MasterCard Clarifies Its EMV Plans, Paints An EMV E-Commerce Future
Written by Evan SchumanMasterCard has clarified its EMV push policies, saying its campaign will be focused solely on direct data breaches (as in a wide-scale attack on servers stealing millions of card numbers). Its second campaign will deal with individual fraud (as in consumers losing their cards and someone finding them and then running up charges).
But the number-two card brand also spoke of a near-term future where E-Commerce will be able to use the EMV chip to authenticate and process E-Commerce and M-Commerce transactions. However, will consumers pay more for laptops that can handle such security? And will tablets and smartphones—which can more easily and more cost-effectively handle such technologies—grow quickly enough to make desktop/laptop enhancements irrelevant?
A key part of the new MasterCard plan, which is very similar to a previously announced Visa plan (other than MasterCard embracing PIN and Visa preferring to avoid PIN), deals with two programs. The first, called MasterCard ADC (Account Data Compromise) relief, is slated to start in October 2013 and complete in October 2015. That program requires a retailer to use EMV contactless-and-contact terminals for 75 percent of all in-store transactions. (The card brand actually said all transactions, later clarifying it to mean only in-store, which reveals more anti-E-Commerce prejudice than MasterCard intended.)
The ADC incentive is that it will shift the cost of data breaches—including the cost of reimbursing issuers for distributing new cards and the cost of unauthorized transactions—to the issuers, said Colin McGrath, the MasterCard VP for U.S. market development. It will do so halfway (50 percent) by that October 2013 date, and it will reach 100 percent relief two years later.
The next program, called the MasterCard liability hierarchy, deals with all of the other types of fraud, including where consumers lose a payment card and someone finds it and then runs up charges. That program is sort of a seesaw, where the question of whether the retailer or the issuer pays the freight gets influenced by which side has, in MasterCard’s view, the better security. This gets into the PIN versus signature issue, with MasterCard using this incentive to push retailers and issuers to embrace PIN.
-Marc
February 14th, 2012 at 5:58 pm
So we will finally join the rest of the developed world and adopt the EMV credit card technology. There are at least two very good reasons why this will benefit all Americans and by itself better data security is more than enough to justify the effort. Yes, there is the argument that, as cardholders are fully protected against fraud, limiting it would only benefit the card issuers and processors. Well, even if that were the case, consumers would still benefit from the fact that their credit cards will be usable in Europe. However, minimizing fraud does matter to consumers, as the issuers’ fraud losses are reflected in the levels of interest rates and penalty fees we pay.