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EMV: U.S. Market Update
EMV for Merchants
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© Copyright 2014 Vantiv, LLC. All rights reserved. Vantiv, the Vantiv logo, and all other Vantiv product or service names and logos are
registered trademarks or trademarks of Vantiv, LLC in the USA and other countries. ® indicates USA registration.
Disclaimer:
This communication, including any content herein and/or attachments hereto, is
provided as a convenience only, does not constitute legal advice and does not create and attorney client
relationship. Because of the generality of this communication, the information provided herein may not be
applicable in all situations and does not constitute a comprehensive list of issues that could impact your
business. As such and to understand how the information in this communication may impact your business,
you are encouraged to seek the advice from your legal counsel, compliance and/or other subject matter
expert based on the facts and circumstances of your organization’s particular situation.
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Agenda
• U.S. Market Stats
• EMF Update
• EMV and Debit
• Debit Routing
• Vantiv and EMV
• Next Steps
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U.S. EMV Market Statistics
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US Market Today*
• 511 million credit cards
› 31% of the global total
• 572 million debit cards
› 32% of the global total
• 16 million payment terminals
› 11 million integrated
› 5 million stand alone
• Wedge readers unaccounted for
› Utilized by hospitality, service industries
* Data is only based on information provided by Vantiv’s partners and does not include all international payment systems.
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US Market Today*
• 16 Independent “PIN” Debit Networks
› 37% of total US debit volume
› Routed 19 Billion of US PIN transactions in 2012
› Federal regulations ensure merchant “least cost routing” option
for PIN debit transactions
• 9 Acquirers Represent 70% of Processing Volume
• 1000+ Independent Sales Organizations (ISOs)
› Primary business interface of small merchants
• 500+ Independent Software Vendors (ISVs)
› Primary processing interface to mid-tier merchants
* Data is only based on information provided by Vantiv’s partners and does not include all international payment systems.
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US Market EMV Update
• Significant progress underway*
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Multiple issuing pilots underway, top issuers
Up to 2 million EMV capable terminals installed
5-20 million EMV cards issued
Top acquirers fully certified
Stand Alone Terminal applications being developed/
certified
› Debit routing challenges resolved
› ISVs adding EMV support to products
* Data is only based on information provided by Vantiv’s partners and does not include all international payment systems.
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US Market EMV Update
Merchants
• Merchants reinvigorating EMV cert and Security discussions
as result of 2013 holiday breaches
• Top 25 Vantiv merchants plan to certify by Q1, 2015
• Wal-Mart “live” with EMV today
• Inability to finalize PIN Bypass specifications may result in
slower TTM
• Significant drive toward PIN adoption promoted by merchants
(credit and debit)
• Contactless adoption minimal outside of QSR, Drug Store,
Petro verticals
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US Market EMV Update
Issuers
• Large issuers piloting in 2014
• Anticipate aggressive number of 2014 pilots:
› Smart Card Alliance EMV Forum (EMF) pilot planned Q4
› Includes FIs and Merchants (WF, BoA, SunTrust, Target,
others TBD)
• Vantiv pilot begins August, 2014 with issuers and
merchants
• Utilizing Common US AID for debit ONLY
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US Market EMV Update
Brands/Networks
• Visa and MC reaffirmed EMV October, 2015 liability shift
commitment
• PIN-on-Credit vs. Signature Preferring
› Signature Credit will likely prevail initially
• Debit
› US Common AID meets current Reg II requirement
› Largest debit networks (Star, Pulse) announced support
› Potentially future-proofs for signature duality
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Brand Roadmaps
April 2013
April 2013
April 2013
April 2013
Processors must
support EMV
Processors must
support EMV
International ATM
liability shift
Processors must
support EMV
Processors must
support EMV
April 2015
3rd party ATM
must support EMV
October 2015
Liability shift of
counterfeit transactions
October 2015
Liability shift of
counterfeit transactions
October 2016
October 2015
October 2015
Liability shift of
counterfeit transactions
Liability shift of
counterfeit transactions
October 2017
October 2017
Liability shift for AFD
Fuel liability shift
Liability shift for ATM
October 2017
Liability shift for AFD
Liability shift for ATM
October 2017
Liability shift for AFD
283 business days to Counterfeit Fraud Liability Shift
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EMF Update
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EMV Migration Forum Update
•
The EMV Migration Forum is an independent, cross-industry
body created by the SCA to address issues that require
cooperation and coordination across the payments space in
order to successfully introduce EMV technology in the U.S.
• Released the U.S. EMV Debit Framework in April, 2014.
• Creating and delivering a series of EMV educational
webinars.
• Developing recommendations for securing the CNP channel.
• Developing a framework for streamlining the EMV certification
process.
http://www.emv-connection.com/
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EMV and Debit
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› EMV and Debit
•
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•
•
•
•
As designed, card (i.e. the issuer) determines debit routing, not merchant.
This conflicts with the Durbin amendment of the Dodd–Frank Wall Street
Reform Act.
EMF develops debit framework to support PIN debit routing choice.
U.S. District court ruling in July, 2013 opens the possibility that at least
two unaffiliated Signature networks will have to be supported as well as
two PIN networks.
EMF regroups to account for potential of
signature duality.
Appeals Court overturns U.S. District
decision. May go to U.S. Supreme Court.
EMF proposes new debit framework
designed to be “future-proofed” against
ultimate outcome of court case.
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Debit Routing
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EMF Debit Routing Framework
› Primary goal is to propose a set of baseline technical
specifications for a U.S. EMV debit solution intended to be
consistent with applicable technical and regulatory
requirements and provide a viable technological approach
› Intended as a model, or framework, serving as the basis for
one or more technological solutions to be developed
› The EMV Migration Forum does not mandate adoption of or
compliance with the framework
› Based entirely on EMV chip technology with no proprietary
data elements or logical process steps
› The U.S. common debit AID would be shared across U.S.
debit networks and would be for domestic use
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EMF Debit Routing Framework
Transaction Flow – US Common Debit AID with Signature
Cardholder
Card
Acquirer/Store/Network
back-end
Merchant Terminal
Initialized and
ready to accept
transaction
Message “Insert or
Tap Card”
Card powered up
Insert Card
Application list
returned to
terminal
Optional preselection BIN
based on routing
choice
Application
selection (via PSE
or explicit)
Candidate list
created
International + US
Debit AID (6-digit
BIN available)
Use US Debit?
Yes
Select US Debit
AID
Application
selection & GPO
Read application
data
Full PAN and CVM
preference list
Card CVM
1. Online PIN
2. No CVM
3. Signature
No
Standard EMV
with Intl AID
Online PIN
Enter PIN
PIN entered
Enter PIN or
Bypass
PIN entry captured
Online PIN block
created
BIN Routing (PAN,
Online PIN)
No PIN transaction
initiated
No PIN Routing
(PAN, No CVM
limit, Sig support))
PIN bypassed
Routing input:
PAN, Type (PIN/
no PIN), Amount
A
Vantiv Confidential
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EMF Debit Routing Framework
Transaction Flow – US Common Debit AID with Signature – Page 2
Cardholder
Card
Merchant Terminal
Acquirer/Store/Network
back-end
A
Completed as
EMV PIN
Remove card
Sign
Print receipt with
Signature (or sign
on screen)
C
D
E
No EMV Support
Signature
PIN
No CVM Limit
Completed as
EMV No Sig
required
B
PIN
BIN Routing
A
PIN
No CVM Limit
Print receipt with
No Signture
PIN
No CVM Limit
Signature
Remove Card
Completed as
EMV Sig capture
Merchant Routing Decision
Completed as
EMV without
ARPC
Option 1: ARQC &
Online PIN Block
Option 2: ARQC
(Request No CVM
or Sig approval)
Option 3: Drop
EMV data – send
to network track 2
eq. & PIN (chip
entry mode)
Approve with No
CVM
Approve with
Signature
Authorization Response
Approve with PIN
Approve as magstripe
Vantiv Confidential
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Vantiv and EMV
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Industry Participation
•
Only U.S. headquartered acquirer serving on EMVCo
Board of Advisors. EMVCo manages the EMV ICC
Specifications.
•
Steering Committee member of the EMV Migration Forum.
•
Member of the Smart Card Alliance’s Leadership Council.
The Alliance works to stimulate the understanding and
adoption of smart card technology.
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EMV Achievements
•
First U.S. Acquirer to Complete Mandate Requirements to Process both
EMV Visa and Interlink Transactions
•
First U.S. Acquirer to Complete MasterCard® Requirements to Process
EMV Transactions for Both ATM and Point-of-Sale Locations
•
First U.S. Service Provider to Certify Amex for ATM Acquiring
•
First U.S. Service Provider to Certify ATM Upgrades with MasterCard ® and
NCR
•
Industry leading closed-loop EMV testing environment with VIABLE
•
Confirmed by all four major networks for self-accreditation
•
First terminals in market with the Common U.S. Debit AID
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Next Steps
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EMV Merchant Products Readiness & Roadmap
EMV Terminal
Products
Available
Today
EMV
Transaction
Processing
Available
Today
EMV Terminal
Applications
Available
Q3-4 2014
EMV capable terminals can be boarded today and downloaded with EMV
functionality upon availability of EMV certified applications
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Upcoming Milestones
• General release of the Tandem 610 version of VIABLE
• Pilot of ISO 8583 version of VIABLE
• Combined Issuer and Merchant pilot in multiple
markets
• General release of Ingenico EMV-enabled terminals
• Certification of VeriFone terminals
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Questions
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