The financial transactions world is changing. Are you staying afloat?
As one of the last countries to accept and implement EMV, the U.S. finds itself under the spotlight at the intersection of various payment technologies, converging all at the same time. As the concerned parties start dipping their toes into this new technology, the ongoing changes bring nothing but questions regarding the overall technology, its logistics, and, most importantly, its security.
Industry jargon – EMV, Chip-and-PIN, Chip-and-Signature, NFC, tokenization, kernel – is second nature to those of us who have been in the forefront of these transactional changes when they first started happening over a decade ago. But how about business owners (points-of-sale) who are obligated to learn and train their employees?
The upcoming EMV migration will be a challenging, long-term process, affecting all stakeholders in the payments ecosystem – especially, merchants and terminal providers, who will be required to redesign their hardware based on the security and performance standards enforced for EMV migration to add EMV functionality in their devices, which contains complex algorithms and flows to provide the much-needed security an EMV transaction needs. The updated software and hardware will also have to go through the type-approval process by card schemes (i.e. MasterCard, Visa, Amex), which is another hectic process, where at least 5,000 test scenarios are carried out. After terminal certification, merchants need to get into another certification process with its processor/acquiring bank before they are allowed to use the terminal.
Once merchants and terminal providers complete all these requirements, they will be able to accept EMV transactions in a secure way, where liability is no longer on merchants, but on issuers. This will eliminate merchants from financial loss, resulting from potential fraud transactions, similar to what we have seen in Target, Neiman Marcus, and/or The Home Depot breaches. This could be seen in other European countries who have already underwent and completed the migration. For instance, the U.K. reported a significant drop since the implementation of EMV cards with significant drop in retailer losses and fraud on lost and/or stolen cards.*
With these changes on the horizon, extensive training sessions are also recommended for business owners, who end up being the gatekeepers of safe transactions in the interest of avoiding liability and protecting their customers from data breaches. For proper training, companies are advised to hold mass training sessions for their employees by showing educational videos, pictures and/or the actual terminals, in addition to various new methods of completing safe financial transactions. These sessions should also be tailored to educate employees on the overall importance of the EMV migration and how it adds that extra level of security to all transactions, thanks to Level 1 and Level 2 kernel layers, provided by software companies who embed these layers to the terminal manufacturers for extra security. For instance, although it is technical information, it would be helpful for employees to know that certification for the terminal cannot be granted, if any of the more than 4,000 tests that EMVCO Level 2 runs a POS terminal fail.
Having witnessed and aided EMV migration for 14 years in countries around the world, including Turkey, France, the UK and Canada, we have seen many different rollouts, with many different formal and informal programs, but how well and successful a country adopts to the new system always comes down to the consumer. As the swiping motion is getting ready to be a thing of the past, businesses should be getting ready to migrate/update their old systems and be supportive for their employees, who will end up educating consumers.
The early adopters, who accept, implement and educate, will be rewarded by high employee and customer satisfaction, which will eventually contribute to the overall growth of their businesses.
Cardtek, which operates from six countries including Turkey, USA, Canada, Azerbaijan, India and UAE, was founded in 2001. The group has been in the forefront of the groundbreaking changes in the payment solutions industry, thanks to their effective mobile and digital payment systems, and integrated solutions. For more information, visit Cardtek.com, or LinkedIn.com/company/Cardtek-Group and @CardtekGroup.
About Erdal Yazmaci
With 17 years of experience in payment and card technologies, including NFC, EMV and Contactless, Erdal has been playing a pivotal role in Cardtek by leading Business Development and serving as Chief Channel Officer. Over the last ten years he has been heavily involved in the emergence of smart cards and EMV standards, such as designing and developing EMV Level 2 Kernel applications on terminals and cards, and has globally provided EMV consultancy and training for more than 40 issuers, acquirers, card and terminal manufacturers. Erdal received his Bachelor of Science (BS) in Control and Computer Engineering from Istanbul Technical University, his Masters of Science (MS) in Computer Engineering from Yildiz Technical University and his MBA from Sakarya University.
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