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EMV dilemma explored in TMG paper
DES MOINES, Iowa (4/2512)--Even as the terms "EMV" and "chip-and-PIN" became nearly synonymous over the past few years, some players have chosen a different route--namely, chip-and-signature. That is the subject of a new white paper from TMG, "Chip Card Debate: U.S. Weighs Benefits of PIN and Signature Formats."

Chip & PIN is the brandname adopted by the banking industries in the United Kingdom and Ireland for the rollout of the EMV smartcard payment system for credit, debit and ATM cards.

Chip-and-signature technology features both an embedded encrypted chip and traditional magnetic strip to accommodate merchants in the United States

The paper follows updated roadmaps to EMV migration from Visa, Mastercard and Discover. Throughout, author Aris Jerahian,TMG vice president of client relations, compares the benefits and limitations of each and discusses the elements to the Europay- Mastercard-Visa (EMV) standard migration that smaller issuers, like credit unions and community banks, need to take into account.

"Until such a time as EMV achieves critical mass in the U.S., issuers must consider leaving mag-stripes on all EMV plastic," writes Jerahian. "Even with Visa's 2015 deadline, merchants across the country are still evaluating whether or not to invest in chip-card terminals now. And after they inevitably make the decision, switching point of sale and back-office systems to the new technology will take time."

Magnetic stripe technology is essentially insecure, Jerhian explains in the white paper. Because fraudsters are unable to skim data from a chip card, EMV in the U.S. is predicted to greatly reduce losses from the sophisticated skimming rings already operating within our borders.

Indeed, the U.S. has gained international attention for its failure to adopt EMV as a standard. The U.S. accounted for 47% of global credit and debit card fraud as of December 2011, according to Global Card Fraud. The stat is even more troubling when taken in the context that Americans only generate 27% of the total volume of purchases and cash.

Jerahian concludes the paper with five considerations for financial institutions thinking about a migration to EMV, including current and future fraud losses, cardholder convenience, interchange income, portfolio segmentation and education.


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