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The payments card ecosystem is pretty complex in the US. If chip and pin is such a superior technology, why hasn’t it caught on in the US?
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Comments
With Contactless (PayPass, Visa PayWave, ExpessPay, etc.) especially cell phone based NFC, many in the US will wait to see if we can skip the chip generation and go directly to Contactless.
Posted by GeorgeJ, 11/06/2010 5:20pm (2 years ago)
With Contactless (PayPass, Visa PayWave, ExpessPay, etc.) especially cell phone based NFC, many in the US will wait to see if we can skip the chip generation and go directly to Contactless.
Posted by GeorgeJ, 11/06/2010 5:20pm (2 years ago)
Sigh, the cost of POS terminal BS again. This is one of the stupidest BS’ US financial institutions like to make is the “cost to merchants and retailers” for “upgrading POS terminals” as if trying to play on the gullibility of the public and to hide their real intentions: they don’t want to pay more to make EMV chipped credit cards.
I'll say it over and over again: EMV chipped cards are BACKWARDS COMPATIBLE, THEY ALREADY HAVE MAG STRIPES ON THE BACK! Why the heck do you think we never hear issues with Europeans, Canadians, Mexicans, Asians who have EMV chipped credit cards having problems of buying stuff when they visit the US? BECAUSE THE MERCHANTS IN THE US JUST SWIPES THE MAG-STRIPE PORTION ON THE BACK OF THOSE EMV CHIPPED CARDS. UH-DUH!!!!
That backwards compatibility alone solves that issue: merchants and retailers do not have to upgrade their POS terminals all at once nor would that have to be forced to make that change; they can continue to use their existing swipe POS systems until they choose to do so; just like people have the choice to upgrade their Windows OS when they choose to do so as well.
Posted by Ken, 10/06/2010 2:32pm (2 years ago)
Ubiquitous, safe, and globally interoperable card payments are indeed complex. As each country and region has adopted chip technology for payments, the knowledge and experience has paved the road for smoother and less expensive transitions to EMV standards for the next country and region. The U.S. market is the most complex ecosystem for payments in the entire world and the largest single market (perhaps not for long with China growing rapidly). The US has approximately 6,000 financial institutions, 4 million POS terminals, and 600-700 million cardholders. The US is a capitalist society with no central financial rules-making body. Even government regulation is dispersed between at least a half dozen government agencies. Finding the elusive balance of a shared risk and shared reward between all of the issuers, merchants, processors, and intermediate 3rd parties that make up the payments ecosystem is hard enough – doing it as the nation comes out of its worst recession since the Great Depression makes it even tougher.
The US market is moving closer to EMV chip cards everyday but you don’t turn a ship as big as the US market easily and it benefits nobody to add any disruption or friction in the current fragile system without careful planning. The evidence is clear that progress is being made. We have an estimated 65-75 million contactless chip cards (greater than 10%) issued in the US, over 600,000 contactless terminals that some percentage of include contact EMV capability, and 200,000 merchants enabled to accept chip transactions. Merchants are now asking for chip & pin rather than fighting it. The United Nations Federal Credit Union has announced that later this year, it will begin offering EMV compliant chip cards to it international travelers and it is expected that more issuers will follow suit. As Canada speeds ahead with its EMV migration, merchants and shoppers in the US will see more chip cards and contactless cards and will begin to question why the US has fallen behind our neighbors to the north when it comes to payment security. The big “Mo” (momentum) is starting to happen and organizations like the Smart Card Alliance are doing everything in our power to inform, educate, and provide an open forum for discussion to accelerate this process.
Posted by Randy Vanderhoof, 10/06/2010 10:49am (2 years ago)
The simple answer is because there is a lack of a compelling business case for all stakeholders in the US payments ecosystem.
Could we be reaching a tipping point where a positive business case could be made? Possibly.
Certainly the costs to issue cards and deploy POS devices with chip and pin technology has fallen over the years while fraud costs which might be reduced with chip and pin (such as mass account data breaches and phishing schemes) have increased.
However the key questions still remain.
Can enough positive financial benefits be quantified to outweigh the costs to deploy chips and pin in the US?
And can the various stakeholders such as the associations, issuers, acquires, merchants and consumers agree on a way to share the costs and benefits evenly?
Posted by Todd Roberts, 07/06/2010 5:07pm (2 years ago)
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