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MasterCard Clarifies Its EMV Plans, Paints An EMV E-Commerce Future

February 8th, 2012

McGrath also spoke of an E-Commerce future where EMV is used to authenticate online transactions and referenced a deal MasterCard announced in November 2011 with Intel, in which the chipmaker will add in a wide range of security capabilities—including the ability to interact with EMV chips—in future hardware.

He argues that some of these equipped systems may not need any add-ons—such as a USB device into which an EMV card could be inserted—and would simply wirelessly detect and interact with the card or the mobile device. “It may not require the consumers to adopt anything,” he said.

Adopt something? Maybe not. But agree to pay for higher priced hardware? Almost certainly. Unless someone such as MasterCard chooses to highly subsidize the enhanced hardware (quite unlikely), the cost is likely to discourage purchases. Indeed, there are many who question how many years of useful life desktops and laptops have, in an increasingly smartphone- and tablet-oriented world.

On the plus side, E-tailers are unlikely to need to do a lot of expensive changes to accommodate these authentications, as opposed to in-store efforts to deal with mobile coupons and mobile CRM. The in-store challenge is that they can’t wait until enough consumers have such functionality. Processors will make the acceptance of these authentications simple. The question is whether any consumer transactions will be using them for years. Most likely, in-store mobile transactions—using one of the many wallet applications (Google Wallet, PayPal, ISIS, maybe Apple) with secure elements—will make it academic.

All of this, though, is aimed at pushing retailers to have a reason to upgrade their systems to accept EMV. Many retailers are resisting, and for good reason: there’s not much of—OK, almost any—economic ROI justification for paying for such upgrades. This is triply true because many chains have recently upgraded their systems and a slight reduction in PCI paperwork is hardly a game-changer.

Actually, there is a reason for most chains to strongly consider moving to these EMV-friendly terminals, and it has little to do with Visa or MasterCard and certainly not with PCI. Mobile purchases are going to soar in 2012, and chains are going to want to facilitate those as aggressively as possible. Given that mobile wallets are generally using EMV, it will be consumer demands that will push the EMV terminals.


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Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

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