I have grown up in the confusing world of metrication, where standards and numbers have strange and unusual associated values. Now, for some reason I have ended up using metric for many measurements but imperial measurements for others. For speed I like kilometers per hour, for distance as well unless I’m running then I prefer miles. For temperature I prefer celsius unless I’m cooking then I insist on fahrenheit It is a very strange and confusing world, indeed.
Unfortunately, we may be heading here with US chip and pin. Already I’m hearing about friends from the USA that when they travel abroad are being thrust into a very confusing world. Not only are the countries generally metric they also are declining cards without a chip. These days most people expect the networks to co-operate and while they might get charged an extra fee and an unconscionable F/X rate — the card will work. Now we have a system where the delays to move forward with US Chip and Pin are creating interoperability challenges in the system.
These delays also open up an even more concerning possibility: the EMV standard was first released in 1995. This is not new technology or a new approach to solving this problem. It is possible that a new approach will emerge to secure the card transaction and distribute liability, and now given the current state of EMV adoption in the US there is a risk that a new technology could create a “leap-frog” effect and further fragment the interoperability factor.
Like with metrication, this “leap-frog” effect could mean a feigned initial implementation in the US and then fragmentation.
With a pending explosion in payments approaches and technologies the real bottleneck will be the merchant counter itself: how many terminals, adapters, readers, scanners, and point of sale devices can we reasonably expect the merchant to have? Don’t they need a bit of room on the counter for the product itself? Eventually convergence at the merchant terminal will solve this, but not until the approaches and standards settle out.
Moving to EMV seems like a highly technical implementation that only the deep technical teams need to be concerned with. Often process impacts are discovered late in the chip and pin project and can be a surprise to the bank. Here are some tips to help move to EMV more quickly:
- Design for interoperability: Build the rails to support as many standards as possible. Think about how the processes and the systems will handle mag stripe until it is no longer needed. Identify which activities are exclusive EMV and which will interoperate: for example, PIN operations are all EMV exclusive but many others could handle either type.
- Consider the process: Current processes may not be technology bound. If you are currently resetting card pins for mag stripe through a contact center (for example) now your customer will need to make a trip to the ATM. Mapping and understanding process changes and training is an important part of this effort.
- Remember the physical restrictions: I have seen plans to roll out chip readers in places that could not physically accommodate them, or desks that were too small for the merchant terminal. The front counter is an important sales area, and this physical space and dynamic needs to be factored in when change is considered.
One way to ensure that EMV happens is to move quickly in this direction and achieve adoption. This way, when new technologies emerge that solve this same problem the entire global network can consider them together and migrate from EMV to the next generation approach as one unit.
People and businesses are crossing borders at an incredible pace these days. Interoperability is a key goal for payments, and it’s important that we avoid fracturing and splitting off into isolated silos. Moving quickly is the key, and to do this requires good design and strong commitment.
I’m not saying that the metric system is better, but it is nice to have an interoperable global system. What do you think, is there a risk of fragmentation?