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EMV: Paving the road to mobile NFC

Why is the U.S. the last holdout to adopt EMV? The pain of a costly conversion and the absence of government or industry mandates to force the issue are the obvious, key culprits. Some forward thinkers, however, muse that EMV is a 15-year old, out-of-date technology and are waiting for something newer and flashier to “leapfrog” EMV and jump straight to the promise land of mobile payments. While future focused, this thinking is misguided. As Visa’s recently announced U.S. EMV initiative spotlights, EMV adoption actually readies the landscape for mobile NFC payments now.

The prevalence of chip-and-PIN cards has made EMV synonymous with that specific payment form. In actual fact, however, the EMV standard is constantly updated, and more recent refreshes include basing NFC technology on the contactless version of the EMV specification; NFC is an EMV transaction.  The underlying technology infrastructure is the same as well – transaction processing, risk management and card or token management solutions to name a few. 

With nimble payment providers from the “virtual world” – PayPal, Google’s Android and Apple – knocking at the door, financial institutions need to get in on the NFC act soon. These new, flexible players do not have outdated legacy systems to maintain, yet have experience switching, billing and settling. The financial networks need to recognize the massive opportunity at hand. Today’s tech-savvy consumers have shown that they want to use their mobile devices in all areas of their day-to-day life, including payments.

The waiting game is over; EMV is defining how that newer, flashier technology people have been waiting for is going to operate.

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Comments: (2)

A Finextra member
A Finextra member 14 September, 2011, 11:32Be the first to give this comment the thumbs up 0 likes

Maybe the dominat view is that it isn't worth it.  What are the benefits from  a US perspective (e.g. lower fraud), how will EMV reduce the costs directly atrributed to not having EMV and how does that stack up against the costs of implementing it?

For instance, though not a US citizen, I have had contact with US people in the cards industry and the dominant view I always came away with was that the US didn't need Chip/EMV, simply because most (all?) transactions were already online authorised.

It could simply be down to an economic assessment.  Is it?

Nick Collin
Nick Collin - Collin Consulting Ltd - London 21 September, 2011, 11:19Be the first to give this comment the thumbs up 0 likes

I think there's a growing realisation that the business case for EMV migration in the US is as strong as it is in the rest of the world, maybe stronger as fraud increasingly migrates to the US.  With Visa's announcement and other indicators I think we've reached a tipping point and migration will happen sooner and more rapidly than most people expect.  And yes Jim, I totally agree that mobile NFC is enabled by EMV, rather than being in some weird sense an alternative.  Not that I think mobile NFC will happen any time soon - in fact it's been massively over-hyped IMHO - but that's another story!