EMV Comes to U.S. for International Travelers, Wal-Mart Calls for Chip and PIN

EMV Comes to U.S. for International Travelers, Wal-Mart Calls for Chip and PIN

Payments Highlights From the Smart Card Alliance Annual Meeting

Princeton Junction, NJ, May 25, 2010–The first U.S. financial institution to issue EMV chip cards, the United Nations Federal Credit Union (UNFCU), explained how it is responding to the needs of its international travelers, and Wal-Mart, the largest U.S. company, strongly advocated a move to chip and PIN at this week’s Smart Card Alliance annual conference in Scottsdale, Arizona.

Merrill Halpern, card services manager at UNFCU, explained that since so many of their members travel internationally, they had many customers asking them to provide a card that would be interoperable in countries that have implemented EMV. “Customers would tell us, ‘I want to use your card but I can’t depend on it. It’s going to the bottom of my wallet; tell me when you have an EMV card that I can use,’” said Halpern. To address these concerns, UNFCU is introducing a contact EMV card for its elite cardholders, and plans to evolve into dual contact/contactless technology.

Tim McGaugh, manager of smart card technologies for Royal Bank of Canada, said RBC very successfully pursued the same strategy several years ago, introducing EMV chip and PIN as a feature for international travelers on its premier Avion branded payment card years before Canada made the decision to migrate to EMV.

Worldwide nearly one billion EMV cards have been issued, according to keynote speaker Brian Byrne, a Visa executive and the chair of the EMVCo board of managers. Over half of these are now non-European, due to the phenomenal growth in the Americas and Asia over the last few years. EMVCo is focused on preparing contactless and mobile EMV standards, he reported. In his view, there is an excellent opportunity in the U.S. market to utilize contactless technology online to improve security.

Wal-Mart is also interested in moving to EMV for security reasons. “When it comes to secure payments, we are strong advocates of chip and PIN,” said Jamie Henry, director of payment services, Wal-Mart Stores, Inc. “The PIN piece is very important to us. We don’t see it being rolled out otherwise.”

Wal-Mart already has 100 percent of its payment system hardware equipped to accept EMV chip and PIN, and is finalizing the software programs for these devices. Henry explained that Wal-Mart rejects the idea of investing in “Band-Aids” such as end-to-end encryption and tokenization. “Our position is let’s just cut through this winding road and the rollout of all this expensive technology we’re being asked to deploy, and let’s get directly to the end result, which in our view as it currently stands is chip and PIN,” said Henry.

Dodd Roberts, president and CEO of the Merchant Advisory Group, said the large retailers who are his organization’s members are asking that all of the payment industry stakeholders come together to set a direction toward EMV in the U.S. that does not require multiple stages of investment in interim solutions.

Robert Carr, CEO of Heartland Payment Systems, expressed his view that payment with mobile handsets will drive the country to EMV, citing its popularity on the college campuses for which Heartland provides processing. Since that requires an evolution in the payment systems that will take many years, he argues, and in the meantime there are eight million merchants in America that need protection now, Carr’s organization is beginning to deploy end-to-end encryption as a way to provide his merchant customers with an immediate solution.

The executive director of the National Retail Federation’s retail technology standards group, Richard Mader, is also “convinced mobile will be a revolution.” His organization is working to provide retailers with a voice in how mobile payments and mobile retail applications evolve.

Patrick Gauthier, the senior vice president of Commerce Fault Line and a former Visa executive, shares Carr’s and Mader’s enthusiasm for mobile payment and NFC. His view is that NFC aligns the smart card industry with the “gesture and touch” paradigm that is propelling the rapid growth of products like Apple’s iPhone and iPad. Gauthier argues that using the smart card inside a touch phone lowers the barriers, notably the user experience and connectivity, which have frustrated earlier efforts to use smart cards for relationship marketing and other applications beyond payments.

About the Smart Card Alliance

The Smart Card Alliance is a not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application of smart card technology.

Through specific projects such as education programs, market research, advocacy, industry relations and open forums, the Alliance keeps its members connected to industry leaders and innovative thought. The Alliance is the single industry voice for smart cards, leading industry discussion on the impact and value of smart cards in the U.S. and Latin America. For more information please visit http://www.securetechalliance.org.