EMV: GET READY

Michelle Thornton, CO-OP Financial Services

EMV Technology

EMV and Chip Used Interchangeably In essence it replaces the functionality of magstripe with a computer chip making it nearly impossible to counterfeit

• Small microprocessor embedded

• Chip contains an operating system and one or more applications and AIDs

• EMV is the technology specifications on the chip

• Visit co-opfs.org/emv to view previous EMV webinars

EMV Payment Applications

An EMV payment application is the software that determines the actions of the card and transaction

• EMV payment applications are network specific

• Only the four national networks have applications

• The terminal and card must have the same application loaded

• U.S. deployment today has only one application on the card

Terminology – What’s on the Cards

• EMV Application

– EMV compliant software on the chip

• EMV Application ID (AID)

– Written onto chip during card production

– Identifies owner of the application

– Helps the terminal work to process the card options

– AID specifies encryption keys, networks and contains parameter lists like CVMs

– Multiple AIDs can use the same application on a chip

• Cardholder Verification Methods (CVMs)

– Methods to verify cardholder for that card and terminal for that EMV AID • Signature, Online PIN, Offline PIN, No CVM

4

AID 1 CVMs

AID 2 CVMs

APPLICATION

EMV Chip

Terminology – What’s on the Terminal

• EMV Compliant Kernel

– Contains the EMV compliant terminal application

• EMV Application ID (AID)

– AID specifies which applications are accepted

– AID specifies parameters, like CVM and networks

AID 1 AID 2 AID 3

EMV Compliant Kernel Application

POS /ATM Terminal

INDUSTRY

UPDATE

Debit Logjam Broken with Common AID

Durbin requirements and issuer/acquirer need to have network choice has stalled debit until now

• Debit Network Alliance helped get us to a workable solution

• Visa and MasterCard long term license agreements with PIN debit networks

• Common AID – allows acquirers to route to any network licensed to the common AID

• Allows issuers and acquirers to maintain existing relationships with their networks

How Common AIDs will work

M-Chip App VSDC App

Visa US Common AID

Visa Standard AID

Maestro AID MC Standard AID

Implementation of Common AID Solution

Work To Do, Especially Terminals

Hurdles include acquirer adoption and implementation time frames

• POS and ATM terminal manufacturers will need do development to enable the terminal to ignore EMV rules and select the AID it wants versus the prioritized global AID

• Card Vendors need to develop code to add two AIDs on the card

• Processors need to recognize multiple AIDs on one network link

Planning and

Operationalizing

Planning for EMV

• Learn as much as you can about EMV

• Analyze existing debit, credit and ATM traffic

– International transactions

– Fraud losses

• Start with credit and ATMs

• Use learnings from credit to plan for debit

• Don’t move on debit until terminals are ready

Planning for EMV

• Use CO-OP budgeting tool to estimate costs

• Anticipate implementation logjams in industry beginning in 2015

• Remember liability shift is just that, not a mandate

• Implementation timelines running 4-6 months

Timing: Things to Consider

Cards: Credit first, then debit

• Issuance plan

• Card type: contact or dual interface

• Custom card or pay-as-you-go

• CVM Profile: impact on interchange revenue

• Have your networks signed a licensing agreement with your global network?

• CO-OP Early Planning Guide

Timing: Things to Consider

ATMs

• Upgrade with readers and kernel

– Strategically choose deployment footprint

• Understand how your terminal manufacturers plan to support AID Standard EMV code will either choose the global AID or force the cardholder to choose which AID to use

• Don’t load AIDs until ATM can select the common as a default AID

• Verify and test terminal for AID prioritization and selection

Operationalize EMV

EMV will be the new norm – how to adapt Don’t think of EMV as a project:

Think of it as a new way to do business

• Broaden knowledge base within credit union at all levels

• Understand it will have impact on members and staff

Operationalize EMV

EMV the new norm – equip to respond

• Anticipate staff resource needs in operations, member service and marketing/communications

• Start educational communications prior to issuance

Expect EMV to take 10+ Years

Most experts expect the U.S adoption to take many years

EMV will help solve fraud for

card present transactions

EMV will help solve for international interoperability

EMV will not prevent more

breaches

CO-OP Roadmap

• Certified with Visa and MasterCard on debit

• Certified with Visa and MasterCard TMG full-service credit

• In beta with Visa and MasterCard on in-house credit

• Preparing for Visa and MasterCard beta on debit common AID

• Contact, online PIN only: roadmap to support dual interface and offline PIN

• CO-OP will provide training materials and recommendations for member communications

CO-OP Tools

• EMV budgeting tool

• EMV early planning guide

• FAQs

• Webinars and white papers

• Coming:

– Additional training webinars

– Member communications plans

– Member communication templates

• Visit the CO-OP EMV Resource Center www.co-opfs.org/emv for up-to-date information

Questions?

Visit www.co-opfs.org/emv for up to date information on EMV.