Smart Card Alliance Payments Summit Wraps with EMV, Mobile and Transit Innovators Discussing and Debating the Future of Payments
Princeton Junction, N.J., February 13, 2012–After overflow keynote plenary sessions on Wednesday, the Smart Card Alliance 2012 Payments Summit continued last Thursday and Friday with the “all payments” agenda shifting to individual track sessions. Experts and innovators from payments, mobile and transit industries presented on the state of their industries and debated their futures. The 2012 Payments Summit, held last week in Salt Lake City, Utah, drew over 500 industry professionals.
Sessions on EMV chip technology continued spirited discussions on the migration to EMV in the United States, including addressing card-not-present (CNP) fraud, how to use EMV to authenticate ecommerce transactions, and the state of current EMV deployments in the United States.
Ben Dominguez, the vice president of global ecommerce at Visa International, focused on tackling CNP fraud in his presentation, noting “once you roll out EMV, fraud will migrate to CNP; that is just the way it is.” He said that an enhanced, risk-based authentication method utilizing dynamic data is best for CNP because there is “no need to be authenticating for a pair of socks, there has to be some intelligence behind the authentication,” i.e. higher value transactions should require higher levels of authentication.
Jane Cloninger, partner, Edgar, Dunn & Company, also talked CNP fraud, explaining that EMV was not set up to address online payments. However, she pointed out that CNP fraud can be addressed by using EMV chip cards along with a device that generates a dynamic code. Devices like this, such as Barclays Bank’s PINsentry in the UK, are used a lot today for online banking, but may be used in the future for online commerce activity.
Issuers in the United States already rolling out EMV chip card programs–Silicon Valley Bank, United Nations Federal Credit Union (UNFCU), U.S. Bank, and Wells Fargo–reported positive reactions from their frequent traveler cardholders. Bob Daly, the senior vice present for retail payment solutions at U.S. Bank, said that they have issued close to 35,000 EMV chip cards, and will start shipping soon on several new EMV products.
Eric Schindewolf, vice president of product development for Wells Fargo Consumer Credit Card, which has issued EMV chip cards to 15,000 customers who travel frequently, said that the company chooses to support offline authentication with PIN, saying that “it’s a traveler program; we need to make sure they can use it everywhere.”
Pradeep Moudgal, the head of global cards and merchant services for Silicon Valley Bank, said that their EMV cardholders have already used the cards in 39 countries. Merrill Halpern, UNFCU’s assistant vice president of the card services department, reported that the company’s chip card portfolio’s balances are up 25 percent, usage in general is up 30 percent, and reported fraud is down 30 percent in the past year.
Mobile Payments and NFC
The lively and open dialogue on mobile payments and NFC continued, focusing around the technologies’ relationship with EMV; consumer adoption and behavior; and predictions for future implementations.
Mark Andrews, product manager, Google Wallet at Google, said that the Google Wallet focus initially is on payments, offers and loyalty, with the intention to create an open marketplace that others can integrate with to create a broader set of applications. He said that, “Interaction with your environment is what NFC is all about.” Andrews observed that a standards framework for wallets–where wallets play together and offers can go into any wallet–would provide portability for consumers and make the market bigger.
Regarding EMV, Andrews said that MasterCard and Visa introducing EMV will be a positive factor in getting replacement terminals in place in the United States. Andrews agreed that “standards are important to some degree to make the whole financial ecosystem comfortable with NFC.” Andrews also commented that “we’ll have to implement [EMV],” for security and global interoperability.
Thomas Calvert, leader and general manager, personal mobile commerce, Intel, talked about Intel’s upcoming ultrabooks with NFC capabilities. Pointing out that PCs are still the go-to device for online shopping, he said that consumers’ top concern is online fraud. Intel plans to “enable multi-factor authentication with integrated yet separate and trusted hardware capabilities,” so consumers can present a token/card to the PC, and the PC will act like a point-of-sale (POS) device.
A topic discussed throughout the event was whether consumers would easily accept abandoning plastic cards and use their mobile phones to pay. David Holmes, Identive Group’s vice president of mobility and NFC solutions, said that because smart posters and tags are quick and easy to roll out, their use could “help facilitate the behavioral changes consumers need to get used to for mobile wallet use.”
Also addressing the consumer response to NFC and mobile payments, Hans Reisgies, senior vice president, head of sales and business development at Sequent Software said, “consumers want all of their cards on their phone,” and the ability to use “any phone they choose.” He said to make this a reality, the managers of the secure elements (SEs) should work together, support all SE form factors, and define and follow rules.
Javed Chaudry, product management and business development, ViVOtech, had implementation predictions, saying that he expects early implementation of mobile NFC payments by aggressive financial institutions in 2012. He also said he expects that near-term, we will see NFC being used for peer-to-peer (P2P) payments, smart posters, and applications outside of the payments space.
On Thursday, medium sized transit agencies discussed their plans for new fare payment systems. The Orange County Transportation Authority (OCTA) transit program manager Joe Vicente discussed its timeline for “investigating the state-of-the-art in fare payment and working toward a common regional fare approach.” OCTA will have a technical specification for the target fare product in the second quarter of 2013 and plans to begin roll-out of bank card and cell phone acceptance in the second quarter of 2015. Kathleen Imperatore, director of fare collection at the Port Authority Transit Corporation (PATCO)–a high speed train line between Southern New Jersey and Philadelphia–reported on their acceptance of the Wave & Pay prepaid Visa card. They plan to accept other contactless brands in March 2012, with pilots ending in September 2012.