Making the Move to EMV: Why Procrastination is the Wrong Strategy

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Making the Move to EMV: Why Procrastination is the Wrong Strategy

By Dick Mitchell - 01/19/2015
In less than a year – October 2015 – banks and merchants who have not upgraded their payment systems to Chip and PIN technology (also called Europay-Mastercard-Visa, or EMV) could pay a costly price. On that date, liability for credit card fraud will shift to the party with the lesser technology. So if a merchant is still using the magnetic stripe "swipe and signature" methodology prevalent in the U.S. today, and the customer has a card with the more secure Chip and PIN, the merchant is liable. Conversely, if the merchant has the new technology but the bank hasn't issued the customer a Chip and PIN card, the bank is liable. Today, the credit card companies pay for credit card fraud, estimated to be in excess of $10 billion per year at the deadline date.
 
For a number of reasons, merchants converting to Chip and PIN should not put it off. Let's take a look:
 
  1. Planning for the transition now will result in less cost – and less drama – down the road
As with any technology transition, having a plan before making the leap is fundamental to proceeding. A plan puts events on your terms, allowing you to consider the best time for the transition (e.g., probably not during the holiday season) and also to anticipate potential roadblocks, gates and trouble spots. Planning allows you to consider whether you'll convert your stores/outlets one at a time or upgrade multiple stores on a consistent, concurrent basis. You can carefully consider the plusses and minuses of either option. In a last minute conversion, those options are probably off the table, and you'll have the anxiety – and very likely increased expense – of a breakneck transition. Last minute projects seem to always cost more.
 
  1. Being the last on your block to convert is not a good place to be marketing-wise
As consumers become savvier about protecting their personal and financial information, they're going to start demanding more secure credit cards and payment systems. Almost non-stop recent reports of massive credit card breaches will likely accelerate that movement. If you're a merchant, having a secure payment system could distinguish you from the competition; it's a high-value differentiator that you can advertise. If on the other hand, you're the last to convert, that also sends a message – but not one you want.
 
  1. There's a lot of background work that has to take place
While the conversion process isn't generally overwhelming, there are several steps involved. First, you have to decide on the PIN pad device. Next, make sure your system has a functioning app that allows a chip card to be read and passes info to your selected payment processor. Test the system and following that, obtain EMV certification. If you have a snag with any of these pieces, your conversion will likely be delayed. Otherwise, assuming you've ordered the equipment, you can proceed to deployment and training.
 
  1. You might end up without adequate resources
There were 15 million mag stripe readers/PIN pad devices deployed in the U.S. when EMV dropped the October 2015 hammer. By the end of 2014, it's estimated that less than 10% will be chip and PIN capable (and only about 10% of those will have a functioning app). There's going to be a huge rush for these devices and the apps that support them fully by next summer. Don't get short-sheeted on inventory availability.
 
Another important resource is a capable, experienced partner. You don't want to be reaching out to a partner only to find their dance card is full through next fall. Many companies are doing 2015 budgeting now, and those with foresight will be engaging good partners to advise on, assist with and help manage the conversion and all its details. You don't want to have to choose among the few partners seated in the folding chairs at the end of the night; chances are they won't be an ideal match.
 
As with any deadline, there are those who will batten down, start planning and dramatically improve their odds of making the deadline. And then there are those who just know everything will turn out OK. Doesn't it always? No, it doesn't. Take this seriously. Don't wait. There's a lot at stake.
 
Dick Mitchell is solutions director in the Technology Deployment Services Practice of Randstad Technologies.

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