Card Payments Roadmap in Latin America: How Does EMV Impact the Payments Infrastructure?
Publication Date: August 2011; Translation: June 2012
- Click here to download the white paper in English
- Click here to download the white paper in Spanish
- Click here to download the white paper in Portuguese
The EMV specification defines technical requirements for issuers, acquirers, merchants, and processors on the use of embedded microchip cards (smart cards) and accompanying point-of-sale (POS), and Automated Teller Machines (ATMs) to conduct secure financial transactions. According to EMVCo, approximately 1.2 billion EMV cards have been issued globally and 18.7 million POS terminals accept EMV cards. The primary purposes of including a chip in a bank card are to store cardholder data securely, protect data stored on the chip against unauthorized modification, and reduce the number of fraudulent transactions resulting from counterfeit, lost, and stolen cards.
In Latin America and the Caribbean, Visa Inc. announced their milestone of 100 million EMV cards issued in Brazil, the region’s largest market. Other countries in the region have been following suit with large migrations occurring in Colombia, Mexico, and Venezuela. It has become clear that countries that have begun their migrations have seen a decline in card present transaction fraud rates and an improvement in card services.
The primary drivers for EMV migration in the Latin American and Caribbean markets were high fraud rates, and the regional Liability Shift Mandate put in place by the main financial networks (MasterCard Worldwide and Visa Inc.) In addition, private label financial networks have also begun requiring dynamic data authentication using the embedded microchip cards to reduce liability associated with fraud. These networks and partners have seen the incorporation of the microchip as an opportunity to add services rather than as an additional cost in infrastructure.
Today, main challenges for EMV migration in Latin America and the Caribbean, as cited in our EMV Migration Study and Market Analysis of Mexico and Brazil, are “budget constraints and lack of knowledgeable resources.” These inhibitors to EMV migration have been decreasing as new impartial available resources are finding their way to the markets and as financial institutions have begun to mitigate high fraud rates due to the liability shift mandates.
Latin American and Caribbean payments industry stakeholders recognize that there is a need to educate themselves about EMV and to leverage the lessons learned in other parts of the region and the world. When compared to other regions, the Latin American and Caribbean markets have unique characteristics and are developing variations of EMV chip card solutions such as: EMV/ICP Brasil (EMV/National PKI), offline EMV transactions (Cielo), EMV payment and transit solutions (Pao de Acucar, Rio de Janeiro), and advanced loyalty programs (Puntos Bancomer program BBVA Bancomer). These explorations of implementation options based on the EMV specifications are meant to address market needs in the most cost-effective manner and address the opportunities provided by EMV chip cards.
The objective of this white paper is to educate stakeholders across the payments value chain on different options for EMV implementation and critical considerations for deploying an EMV solution in their business environments in Latin America and the Caribbean. The primary stakeholders are issuers, merchants, acquirers/processors, ATM owners and suppliers of hardware, software, and support services. White paper topics discussed include:
- The impact of the global and regional deployments of EMV on possible roadmap options for Latin America.
- A primer on EMV security specifications for card authentication methods, cardholder verification methods and transaction authorization approaches and implementation options for each.
- The relationship between EMV, contactless payments and Near Field Communication (NFC).
- An overview of changes required in the issuing, acquiring/processing, merchant and ATM payments infrastructure to support the different EMV roadmap options.
The Smart Card Alliance Latin America–SCALA website contains many EMV Resources for those looking to learn more about the financial payments industry and the technology. Visit the following available links:
- Card Payments Roadmap in Latin America: How Does EMV Impact The Payments Infrastructure?
- EMV Migration and Market Analysis: Mexico & Brazil
- Banco do Estado do Rio Grande do Sul–Banrisul Case Study
About the White Paper
The Smart Card Alliance Latin America – SCALA Financial Payments Council developed this white paper to educate stakeholders across the payments value chain about the critical aspects of deploying an EMV solution in their business environments in Latin America and the Caribbean.
Payments Council members involved in the development of this white paper included: Assenda, Banred S.A., Banrisul, First Data CAC, G&D Burti, Gemalto, GET Group, MasterCard Worldwide, Morpho, Oberthur Technologies, Redeban Multicolor S.A., Telered S.A., and Visa Inc.
The honor roll for the development of this white paper is given to:
- Marcelo de Oliveira, Visa Inc.
- Dimas Gomez, Gemalto
- Vincent Tenaglia, GET Group
- Marina Acosta, MasterCard Worldwide
- Willian Lemes, Morpho
About the SCALA Financial Payments Council
The Smart Card Alliance Latin America Financial Payments Council focuses on facilitating the adoption of chip-enabled payments and payment applications in Latin America and the Caribbean through education programs for consumers, merchants, issuers, acquirers/processors, government regulators, mobile telecommunications providers and payments service providers. The group is bringing together payments industry stakeholders, including payments industry leaders, merchants and suppliers, and is working on projects related to implementing EMV, contactless payments, NFC-enabled payments and applications, mobile payments, and chip-enabled e-commerce. The Council’s primary goal is to inform and educate the market about the value of chip-enabled payments in improving the security of the payments infrastructure and in enhancing the value of payments and payment-related applications for industry stakeholders. Council participation is open to any Smart Card Alliance Latin American–SCALA member who wishes to contribute to the Council projects.
About SCALA–Smart Card Alliance Latin America
SCALA–Smart Card Alliance Latin America is a chapter of the Smart Card Alliance, a not-for-profit, impartial, 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://latinamerica.smartcardalliance.org/