United States: The Inevitable - EMV Payments On A Fast Track To Becoming A New Standard In The United States

Last week, congressional leaders in Washington continued with their focus on the safety of the U.S. payments system in the aftermath of the massive retailer breaches at Target, Neiman Marcus and others. The House Committee on Financial Services held its session March 5, while the House Committee on Science, Space and Technology hearing was held March 6. The message coming out of the hearings was that the adoption of EMV cards is just one of many steps that need to be taken to secure the U.S. payments system.

Not coincidentally, MasterCard and Visa have announced the formation of a cross-industry group focused on enhancing payments system security to keep pace with the expectations of consumers, retailers and financial institutions. The companies say that the group "will initially focus on the adoption of EMV chip technology in the United States, in addition to addressing other security-related topics, including tokenization, point-to-point encryption and broader needs of the region."

Named after its original developers (Europay, MasterCard® and Visa®), this smart chip technology features payment instruments (cards, mobile phones, etc.) with embedded microprocessor chips that store and protect cardholder data. This standard has many names worldwide and may also be referred to as: "chip and PIN" or "chip and signature." EMVCo. is the standards body collectively owned by American Express, JCB, MasterCard and Visa.  These companies also comprise the organization that maintains the Payment Card Industry Data Security Standard (PCI-DSS).

Under the EMV standard, a cardholder's confidential data is more secure than on the current magnetic stripe card due to the fact that EMV supports dynamic authentication that is verified by the point of sale (POS) merchant terminal.  The EMV system has been long in coming to the United States.  As we know from earlier congressional hearings, Target unsuccessfully tried to implement it and, for the last few years, the payment networks have been trying to spur adoption. Uncertainty from litigation and complexity of implementation by retailers have delayed the implementation of EMV in the United States.

As a result of the high profile and the size of the most recent breaches, the timetable for adoption of EMV in the United States is likely to speed up or, stated more accurately, there will likely not be long delays. However, EMV is not the silver bullet.  Experts agree that EMV would not have prevented the Target breach because the malware that attacked Target was looking for account information inside POS devices' memories, where data is unencrypted. This information would have been compromised regardless of whether or not it came from EMV cards because it was not taken directly off the cards themselves.   Most significantly, while EMV provides authentication at the POS device, it has no effect in online transactions.  Thus, as more brick-and-mortar merchants implement EMV technology, we can expect higher risk for fraud and data breaches for online merchants as the fraudsters shift their focus.

There is no agreement at this time if the EMV adoption in the United States will be coupled with a PIN or a signature requirement.  Cards will continue to be issued with a magnetic stripe.  Also, while experts agree that a layered approach is necessary to truly protect payment data, there is no agreement on what, if any, other data protection element, such as tokenization, is needed. 

The newly formed cross-industry group is just one of the ways Visa and MasterCard are trying to ensure widespread adoption of EMV.  They have also issued upcoming rules and guidelines for processors and merchants to support EMV chip technology.  

Visa is introducing its Technology Innovation Program (TIP) to the U.S. region, which waives an annual PCI-DSS audit if 75 percent of the merchant's Visa transactions are processed through a dual contactless and contact EMV certified device. MasterCard is introducing its PCI-DSS Compliance Validation Exemption Program to the U.S. region, which also waives the annual PCI-DSS audit if 75 percent of the merchant's MasterCard transactions are processed through a dual contactless and contact EMV certified device.

If the waiver of a PCI-DSS audit is not incentive enough, the coming liability shift will certainly be. Under the payment network guidelines, merchants who have not made the investment in chip-enabled technology by the network deadlines may be held financially liable for card-present fraud that could have been prevented with the use of a chip-enabled POS system.  When the liability for fraudulent transactions will shift depends on the card brand, but October 1 of 2015 and 2017 are key dates for Visa, and October 1 of 2015, 2016 and 2017 are key dates for MasterCard.  American Express has announced October 1, 2015 for its liability shift date.  Recently, the networks have reiterated their commitment to adhere to the liability shift dates

What to Do – NOW

In the past the payment networks have either extended or completely abandoned their own timelines.  That will likely not be the case this time around.  Congressional attention on the retailer breaches and the impending liability shift has become a catalyst for EMV adoption.  It is likely that EMV implementation in the United States will now be on the fast track; thus, it is important to start the planning process now.  For issuing banks, working with card manufacturers that can produce EMV cards may become a challenge as there is a limited number of such manufacturers.  For merchants, the situation is similar, as the demand for EMV-enabled POS terminals will skyrocket in the coming months. 

  1. Develop a Business Plan for your Specific Business.  For retailers, equipment upgrades will be both costly and time consuming. For some retailers, the business plan will have to include an assessment of whether the amount of fraud prevention may deliver an acceptable ROI for the cost and effort to implement this technology. Implementing EMV chips will speed up mobile and contactless payments and make them more secure. The devices that accept EMV chip cards are dual contact/contactless devices. Thus, merchants should ensure that their business plan includes capturing mobile and contactless payments, especially with respect to gift cards and loyalty/reward programs.
  2. Get Involved.   Participate in industry-specific groups.   Follow closely what the payment networks, the U.S. Congress and regulators will propose with respect to payment data security.  Don't forget about the Federal Reserve Board payment system improvement project and its ramifications for upcoming regulation and implementation of EMV.  http://fedpaymentsimprovement.org/
  3. Don't Wait!  The first merchant in the United States to accept EMV cards in many of its stores is Walmart. Sears, Target and CVS Caremark have announced the rolling out of Chip and PIN at an accelerated pace. As market pressure builds in all segments of the payment network infrastructure, there will be pressure on resources. 
  4. Go Beyond the Requirements.  Putting in place a successful strategy that addresses both POS and online transaction security, as well as personal data security, generally will require going beyond the current requirements/recommendations.  Understanding how and what new technologies can be layered in the protection of private and financial data will be a market differentiator. 

Payment system security is a complex problem that cannot be solved by any single technology, standard, mandate or regulation.  Consequently, a multi-faceted, business-oriented, risk-based plan is needed before the flood gates of EMV adoption open.  

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions