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Are you ready for EMV?

If the answer is “no,” you could face big delays and more fraud

Are you ready for EMV?

Taking a wait and see approach is not a good plan for EMV. Furthermore, waiting for your vendor to tell you it is time to change your cards can cost your organization huge dollars and position you at the end of the line, leaving you exposed to increased fraud you can’t fight!

The chip-based plastic card system significantly improves card and transaction security by using on-card encryption and eliminates the mag-stipe swipe. The transfer of the information from the card to the payment system is achieved by using a closed system and a card verification method (CVM). It’s very secure and very reliable for both online and offline transactions.

In the first year of implementation, EMV participants (in Europe) noted a 67% decrease in card-present fraud (counterfeits). Canada has experienced similar success. That is a real number and hard to ignore! In addition to Europe, the system has already been implemented in South America and Canada.

All that reduced fraud has got to go somewhere!

And it’s coming here because the U.S. lags behind in implementing EMV,. Identity theft, data breaches and card fraud (debit and credit) have garnered numerous headlines in the recent past and there is no sign that they will be letting up anytime soon. That’s because our online internet based systems are under constant attack and our security could be a lot stronger than it is. (Note: If your institution has not implemented an effective multifactor authentication method, your institution is at risk.) But events like the Target breach are providing increased momentum and things are speeding up.

Target breach aside, EMV rules are already going into effect and affect your institution. Last year American Express, Discover, MasterCard and Visa started rolling out the new rules and more are going into effect each year. These rules affect the merchants, transaction processors, issuers, and everything in between. It is not about just issuing a card that has a chip in it. It is about the technology surrounding the card.

Every institution should have an EMV implementation plan. Almost every part of your customer contact experience will be impacted by EMV. The worst thing you can do is to wait for your card processor or your core processor to come knocking at your door telling you it is time to change. By then you will pay a premium for being the last in line and you will have to wait.

How long has it taken your card processor to issue new cards after the Target breach?  Are you still waiting? How long do you think the line is going to be when EMV is the only card accepted by merchants who don’t want to assume the fraud risk of a magnetic stripe only card?

By the way, the machines that produce the common mag-stripe credit and debit card today can’t produce the EMV card. That’s right, the all-new technology is predestined to create a huge log jam in the production window when the wave hits the card manufacturer’s beach. So many cards and too little capacity!

Yes, due to EMV security, card fraud will go down if you can get the cards issued. Next, where do you think the fraudsters are going to go when they can’t steal your customer’s card information anymore? So, are you ready for EMV?

 The Wombat!           

Dan Fisher

Dan Fisher is president and CEO of The Copper River Group, a consulting firm headquartered in Fargo, N. D., that focuses on technology and payment systems research and consulting for community financial institutions. For nearly 30 years, Fisher has worked in the financial industry using technology to improve the bottom line. He was CIO of Community First Bankshares (now part of Bank of the West), has served as a director of the Federal Reserve Board of Minneapolis, the chairman of the American Bankers Association Payment Systems Committee, and was a member of the Independent Community Bankers of America Payments Committee. Fisher has written numerous articles on banking technology and the payments system. He has authored or co-authored six books and recently published a book titled, "Capturing Your Customer! The New Technology of Remote Deposit." You can contact Fisher at dan@copperrivergroup.com.
P.S. To understand Dan's nickname, check out "About the Wombat" on his website.       

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