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With most regions in the world already adopting EMV, a global standard for credit and debit payment cards based on chip card technology, the U.S. is a sitting duck when it comes to customer present card fraud. This isn't good news for the country’s retailers and it’s clear that something needs to be done.
EMV has proven to be a highly effective solution to eliminate customer present fraud. The technical standards behind EMV are mature and its successes can be seen in many countries worldwide. The question isn't will EMV hit U.S. shores, it’s when. Having played an instrumental role in the introduction of retailer chip and PIN solutions in the U.K., I can provide some practical advice for retailers implementing EMV solutions.
One of the most significant impacts on retailers will be the technical complexity of implementing and running an EMV solution. The actual cost of implementing such solutions can be significant — the software upgrade, purchase of PIN pads and cost of accreditation all need to be considered. Retailers who choose to run their own in-house payment systems will need staff skilled in both EMV and their chosen vendor’s software. These retailers will have more control over their point-of-sale processes and the general customer experience. They'll also be able to architect their infrastructure to ensure the fastest possible transaction speed and integrate their payment solutions more closely with other associated retail systems.
For many retailers, however, the cost of running their own payment system will become excessive. They'll opt to move to a merchant processor with expertise in chip and PIN. There are two models available: The first is a hosted solution where the processor will run the retailer’s payment solution for them. The second is a shared solution which is, in effect, a single payment solution provided by the processor but shared by multiple retailers.
A hosted solution allows retailers to preserve many of the benefits of running their own system. The solution can still be tailored to their specific needs but, on top of this, they're able to draw on the processor’s EMV skills and experience. As the processor will be running systems for several retailers, it will have standardized processes and procedures within its data centers. For retailers, this means a reduction in the cost and effort associated with PCI DSS (Payment Card Industry Data Security Standard) accreditation.
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