30 September 2016
Find out more

US banks going full-tilt for EMV in wake of Target breach

26 June 2014  |  10051 views  |  2 card chip

Spurred on by the fall-out from last year's Target data breach, 86% of US financial institutions plan to begin issuing EMV-based chip cards within the next two years, according to the annual debit issuer report from Pulse.

The Target breach impacted every one of the 71 financial institution that participated in the study, causing fraud loss rates to increase in 2013 and compelling issuers to re-evaluate their strategies for improving card security in 2014, the study found.

Prior to the Target incident, many financial institutions were hesitant to commit to EMV because of uncertainty around retailer adoption of chip card point-of-sale terminals, questions about the viability of the business case for migrating from magnetic stripe cards to chip cards, as well as unresolved issues related to regulation and support for merchant routing choice.

With the Target incident seen as a watershed, 86% of financial institutions stated that they plan to begin issuing EMV cards in the next two years, a significant increase from 50% in 2012.

Migration to EMV debit cards will begin in earnest in early 2015, says the report, and will span approximately three years, with many issuers attempting to provide chip cards to their international travelers and heavy debit users in advance of the liability shift in October 2015.

"We were quite surprised by the across-the-board embrace of EMV by debit issuers," says Tony Hayes, a partner at Oliver Wyman who co-led the study. "There has been a dramatic shift from issuers' tepid interest last year to their active plans to implement EMV beginning in 2015."
KeywordsEFTPOS

Comments: (2)

Nigel Beatty
Nigel Beatty - Proxama Digital Payments Division - London | 26 June, 2014, 09:46

The Target breach has undoubtedly acted as a call to action for the US payments industry and has indeed spurred the adoption of EMV and largely silenced the sceptics. But while EMV adoption will radically reduce the growing incidence of face-to-face card fraud, the impact of data breaches will only be substantially mitigated by tokenization being adopted by all 'card-on-file' merchants. If card details are replaced by aliases, which themselves are constrained to usage in a single channel or even at a single merchant, stealing these tokens becomes a futile exercise, but no doubt the hackers will turn their attention somewhere else...

1 thumb up! 1 thumb up! (Log in to thumb up)
Kai Johnson
Kai Johnson - Sutton Abinger - San Diego | 26 June, 2014, 15:31

It's right to say that EMV adoption will shift fraud from card-present to card-not-present channels. However, we need to be careful about the expectations that tokenization could reduce e-commerce fraud. In the tokenization framework proposed by EMVCo, tokens are created from the original card data, including the PAN, and revert to the original card data for processing. Some of the proposals to apply this framework will require e-commerce merchants to collect and handle card data including the PAN. If the card-on-file database is converted to tokens, it may present less of a risk, but as we saw with Target, the point-of-sale infrastructure can be breached to capture card details as consumers present them.

1 thumb up! 1 thumb up! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Target names DeRhodes CIO; partners MasterCard for chip and PIN

Target names DeRhodes CIO; partners MasterCard for chip and PIN

29 April 2014  |  5137 views  |  0 comments | 3 tweets
Visa and MasterCard launch cross-industry effort to push US adoption of EMV

Visa and MasterCard launch cross-industry effort to push US adoption of EMV

07 March 2014  |  10702 views  |  4 comments | 20 tweets | 19 linkedin
Target chief information officer quits

Target chief information officer quits

05 March 2014  |  5247 views  |  0 comments | 6 tweets | 5 linkedin
Credit unions estimate $30 million hit from Target breach

Credit unions estimate $30 million hit from Target breach

11 February 2014  |  5226 views  |  0 comments | 6 tweets | 10 linkedin
US banks have re-issued 17.2 million cards following Target data breach

US banks have re-issued 17.2 million cards following Target data breach

07 February 2014  |  13396 views  |  8 comments | 25 tweets | 10 linkedin
Hacked Target hastens migration to chip cards

Hacked Target hastens migration to chip cards

05 February 2014  |  6107 views  |  0 comments | 4 tweets | 9 linkedin
Citi replaces all debit cards involved in Target breach

Citi replaces all debit cards involved in Target breach

16 January 2014  |  5788 views  |  0 comments | 7 tweets | 7 linkedin
Target hackers used POS malware to steal card details

Target hackers used POS malware to steal card details

14 January 2014  |  6503 views  |  0 comments | 5 tweets | 5 linkedin
Target raises numbers hit by data breach from 40 million to 70 million

Target raises numbers hit by data breach from 40 million to 70 million

10 January 2014  |  5461 views  |  1 comments | 11 tweets | 6 linkedin
Credit Union lobby urges Congress to act on retailer data security failings

Credit Union lobby urges Congress to act on retailer data security failings

20 December 2013  |  5928 views  |  1 comments | 3 tweets | 9 linkedin

Related company news

 

Related blogs

Create a blog about this story (membership required)
Visit dh.comVisit www.abe-eba.euFind out more

Top topics

Most viewed Most shared
Ripple rudely gatecrashes Sibos partyRipple rudely gatecrashes Sibos party
10991 views comments | 35 tweets | 33 linkedin
BNP Paribas is working with clients on blockchain deploymentBNP Paribas is working with clients on blo...
7891 views comments | 15 tweets | 31 linkedin
Banks ready for real-world blockchainBanks ready for real-world blockchain
6983 views comments | 22 tweets | 29 linkedin
PayPal and Lenovo team on biometric authentication for laptopsPayPal and Lenovo team on biometric authen...
6806 views comments | 13 tweets | 16 linkedin
Distributed ledger technology could damage financial market integration - ECBDistributed ledger technology could damage...
6255 views comments | 15 tweets | 10 linkedin

Featured job

to c.£100K base, double OTE
London, UK (covering Europe)

Find your next job