October 31, 2014


Evaluating a partner to enable a seamless EMV migration

Europay, MasterCard and Visa (EMV) technology (which employs the use of chip and PIN based cards) has been in existence since 1992[i], and has now become the global standard in many countries around the world including Europe, Canada, and Asia. In fact, more than 84 percent of the cards issued in Western Europe are chip and PIN[ii]. The USA, however, remains the last G20 country to continue using the traditional magnetic stripe card system, which is far more vulnerable to fraud. This is set to change with all major U.S. credit card issuers setting October 1, 2015 as the deadline for American financial institutions and merchants to comply with EMV standards.

The U.S. has lagged behind in terms of EMV adoption partly because it has one of the largest and most complex markets in the world and the costs involved in meeting EMV requirements are considerably high. But what is also high is the cost of U.S. payment card fraud, which grew by 29 percent to $7.1 billion in 2013[iii]. In comparison, other countries that have adopted EMV standards have seen significant benefits – in the U.K., fraud decreased 69 percent over 5 years after EMV conversion. In Brazil, counterfeit fraud decreased 80 percent; in Malaysia, fraud declined by 84 percent[iv].

The penalty for non-EMV adoption after October 2015 is set to compound with the introduction of the ‘liability shift’ – when there is an incidence of card fraud, the party that has the lesser technology will have to bear the costs. While there is a possibility that a hard deadline such as this one may always be revised to accommodate a more efficient shift, U.S. financial services organizations and merchants should use this time effectively to prepare for these new changes and arm themselves against fraudsters and the loss of reputation. The nation is already facing setbacks because of its non-EMV adoption in the form of global interoperability problems: U.S. magnetic stripe cards are increasingly becoming obsolete outside its borders and many U.S. travelers have encountered cards being declined in European countries. At HCL, we recently helped a financial services organization successfully adopt EMV technology and one of the driving factors behind this move was revenue losses – end-customers were relying more on cash and other modes of payment like traveler cards for their overseas transactions.

The time is now right to evaluate a partner who can make this journey to EMV adoption easier, cost-effective and successful. Here are the top three factors to keep in mind when evaluating the right outsourcing partner for your EMV standard adoption project:

  • Experience: Your outsourcing partner should ideally have had prior experience in rolling out a phased EMV card issuing model that is compliant with stringent regulations, and is also executed in time before the ‘liability shift’ occurs.

  • Domain and technology expertise: With EMV adoptions just beginning to take place in the U.S. market, your outsourcing partner must be able to make domain-specific recommendations, which incorporate global best-practices, to execute a successful EMV roadmap. They must also possess a talent pool of resources who can manage the project across multiple touch-points. Your partner must also possess the front-end and back-end technological know-how to execute a phased project involving integrating with several third-party tools and building a strong, secure infrastructure.

  • Project management: EMV adoption projects take place in multiple phases, and involve several groups such as consulting, implementation and maintenance teams coming together. Your outsourcing partner must ensure seamless coordination between different stakeholders and multiple vendors to ensure a holistic migration. 

To read more about how HCL recently executed a successful, quick and cost effective implementation of EMV card migration for a Fortune 500 financial services organization.