Recently, there has been a lot of buzz surrounding Visa’s EMV (Europay-MasterCard-Visa-integrated circuit cards)Europay-MasterCard-Visa-integrated circuit cardsEuropay-MasterCard-Visa-integrated circuit cardsEuropay-MasterCard-Visa-integrated circuit cards push in the United States. They are not alone in their efforts to advance this technology. Earlier this month, MasterCard announced they will require ATMs to accept EMV cards by 2013. Why the rush?

According to many security experts, institutions see EMV as a way to reduce fraud now that federal regulations have cut revenues once used to absorbed fraud costs. Visa and MasterCard, on the other hand, simply see it as a way to make it more difficult for criminals to steal account data.

Ellen Richey, Visa’s chief enterprise risk officer, said in a recent ABA Banking Journal interview that “the migration to chip technology will be an important security layer and a critical step in a comprehensive strategy to use dynamic authentication across all markets and all channels.”

While Visa stands strong behind their stance that EMV will help ease the arrival of NFC-based mobile payments by building the infrastructure needed to accept and process chip transactions that support a signature or PIN at the point of sale, others aren’t as quick to jump on the EMV bandwagon.

Cindy Merritt, assistant director of Retail Payments Risk Forum said in a recent Green Sheet interview that that "the merchant community in particular has rightfully expressed concerns over the infrastructure investment costs for card acceptance terminals. While they acknowledge the need to migrate to a more secure payment system that does not rely on outmoded magnetic stripe card technology, they understandably want a future-proof investment strategy."

Regardless of how you feel about EMV, it is coming. Across the payment card landscape, there are many ISOs scrambling to figure out exactly what EMV means, how it works and when and where the technology should be installed.

Europay-MasterCard-Visa-integrated circuit cardsBelBBelow is a list of a few of the pros and cons and how EMV might affect the future of the payment card industry.

Pros include:

·         The advancement of the adoption of mobile payments as well as improved international interoperability and security.

·         The reduction of a criminal’s ability to use stolen payment card data due to chip technology and dynamic values for each transaction.

·         The reduction of static authentication, which will diminish the value of stolen cardholder data, ultimately benefiting all stakeholders

·         EMV chip is a robust technology that not only delivers offline authentication, but also stored value, multiple applications in a single environment, contactless payments and the ability to do away with a card form factor altogetherThe ability to do away with a card form factor altogether.

·         Advances in technology. Technology can be used securely with ISIS - the mobile platform created by AT&T Mobile, Verizon Wireless and T-Mobile - in an effort to set the standard for mobile phone payments.

·         Ability to reduce skimming. When Australia introduced EMV technology a few years ago skimming fraud fell 25 percent - the first drop ever seen in skimming statistics there.

Cons include:

·         Cost effectiveness. In some countries, the reduction of fraud losses, given existing systems, simply didn’t outweigh the cost of replacing terminals and cards.

·         Continued fraudulent behavior. In 2010, researchers at Cambridge University hacked into a chip-and-PIN card and forced it to bypass the cardholder verification requirements (in this case a PIN), allowing them to execute fraudulent transactions in real-world tests.

·         Lack of retailer support and understanding. ISOs and MLSs should keep in mind that merchants may balk at paying for new EMV technology.

·         Adoption will take much longer, if ever, for smaller companies.

·         EMV chips can reduce counterfeiting schemes, however, they do not prevent card-not-present fraud.

Javelin Strategy & Research recently released estimates that fraud based on stolen card numbers in the U.S. was $14 billion last year. Add in several billions more for fraud based on new card accounts using stolen identities. The pros of EMV seem to outweigh the cons, however the cost of moving to chip-based cards is estimated to be $8 billion. It will be interesting to watch this play out.