EMV: U.S. Market Update EMV for Merchants
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Disclaimer:
This communication, including any content herein and/or attachments hereto, is provided as a convenience only, does not constitute legal advice and does not create and attorney client relationship. Because of the generality of this communication, the information provided herein may not be applicable in all situations and does not constitute a comprehensive list of issues that could impact your business. As such and to understand how the information in this communication may impact your business, you are encouraged to seek the advice from your legal counsel, compliance and/or other subject matter expert based on the facts and circumstances of your organization’s particular situation.
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Agenda • U.S. Market Stats
• EMF Update • EMV and Debit • Debit Routing • Vantiv and EMV • Next Steps
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U.S. EMV Market Statistics
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US Market Today* • 511 million credit cards › 31% of the global total
• 572 million debit cards › 32% of the global total • 16 million payment terminals › 11 million integrated › 5 million stand alone • Wedge readers unaccounted for › Utilized by hospitality, service industries * Data is only based on information provided by Vantiv’s partners and does not include all international payment systems.
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US Market Today* • 16 Independent “PIN” Debit Networks › 37% of total US debit volume › Routed 19 Billion of US PIN transactions in 2012 › Federal regulations ensure merchant “least cost routing” option for PIN debit transactions
• 9 Acquirers Represent 70% of Processing Volume • 1000+ Independent Sales Organizations (ISOs) › Primary business interface of small merchants
• 500+ Independent Software Vendors (ISVs) › Primary processing interface to mid-tier merchants
* Data is only based on information provided by Vantiv’s partners and does not include all international payment systems.
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US Market EMV Update • Significant progress underway* › › › › ›
Multiple issuing pilots underway, top issuers Up to 2 million EMV capable terminals installed 5-20 million EMV cards issued Top acquirers fully certified Stand Alone Terminal applications being developed/ certified › Debit routing challenges resolved › ISVs adding EMV support to products
* Data is only based on information provided by Vantiv’s partners and does not include all international payment systems.
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US Market EMV Update Merchants • Merchants reinvigorating EMV cert and Security discussions as result of 2013 holiday breaches • Top 25 Vantiv merchants plan to certify by Q1, 2015 • Wal-Mart “live” with EMV today • Inability to finalize PIN Bypass specifications may result in slower TTM • Significant drive toward PIN adoption promoted by merchants (credit and debit) • Contactless adoption minimal outside of QSR, Drug Store, Petro verticals
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US Market EMV Update Issuers • Large issuers piloting in 2014 • Anticipate aggressive number of 2014 pilots: › Smart Card Alliance EMV Forum (EMF) pilot planned Q4 › Includes FIs and Merchants (WF, BoA, SunTrust, Target, others TBD)
• Vantiv pilot begins August, 2014 with issuers and merchants • Utilizing Common US AID for debit ONLY
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US Market EMV Update Brands/Networks • Visa and MC reaffirmed EMV October, 2015 liability shift
commitment • PIN-on-Credit vs. Signature Preferring › Signature Credit will likely prevail initially • Debit
› US Common AID meets current Reg II requirement › Largest debit networks (Star, Pulse) announced support › Potentially future-proofs for signature duality
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Brand Roadmaps
April 2013
April 2013
April 2013
April 2013
Processors must support EMV
Processors must support EMV International ATM liability shift
Processors must support EMV
Processors must support EMV
April 2015 3rd party ATM must support EMV
October 2015 Liability shift of counterfeit transactions
October 2015 Liability shift of counterfeit transactions
October 2016
October 2015
October 2015
Liability shift of counterfeit transactions
Liability shift of counterfeit transactions
October 2017
October 2017
Liability shift for AFD
Fuel liability shift
Liability shift for ATM
October 2017 Liability shift for AFD Liability shift for ATM
October 2017 Liability shift for AFD
283 business days to Counterfeit Fraud Liability Shift 11
EMF Update
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EMV Migration Forum Update •
The EMV Migration Forum is an independent, cross-industry body created by the SCA to address issues that require cooperation and coordination across the payments space in order to successfully introduce EMV technology in the U.S. • Released the U.S. EMV Debit Framework in April, 2014. • Creating and delivering a series of EMV educational webinars. • Developing recommendations for securing the CNP channel. • Developing a framework for streamlining the EMV certification process. http://www.emv-connection.com/
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EMV and Debit
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› EMV and Debit •
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As designed, card (i.e. the issuer) determines debit routing, not merchant. This conflicts with the Durbin amendment of the Dodd–Frank Wall Street Reform Act. EMF develops debit framework to support PIN debit routing choice. U.S. District court ruling in July, 2013 opens the possibility that at least two unaffiliated Signature networks will have to be supported as well as two PIN networks. EMF regroups to account for potential of signature duality. Appeals Court overturns U.S. District decision. May go to U.S. Supreme Court. EMF proposes new debit framework designed to be “future-proofed” against ultimate outcome of court case.
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Debit Routing
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EMF Debit Routing Framework › Primary goal is to propose a set of baseline technical
specifications for a U.S. EMV debit solution intended to be consistent with applicable technical and regulatory requirements and provide a viable technological approach › Intended as a model, or framework, serving as the basis for
one or more technological solutions to be developed › The EMV Migration Forum does not mandate adoption of or
compliance with the framework › Based entirely on EMV chip technology with no proprietary
data elements or logical process steps › The U.S. common debit AID would be shared across U.S.
debit networks and would be for domestic use 17
EMF Debit Routing Framework Transaction Flow – US Common Debit AID with Signature Cardholder
Card
Acquirer/Store/Network back-end
Merchant Terminal Initialized and ready to accept transaction
Message “Insert or Tap Card”
Card powered up Insert Card Application list returned to terminal
Optional preselection BIN based on routing choice
Application selection (via PSE or explicit)
Candidate list created International + US Debit AID (6-digit BIN available)
Use US Debit?
Yes Select US Debit AID
Application selection & GPO
Read application data Full PAN and CVM preference list
Card CVM 1. Online PIN 2. No CVM 3. Signature
No Standard EMV with Intl AID
Online PIN Enter PIN
PIN entered
Enter PIN or Bypass
PIN entry captured Online PIN block created
BIN Routing (PAN, Online PIN)
No PIN transaction initiated
No PIN Routing (PAN, No CVM limit, Sig support))
PIN bypassed
Routing input: PAN, Type (PIN/ no PIN), Amount
A
Vantiv Confidential
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EMF Debit Routing Framework Transaction Flow – US Common Debit AID with Signature – Page 2 Cardholder
Card
Merchant Terminal
Acquirer/Store/Network back-end A
Completed as EMV PIN
Remove card
Sign
Print receipt with Signature (or sign on screen)
C
D
E
No EMV Support
Signature
PIN No CVM Limit
Completed as EMV No Sig required
B
PIN
BIN Routing A
PIN No CVM Limit
Print receipt with No Signture
PIN No CVM Limit Signature
Remove Card
Completed as EMV Sig capture Merchant Routing Decision
Completed as EMV without ARPC
Option 1: ARQC & Online PIN Block Option 2: ARQC (Request No CVM or Sig approval) Option 3: Drop EMV data – send to network track 2 eq. & PIN (chip entry mode)
Approve with No CVM Approve with Signature
Authorization Response
Approve with PIN
Approve as magstripe
Vantiv Confidential
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Vantiv and EMV
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Industry Participation •
Only U.S. headquartered acquirer serving on EMVCo Board of Advisors. EMVCo manages the EMV ICC Specifications.
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Steering Committee member of the EMV Migration Forum.
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Member of the Smart Card Alliance’s Leadership Council. The Alliance works to stimulate the understanding and adoption of smart card technology.
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EMV Achievements •
First U.S. Acquirer to Complete Mandate Requirements to Process both EMV Visa and Interlink Transactions
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First U.S. Acquirer to Complete MasterCard® Requirements to Process EMV Transactions for Both ATM and Point-of-Sale Locations
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First U.S. Service Provider to Certify Amex for ATM Acquiring
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First U.S. Service Provider to Certify ATM Upgrades with MasterCard ® and NCR
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Industry leading closed-loop EMV testing environment with VIABLE
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Confirmed by all four major networks for self-accreditation
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First terminals in market with the Common U.S. Debit AID
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Next Steps
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EMV Merchant Products Readiness & Roadmap
EMV Terminal Products Available Today
EMV Transaction Processing Available Today
EMV Terminal Applications Available Q3-4 2014
EMV capable terminals can be boarded today and downloaded with EMV functionality upon availability of EMV certified applications
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Upcoming Milestones • General release of the Tandem 610 version of VIABLE • Pilot of ISO 8583 version of VIABLE • Combined Issuer and Merchant pilot in multiple
markets • General release of Ingenico EMV-enabled terminals • Certification of VeriFone terminals
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Questions
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