EMV Tech Delays Could Benefit Some Vendors

Payment technology that comes with the EMV stamp of approval already in place may get a boost as a result of the bottleneck newer systems face in getting certified.

"A card issued in Finland has to be usable at a terminal in Alaska; that level of interoperability requires pretty complex tests, which have become more complicated than in the past," said Jeremy Gumbley, the chief technology officer at Creditcall, who worked on the U.K. EMV migration and came to the U.S. to handle EMV efforts in 2011.

Creditcall hopes that by offering pre-certified technology, it can make inroads among merchants looking to speed their way through the U.S. EMV migration. On Oct. 13 Creditcall announced it has secured EMV certification for its ChipDNA EMV migration program from First Data and the card networks. ChipDNA includes encryption and terminal management, and is integrated with the Verifone VX 820 PIN pad, which Gumbley said simplifies and speeds up certification for merchant service providers.

ChipDNA is also a software development kit that can extend readymade EMV acceptance to Android and iOS tablets and smartphones.

Creditcall has a library of EMV-tested technology from its work in the U.K. a decade ago, making it easier to integrate EMV-certified technology into processing and point of sale systems in the U.S., Gumbley said.

While the card network-imposed liability shift for EMV adoption passed Oct. 1, a huge portion of merchants in the U.S. are not EMV compliant and probably won’t be until at least the end of the year, if not longer. Specific numbers vary, though Visa, for example, reports 301,000 terminals out of 6 million merchants are EMV compatible.

Testing and certification play a role in the migration lag, Gumbley said. Tests include different levels for companies that provide hardware and software to process card payments, and the certification process has expanded to accommodate different types of data security required for e-commerce and contactless mobile payments.

Even if only one percent of merchants in the U.S. needed EMV certification, that's still close to 100,000 merchants, and a typical EMV certification takes between four and nine months, he said.

"It doesn't take a mathematician to know that even if you're scaling down numbers, there's still a lot of time that goes into certification," Gumbley said.

Among U.S. processors, TSYS has also recently taken steps to ease EMV certification. Discover Financial Services is using a cloud-based approach to ease EMV testing requirements.

"The real problem is that there are still very few EMV-certified solutions available," said Rick Oglesby, a partner at Double Diamond Research. "Merchants with the most simplistic of point of sale configurations, a cash register and a terminal, can buy EMV-ready terminals. But these are the same merchants that are most likely to drag their feet through the upgrade process as the business case is not very strong for low-volume merchants who don't see a lot of chargebacks."

Merchants with more volume have a stronger need for EMV solutions, yet they also have more sophisticated businesses and therefore more complex point of sale systems, Oglesby said.

"The more complex point of sale systems involved software and any hardware and software combination needs to be certified before it can process EMV transactions," Oglesby said,

Very few of these hardware/software combinations have been certified, and there are long queues to achieve certification, he said.

"As a result, many merchants don't have a viable upgrade path yet. They need to wait for their service providers to be ready and many of the service providers are waiting in the processors' certification queues," Oglesby said.