I attended Card Forum last week in Los Angeles and had three key takeaways from the conference: the implications of the transition to EMV in the US; what’s missing from mobile payments; and expanding card payment security measures.
1) Consensus lacking on the transition to EMV in the US
The transition to EMV was one of the most discussed topics across the conference. On one side there were regional issuers that said it had greatly reduced fraud while others saying the standards don’t go far enough. For institutions that have made the transition to EMV, counterfeit fraud has been significantly reduced, according to Leanne Phelps the SVP Card Services State Employee’s Credit Union: “Since implementing EMV, we’ve seen a 48 percent decrease in fraud and have recovered 70 percent of the fraud we’ve had through chargebacks.” However, several companies specializing in overall fraud reduction see the source of value lost to fraud likely to take other forms going forward. The most likely fraud category to increase based on other markets similar transition to EMV has been card not present. Despite the debate around increasing card payment security, there was a general opinion that the US should not be the last to adopt future standards and should start looking to develop the next security standard.
The lack of consensus among the efficacy of the conversion could hint to greater issues regarding the network, merchant and issuer relationship. Completely leaving the magnetic stripe behind and fully embracing chip and pin technology may be delayed but most likely can’t be avoided forever.
2) Mobile payments and loyalty still not a reality
Another theme driving discussion at Card Forum was the need to increase the loyalty and reward component of mobile payments in order to drive consumer adoption. Although this has been a common refrain over the past few years it has not yet become integrated into the functionality of the various mobile payment platforms or mobile retailing applications to the degree that was expected yet. The lack of overwhelming success of any one mobile payment platform was cited as a reason for the entrance of card issuers into the mobile payment space. Among the issuers at Card Forum actively promoting this was Kim Fitzsimmons of Chase Commerce Solutions. The launch of Chase Pay was promoted as the alignment of incentives for merchants and consumers that can provide lasting conversion to mobile payments. The 94 million accounts of Chase and its partnership with MCX are expected to provide the bank with a unique ability to encourage mobile payment adoption. 2016 will be the year that Chase will find out if they have established an effective value proposition to get consumers on board.
With all the enthusiasm that was generated in the payment industry regarding mobile payments over the previous few years it is becoming clear that the transition will not become widespread without first addressing why consumers need to switch. This involves both education and incentives for consumers and merchants which may finally be presented to the market soon.
3) Biometric authentication can provide additional security for payments
MasterCard’s Catherine Murchie and Brian Ziff-Levine of First Tech Federal Credit Union presented on the new MasterCard biometric authentication platform being launched during the Summer of 2016. First Tech Federal Credit Union was one of the latest institutions to pilot the platform for commercial cards in preparation for a national launch. To provide an additional layer of security, the platform enables consumers to use their fingerprint or facial recognition to confirm a transaction. The launch of the platform highlights the growing security demanded by commercial institutions and consumers and provides additional security options for consumers that don’t involve creating another password. The consumer experience with using fingerprints on smart devices has made them more comfortable with biometric authentication and could prove effective at further reducing total value lost to fraud from online and mobile payment transactions.
The addition of biometric authentication will certainly provide an additional layer of security at a time when consumers are demanding it. Whether it can significantly drive down total value lost to fraud has yet to be seen.