It is confirmed.
The date is set. It is by the end of year 2003.
The mandate has been issued. Is the migration inevitable?
Around the world, all major international payment entities are urging their member banks to migrate their credit and debit card portfolios into a smart card platform. This, without doubt, will bring to card issuers and acquirers many advantages, which include reducing the ever-escalating cases of fraud and tackling the scary growth in 'Skimming' attacks. Smart cards provide for stronger security counter measures, enabling an offline PIN verification, support enhanced data to cater for new-risk management capabilities.
The mandate was recently issued by Visa International, which created in 1993, a joint industry-working group called EMV, together with Europay International and MasterCard International. It aims to facilitate the introduction of IC chip as the replacement technology for the traditional magnetic stripe found on credit and debit cards.
EMV migration plans have been drawn up for each individual geographic region to ensure the upgrade of all POS terminals by year 2003. This is to avoid the 'chicken and egg' debate on whether EMV cards should be issued first or the POS acceptance network be upgraded, in advance of the mass conversion to EMV cards.
The European experience
France
Cartes Bancaires (founded in 1984) started the chip usage as early as 1990 with the issuance of its first B0' (Bull Zero Prime) card. Today, there are 42 million chip cards issued by 180 banks and financial institutions to access 40,000 ATMs and carry out transactions with 600,000 merchants all over France. These are US$ 200 billion and 3.4 billion transactions (75% payments, 25% ATMs) per year business.
In January 2001, there was an agreement reached between the banks and the retailers for the following commitments :-
From the Retailers:-
1) To meet the minimum EMV security capability by 31 December 2001.
2) To complete the EMV migration by 1 May 2003.
From the Banks:-
1) To undertake that EMV acquiring would be ready by October 2001.
2) To stop B0' but start issuing B0'/EMV cards by December 2001.
3) To ensure all new cards are EMV cards after July 2003.
Furthermore, 1.6 million POI (public phones, TV set top boxes, etc.) devices would be upgraded to be EMV-compliant too.
The French experience has shown that after 5 years of using chip cards, domestic counterfeit has dropped from about US$25 million in 1992 to almost zero in 1997. Fraud rate has also dropped from 0.087% to 0.019%.
