The clock continues to count down and October 1st isn't that far away. Across America, retailers are holding their breath even as card issuers are stepping up their card distribution programs. EMV deployment is but a matter of weeks away from becoming a reality. But how pervasive will deployment be and how big a change will it be for the retail and finance industries? And every bit as important, what will the impact be on application monitoring solutions, such as Prognosis?
Whether you call them the bad guys, wrongdoers or just plain crooks, where there's real money involved, fraud has become rampart for credit and debit cardholders. While other countries have countered the simplest of fraud with EMV, the U.S. will only begin to implement this solution, a simple fence around retailers when you consider how a depth of defense gets erected. As a jumping off point, it's at least a sign of progress being made, but there will still be many holes exposed until all parties are fully educated about the benefits of EMV and everyone is on board with the program – card issuers, retailers and banks, and most important of all, every day consumers depending on their plastic. But EMV deployments and the infrastructure supporting them is also about the future and that's every bit as important as the short term "fence-erecting" that October 1 represents.
The early stage of EMV rollout will feature chip-and-signature, even as the rest of the world supports chip-and-PIN. Yes, it's a start and while many payments industry observers bemoan the limitations from this initial baby step into EMV, it's still a baby step down the right path. In the July – August, 2015, issue of the HP NonStop community magazine, The Connection, OmniPayments, Inc. CEO, Yash Kapadia, wrote of how the plans today for EMV in the U.S. are looking; "Most smart cards that are being issued are chip-and-signature cards. They do not require a PIN." Furthermore, Yash explains, "Why are the U.S. card companies not using chip-and-PIN? It is a competitive issue. If a cardholder has two cards, one chip-and-PIN and one chip-and-signature, he is more likely to use the latter because it is more convenient."
Convenient? That's simply because the late take-up of debit cards (and their corresponding transfer of liability from the financial institution to the consumer – the exact opposite to who carries the liability with credit cards) has seen the use of PINs slow to gain traction. Even today, any POS terminal accepting debit cards asks whether you want to use the debit card as debit or credit and by simply cancelling the debit request, the consumer is back to supplying a signature. Debit cards with signature are now deeply ingrained within the general populace so getting them all to remember PINs is a daunting task hence, chip-and-signature in the first phase of EMV in the U.S.
However, EMV carries with it the promise of an infrastructure that will support new technologies like tap-and-go where NFC support is required. Vendors providing EMV capable terminals have the opportunity to supply an additional NFC feature, and I expect to see many of them appearing simultaneously with the deployment of EMV terminals at many big-box stores and the larger shopping mall retailers. And this brings us to the issue of payments by mobile phones and the use of digital wallets. For many of the payments industry observers keenly watching the rollout of EMV, the use of digital wallets will likely appeal to younger generations of consumers, perhaps the physical side of chip-and-PIN will likely be a secondary issue.
In his podcast of July 21, 2015, Payments Innovation and the Increasing Attack Surface John Dunne, Chief Solutions Officer at IR connects the dots between payments, EMV, digital wallets and the balance that has to happen between banks and retailers innovating while offering greater security. "You know, there definitely is a dark side to innovation, and there's people always out there innovating ways to defraud you and steal your money." Acknowledges Dunne, "There's definite fraud first strategies when it comes to innovating, and whether you're Google Wallet or you're Apple Pay, those products are specifically designed to say, okay, how is someone going to take advantage of this in a dark way that's going to cost either the consumer, or one of the banks or payment providers in the middle revenue, and cause this product not to be adopted?"
The impact on payment solutions monitoring is going to evolve. This dark side referenced by Dunne will not be deterred from attempting to defraud financial institutions and the methods will only get more sophisticated over time – EMV is just an outer fence and for the moment, it's not very high. Monitoring solutions are going to find themselves increasingly embracing Big Data Analytics even as they pull audit and event logs from tangential systems as the data center embraces increasingly hybrid systems. It's no longer a case where payments solutions run on a single system or even a hierarchy made up of front and back end processors but rather, highly integrated, mesh-like configurations where just one poorly secured system could expose every operation. Monitoring solutions, like Prognosis, with its ability to support not only today's modern NonStop systems but adjust distributed systems including Linux, Unix and Windows (LUW) can only gain market share as awareness of security and fraud remain of paramount interest to CIOs and those they report to.
The clock continues to count down the hours to EMV here in the U.S. With the first roll-out of EMV focused on chip-and-signature it's just a start, of course, but the infrastructure behind it will hold importance for every consumer in America. Chip-and-PIN, mobile transactions via NFC tap-and-go, and wider dependence on digital wallets will take advantage of the EMV infrastructure and with each new innovation, protection against security breaches as well as fraudulent transactions will be required. Monitoring will play a huge part in ensuring the requirements of consumers everywhere are being met and that's the sweet spot for Prognosis as the oversight of payments solutions is a key part of their core competence. And with that, consumers will be better served as Dunne noted in his podcast, "having real-time visibility of what transactions are happening is a very valuable information stream that (all payments solutions providers) can leverage" to their benefit!
What next? View our infographic on EMV deployment success.