October 2015 Monthly Member Bulletin
Executive Director’s Corner
Dear Members of the Smart Card Alliance,
Did anyone notice, a few weeks ago, that the October 2015 EMV fraud liability date came and went without much of a ripple? Sure, there was a lot of news coverage with reporters showing videos of consumers shopping in Target with their new chip cards, stumbling over explanations of the change and how the cards work, and cautioning about how you still need to be careful shopping online. Yet it still seemed a bit anticlimactic to me. Cash registers continued to chime and churn out receipts, and consumers went about their normal business – most of them not encountering an EMV-enabled merchant that week anyway. For those who did, it was just another new shopping experience, like the first time they used a new POS device or a self check-out kiosk.
Yet while that was happening on the surface, millions of new EMV transactions were occurring across the new, security-enhanced payments terminals connected to the fortified payments network rails that seamlessly process each EMV transaction. The wait for a chip-enabled transaction took a few seconds longer in some cases, either due to the learning curve of the clerk or the consumer, or both. I’m sure there were a few failed attempts when consumers removed the card too quickly or didn’t insert the card fully into the terminal. There were some reports about debit cards not working as chip cards in some places where credit cards did work, and some people wondering what all the fuss was about as they hadn’t received anything from their bank with a chip on it. The important point was that EMV worked for most anyone who encountered it – just as it has in over 80 countries around the world.
There is still work to be done. There should be and will be more big retail chains coming online throughout the month of October and into next year. There will be thousands of small merchants who have ordered new terminals to replace their old swipe-only units and who will receive them in the coming weeks and months from their bank or merchant processor. There will be large and medium-sized banks who issued cards first to their high worth, high volume customers, and who will be getting the remaining credit and debits cards into consumers’ hands before the holiday shopping season gets into full swing.
And many small community banks and credit unions, who were slow to react to the EMV timelines or who were far down in the queue for cards and personalization services from their issuer processors, will finally make their way to the front of the line of their card issuance provider. They’ll be able toget their cards into the hands of the anxious customers who are wondering why they were left behind. As more of those newly-issued cards come into contact with the large retail chains, supermarkets, and convenience stores with chip-enabled payment terminals – as well as at the hometown hardware store, sandwich shop, and dry cleaner – the newly secured payments system is going to light up with EMV authenticated transaction data like a million points of light on a national map.
Don’t expect the entire system to be alive with dynamic data overnight. It will likely take two to three years to reach the 90 percent chip card use at a chip terminal (chip-on-chip percentage) that marks the point when EMV is considered fully enabled. As we move toward higher and higher percentages of chip-on-chip transactions, we’ll start to see a drop in the massive $3.6 billion counterfeit fraud problem. EMV will not protect those cardholders who still use their magnetic stripe cards at EMV merchants or the magnetic stripe on their chip cards at merchants that don’t have the hardware and software to accept the chip.
Merchants should also be aware that they are not protected from liability for fraud by just replacing their terminal with one that accepts a chip. Merchants also need to update the terminal software so that it properly authenticates the card and generates the cryptogram that makes the transaction secure, and complete the testing and certification that are required to ensure that the implementation is successful.
Also, it is important to remember that EMV is not a solution for e-commerce fraud, which is bound to increase when criminals with counterfeit cards run out of physical stores where they can still get away with using them.
Fortunately, there are some market statistics which need to be considered in examining the threat of rising card-not-present fraud for merchants which operate e-commerce businesses. Small businesses are the most vulnerable for e-commerce fraud because they typically lack the added software security measures and e-commerce fraud risk tools that the bigger retailers have. But 72% of small businesses who have physical stores do not sell on the Internet, so the vast majority of small businesses are not impacted by e-commerce fraud. And for businesses of all sizes, 92.2 percent of all sales occurs in physical stores, not with e-commerce merchants; so fixing the biggest fraud hole in the trillion dollar U.S. market is taken care of with EMV chip cards and terminals in physical stores. E-commerce merchants shouldn’t despair or feel abandoned by the banks and payments networks who have focused on the biggest fraud problem first. In fact there are new technologies available for e-commerce merchants today that will better protect their businesses. The EMV Migration Forum published a white paper,“Card-Not-Present Fraud: A Primer on Trends and Transaction Authentication Processes,” that outlines these popular solutions and how they reduce fraud.
So the next time you use your EMV chip card at a chip-enabled merchant, just think of the image of a million points of light happening all around you, and be assured that EMV is working and will be growing in usage and effectiveness each day, bringing down the cost and inconvenience of counterfeit card fraud for banks, merchants, and consumers.
Executive Director, Smart Card Alliance
In The Spotlight
NXP Semiconductors N.V.
A 2014 Smart Card Alliance Company of Excellence (COE) recipient, NXP Semiconductors N.V. (NASDAQ: NXPI) creates solutions that enable secure connections for a smarter world. Building on its expertise in high-performance mixed signal electronics, NXP is driving innovation in the areas of connected car, security, portable & wearable, and the Internet of Things. NXP has operations in more than 25 countries. Their businesses are High Performance Mixed Signal, Automotive, Secure Identification Solutions, Secure Connected Devices, Secure Interfaces & Power and Standard Products.
Please describe your company’s business profile and its offerings
Our businesses are High Performance Mixed Signal, Automotive, Secure Identification Solutions, Secure Connected Devices, Secure Interfaces & Power and Standard Products. At NXP we understand our customer’s vision and requirements to shape the perfect device and user experience. Our innovative solutions deliver greater energy efficiency, safety, security, convenience and functional performance. Combined with application insights, sub-system expertise and standard products, we can provide multiple solutions to engineering problems – working to enable secure connections for a smarter world.
What role does smart card technology play in your business?
Smart card technology plays a central role in our business. NXP offers a complete range of ICs for smart cards, tags, labels and readers, featuring many coprocessor, security, memory and interface options. We address all needs, from low-cost smart label ICs for high-volume supply chain management applications through to our next generation 32-bit smart-computing platform for powerful multi-application smart cards.
MIFARE is NXP’s well-known brand for a wide range of contactless IC products with a typical read/write distance of 10 cm (4 inch) used in more than 40 different types of application worldwide. With 50 million reader and 5 billion card components sold, MIFARE products, which are fully compliant with ISO/IEC 14443, are proven and more reliable than any other interface technology in the market.
What trends do you see developing in your market?
We see that seamless connectivity and the secure interfaces and secure connections are what consumers are looking for. Securely connected devices and easy authentication to help customers better protect their devices and improve the reliability, security, and safety within the eco ecosystem. Additionally NFC is simply about making all of our lives easier with technology that is secure and easy to use, the growing number of NFC devices will influence the development of smart products and consumers will learn to have an interaction between phone and smartcard.
Interoperability, low power, and secure solutions are the underpinning technologies that will drive the next wave of wearables and smart devices in IoT.
What things must you overcome to leverage those trends?
We believe that our future success depends on our ability to both improve our existing products and to develop new and innovative products for both existing and new markets. We direct our research and development efforts largely to the development of new High Performance-Mixed Signal semiconductor solutions where we see significant opportunities for growth. We target applications that require stringent overall system and subsystem performance. As new and challenging applications proliferate, we believe that many of these applications will benefit from our solutions.
For more information visit www.nxp.com
EMVCo/Smart Card Alliance Webinar Series
Don’t forget to register for the Nov. 4th Smart Card Alliance/EMVCo webinar, “The Evolution of Payment Specifications and Tokenization.” The webinar will be delivered by Randy Vanderhoof, executive director of the Smart Card Alliance and Clinton R Allen, chair of EMVCo’s Tokenisation Working Group. The webinar will begin with an introduction to the Smart Card Alliance ‘Technologies for Payment Fraud Prevention: EMV Encryption and Tokenization’ white paper, which provides an overview of tokenization technology and explains how it is utilized to secure the payments infrastructure. Presenters will explore the subject of tokenization, and participants will be given insight into EMVCo’s current payment tokenization activities and priorities, together with an outline of intended next steps.
Registration is available at https://attendee.gotowebinar.com/register/7479164334065672193.
If you missed the first Smart Card Alliance/EMVCo webinar, the webinar recording and presentation are available at http://www.securetechalliance.org/activities-events-the-evolution-of-payment-specifications-and-tokenization-part-1/.
Councils completed one government response and have seven other projects in process. The 2015 Member Meeting breakout sessions were also hosted by Council chairs and members, with panels delivering excellent content on topics ranging from payments to identity authentication to the Internet of Things.
- The Access Control Council is defining a project to update the FICAM in Brief white paper, published in May 2010.
- The Health and Human Services Council published its response to the GAO report, Medicare: Potential Uses of Electronically Readable Cards for Beneficiaries and Providers. The response, titled The Benefits of Strong Authentication for the Centers for Medicare and Medicaid Services, endorses implementing strong authentication for beneficiaries and providers and discusses the benefits. The Council is currently working on a vision white paper on the convergence of the payments and healthcare identity acceptance infrastructure.
- The Identity Council is working on a white paper on the FIDO protocol and smart card technology.
- The Mobile and NFC Council held a well-attended in-person Council meeting at the NFC Solutions Summit; the meeting focus was to discuss new project ideas. Council members also developed and presented sessions at the NFC Solutions Summit pre-conference workshop, “Implementation Considerations for NFC and other Mobile Technologies: Payments and Beyond.” The Council is currently working on two new projects: a white paper on EMV and NFC (in collaboration with the Payments Council); a white paper on “NFC non-payments use cases.”
- The Payments Council held a well-attended in-person Council meeting at the NFC Solutions Summit; the meeting focus was to discuss new project ideas. The Council is currently working on a white paper on EMV and NFC (in collaboration with the Mobile and NFC Council).
- TheTransportation Council is working on two white papers on: reference enterprise architecture for transit open payments system; multimodal payments convergence.
If you would like to participate in a Smart Card Alliance Council, please contact Mike Strock, [email protected].
New EMV Resources
The EMV Migration Forum completed one white paper, hosted two webinars and created a set of educational resources for the media and the industry. All EMV Migration Forum resources are available on the EMV Connection web site.
Welcome New Members
- Zeva, Leaderhip Council
- Abancale Corp., General
- FiTeq, Inc., General
New CSEIP Recipients
- Julian Figueroa, HID Global
- Jim Kemp, COLSA Solutions
- Jared Murry, Access Systems, Inc.
- Delbert Wheeler, HID Global
Payments Summit-Save the Date
The Smart Card Alliance Payments Summit will be held April 5-7, 2016, at the Loews Royal Pacific in Orlando, Florida. The event, co-located with the International Card Manufacturers Association (ICMA), will provide attendees with more workshops and sessions and the opportunity to meet new contacts. Registration will open soon; for more information visit http://www.scapayments.com/
Last Chance to Showcase Your Company
A limited amount of opportunities are available to member companies in the popular “Annual Review,” a comprehensive, full-color publication produced by the Smart Card Alliance and available in print and online in December. Please contact [email protected] to ensure your company’s visibility!