21 November 2014

Transaction Banking

Tim Brew - Tim Brew Consulting

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A post relating to this item from Finextra:

US migration to EMV gathers momentum

13 August 2014  |  8097 views  |  1
More than 575 million US payments cards will feature EMV chip security by the end of next year, according to a trade body set up to push the migration from magstripe plastic.

Size does matter!

14 August 2014  |  1312 views  |  0

 

Interesting isn't it that two of the worlds' largest regions, the US and the Euro Zone, both end up trailing the leaders in payment technology by years.  In the US the roll out of EMV has finally kicked off nearly 15 years after the rest of the world started benefiting from EMV and chip technology.  Whilst this year in Europe SEPA has finally gone live after 14 years, whilst many other countries have already moved on to real-time payments. Over the last fifteen years, what has been the cost of these delays on business and GDP? 

EMV is now a really well tested and proven solution, hopefully making the US roll out relatively simple.   The huge number and different types of terminals now available should make it easy for merchants to select and upgrade to suitable technology relatively inexpensively - certainly when compared to when EMV was rolled out across Europe when certified terminals were quite limited and expensive. In addition the core transaction and authorisation switches all needed significant development to handle the new messages, whilst at most Banks in the US (unless they running their own bespoke switch) should already be running EMV compliant software. 

There is so much noise in the market now about smart phones and mobile solutions, is the rest of the world about to move on again from plastic cards?  Perhaps to a mobile solution?  If so, will this now mean the end of the chip card?  It is possible that EMV could remain, with new instruments continuing to use the current chip standards.  However, it is likely that the terminals will need to be upgraded or even changed, something merchants should consider when choosing new terminals.  

Over the last fifteen years, since EMV was rolled out across Europe, fraudsters have had to move on dramatically from simple card skimming to much more complex scams and away from traditional card fraud to complex on-line and card holder not present transactions and exploiting other weak links in the transaction chain, such as merchant systems.    

Whilst much more secure transaction processing exists today and could be rolled out across on-line and card holder not present purchases, the consumer demands “ease of use” and minimal key strokes when shopping, particularly when using mobile devices.  Now that mobile manufacturers are making mobile screens bigger and easier to read in different light, however, they are still just not designed for complex transaction processing, so ease of use has to remain key.     

I think that the next phase in the development of consumer transaction processing will almost certainly use some form of biometric.  Currently a password, token or pin is used together with a card to give two elements of unique data which when combined link the consumer with the transaction.  With the mobile device now being so sophisticated, the answer has to be using a biometric to replace the pin and the mobile to replace the card.  Maybe using a finger print or perhaps using the camera for facial recognition, making good use of the selfie function!   

 

TagsCardsMobile & online

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