cardholder’s knowledge). Another motivational factor is increased fraud, migrating from neighboring countries where EMV has already been implemented and has been successful in limiting the ability for skimming cards.
In approaching the migration to EMV, participants within the payments ecosystem need to focus on four key decisions:
Card/Data Authentication. This first decision identifies how the authenticity of the card will be assured. Card authentication is the process whereby an EMV card is identified as authentic before a payment can occur, and provides safeguards against counterfeit card creation. Card authentication is done using one of the two authentication methods and is either offline or online.
Cardholder Verification. The next step is to verify the cardholder. The EMV specifications identify three different ways the cardholder can provide verification: PIN, Signature or No CVM (cardholder verification method) under specific situations.
Method of Verification. The third decision depends on the prior decisions made. Offline cardholder verification verifies the PIN inside the chip. In contrast, online PIN verification requires the PIN be encrypted and forwarded through the acquirer’s and payment brand networks for verification by the issuer’s host.
Support for Durbin: The ability to route domestic debit transactions over the merchant preferred network.One of the complications associated with implementing EMV is the original design objective of assuring issuer control and consumer choice and the regulations defined by the Durbin amendment, which requires issuers to identify two or more unaffiliated debit networks for routing domestic debit transactions.
Accenture believes that near field communication (NFC) and EMV offer the security and convenience necessary to address the increasing growth in card fraud and the industry’s drive to replace the physical cards in one’s wallet with the power of the mobile phone.
Further, Accenture recognizes that there is room and need for other technologies such as quick response (QR) codes and cloud-enabled payments to co-exist within the evolving mobile payments ecosystem.
We use a three-phased approach to help organizations reach the right decisions, relative to their investment in NFC and EMV deployment strategies:
Business Impact and Strategy Definition: Accenture conducts a series of management workshops to gain insights into the client’s strategic objectives, existing card products and services.
Business Case Development: Using the insights gained from the first phase as a foundation, Accenture employs proven methodologies to develop the client’s business case—allowing clients to reach informed, financially robust decisions necessary to assure a successful EMV deployment.
Solution Roadmap and Implementation Plan: We work with our clients to assure that all the elements necessary, including an operating model and an EMV migration roadmap, are in place for an optimal EMV solution and successful transition.
With our EMV experience, knowledge and leading practices, we help our clients implement EMV solutions that best fit their needs and role in the card payments value chain.
July 23, 2013
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