Recap of First Annapolis EMV Forum

Navigator Edition: November 2012
By: Emma Causey

First Annapolis, in response to client interest, hosted a forum to discuss the opportunities and challenges surrounding the migration to EMV.  The Forum, which took place in Annapolis on November 14th, included ten leading issuers and four of the most prominent issuer processors.  The primary purpose of the meeting was to facilitate dialogue among participants regarding actions taken to date and ongoing concerns regarding the EMV roadmap in the U.S.  Over the course of the discussion four primary themes emerged:

  1. The lack of industry standards has encumbered decision making
  2. Concerns regarding the EMV-related implications of the Durbin Amendment have created considerable confusion regarding the path forward on debit
  3. The business case for EMV is challenging on pure financial terms
  4. Actions to date across issuers have primarily been limited to initial planning and a few pilot programs

The complexity and interdependency of fundamental EMV decisions has delayed movement across the payments value chain.  In particular, issuers are weighing the decision among contact, contactless, or dual-interface cards, while considering the effects of those decisions on the cardholder experience.  In addition, issuers believe that there are mixed messages on key implementation items such as cardholder verification method and the necessity of an offline PIN number.

Forum participants expressed concerns around the requirements of the Durbin Amendment with regards to network participation and merchant routing.  Under the regulation, merchants must have the ability to route to the network of their choice between the two or more unaffiliated networks enabled on the debit card.  This statutory requirement is more complicated in an EMV environment.  These circumstances led to agreement among Forum participants that the path to EMV on credit cards is clearer.

Issuers also described the challenges related to making the numbers “work” when evaluating EMV.  The principle concern is that the benefits tend to revolve around solving for the threat of increased fraud rather than real dollar improvements in profitability.  As a result, issuers are contemplating a more limited initial approach to EMV reissuance focused on select customer segments, including travelers, corporate clients, and other high-value relationships.

The dialogue observed in the EMV Forum clearly indicates that industry stakeholders are approaching the chip card migration cautiously.  Given the number of open questions and unresolved issues, most issuers are limiting activities to information gathering and planning at this point.  This tentative approach is likely to continue in the near term as industry groups work to define an implementation plan that ensures a positive cardholder experience while strengthening the overall security of the U.S. card payments system.

For more information, please contact Emma Causey, Senior Analyst specializing in Deposit Access,

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