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Let the Chips Fall Where They May…EMV Let the Chips Fall Where They May…EMV

Let the Chips Fall Where They May…EMV - PowerPoint Presentation

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Let the Chips Fall Where They May…EMV - PPT Presentation

Jonathan Stout Vice President eReceivables Consultant Wholesale Marketing amp Treasury Management February 2015 2014 Wells Fargo Bank NA All rights reserved Member FDIC 0 IBM 5100 ID: 732729

card emv chip fraud emv card fraud chip pay contactless visa checkout apple atm pin 2014 payment pos liability

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Slide1

Let the Chips Fall Where They May…EMV

Jonathan StoutVice PresidenteReceivables Consultant

Wholesale Marketing & Treasury ManagementFebruary 2015

©2014 Wells Fargo Bank, N.A. All rights reserved. Member FDIC.

0Slide2

IBM

5100

portable computer55 lbs.

.000064 GB$20,000 Apple iPhone 66 oz.128 GB$500Some things have undergone massive changes over the years…1978

2014

1Slide3

JOHN R DOE

01/14 – 01/18

…other things, not as much

01/12 – 01/15

2Slide4

Source

: United States Federal Trade Commission, Consumer Sentinel Network July 12th, 2014

With this lack of change, credit card fraud continues to grow

37%incurred by merchants mainly at point of sale from counterfeit cards$399

average amount of loss

10%

of all Americans have been a victim of credit card fraud

3Slide5

2013

2014

R

ecent data breaches (# accounts compromised)In the last 2 years, millions of accounts have been compromisedTarget Corp. 40 millionNovember

Home Depot

56 million

September

Neiman-Marcus

1 million

October

Source

:

need attribute here

4Slide6

Costs of global card fraud are rising

5

Total losses in

$Billions and in Cents per $100 in Total Volume

Source

:

2013 The

Nilson

ReportSlide7

Impact of EMV on fraud in Canada

6

As

EMV penetration at POS increased, counterfeit fraud significantly decreased.Source: MasterCard Analysis, 2012 ** % face-to-face EMV penetration.Prior to EMV migration, Canada noticed a spike in counterfeit fraud most likely due to migration of fraud from other countries.Slide8

Global Visa chip acceptance status

Canada

POS 86%

ATM 92%U.S.POS 6%ATM 0%Latin AmericaPOS 54%ATM 40%Visa EuropePOS 93%ATM 97%Visa worldwidePOS 72% | ATM 65%

Note: Percentage of international card-present transactions that originated from chip terminals during 1Q14.

Source: As of January 2014, VisaNet clearing and settlement counts. Visa Europe is the exclusive licensee of Visa Inc. in the territory covered by the European Union.

CEMEA

POS 87%

ATM 92%

Asia Pacific

POS 79%

ATM 13%Slide9

What is EMV?

EMV is an industry wide global specification supporting transaction processing of EMV Chip credit and debit cards C

reated by Europay, MasterCard, Visa

Now maintained by EMVCo, LLCEMV payments improve security Card data schemes are embedded in a computer chip (microprocessor)Uses “dynamic” authentication methods and unique data elements to render stolen data useless

8Slide10

C

u

rre

nt state – staticMagnetic

st

r

i

p

e

Ho

l

o

gr

amsSecuri

t

y

c

o

de

s

(t

hr

e

e digi

t

num

be

r)

N

e

w

E

M

V

/

C

h

i

p

& PIN

– dyn

a

m

i

c

P

e

r

s

on

a

l

I

de

n

t

i

f

i

cat

i

on

N

um

be

r

(

P

IN)

Dyn

a

m

i

c

c

ry

p

t

o

g

r

am

T

r

a

n

sact

i

on

i

n

d

icator(n+1)

Stripe vs Chip

9Slide11

How an EMV transaction works

EMV chip card holder experience

Insert card

instead of swipingTerminalreads card12

2

Screen prompts customer to sign or enter PIN

3

EMV terminal

beeps reminding customer to remove card

4

Important:

card should not be removed until promptedSlide12

Why Should Merchants Care?Benefits to enabling EMV

Fewer chargebacks and costs associated with card present transaction fraudMobile and Contactless payment acceptance

Empower consumers to use the payment method of their choice by adapting contactless payments

11Slide13

S

o

u

r

c

e:

Mas

t

er

Ca

rd

W

h

y

Should

Issuers Care

?

T

he

t

i

me

i

s r

i

g

ht for

t

he

U

.

S

.

t

o m

i

g

r

at

e

t

o

c

h

i

p

No

p

re

pa

r

ati

on

t

o

mig

r

at

e

to EM

V

chip

O

n

e or

m

ore

bank

s

a

re

mig

r

atin

g

or

h

av

e

c

o

mpl

e

t

ed

mig

r

ati

on toEMV chip

Pe

netr

ation

of

Mast

erC

a

rd

B

r

and

ed

EM

V

ca

r

ds

,

EM

V

P

O

S

, or

EM

V

A

T

M

s

e

x

c

ee

d

s 50%

U

.

S

.

cardholders increasingly experiencing problems overseas.Merchants want the speed, convenience and security of Chip and PIN.

Federal Reserve and other regulatory concern at U.S. becoming global center for card fraud.

Rest of the world wants a single, interoperable card payments framework without the weak link of magstripe cards.

12Slide14

Hierarchy of liability Visa vs. MasterCard (October 2015 EMV liability shift)

MasterCard has included Lost, Stolen and Never Received in their liability hierarchy.

Visa’s liability is for counterfeit fraud, does not include Lost/Stolen categories

VisaCounterfeit fraud losses “shift” to party who does not enable EMV if fraud would have been avoided if EMV had been usedReadiness is critical, given the ‘liability shift’ to the party that is not Chip-enabledIssuedDevice/Card Magnetic stripe and/or

Contactless magnetic stripe

 

EMV contact or EMV contactless

(signature CVM)

 

EMV

contact or EMV contactless

(online or offline PIN CVM)

 

Acceptance

Terminal

 

Magnetic

stripe and/or

Contactless magnetic stripe

 

EMV contact or EMV contactless

(not PIN capable)

 

EMV contact or EMV contactless

(online or offline PIN

capable)

 

Higher Risk

 

 

 

 

Lower

RiskSlide15

You could be affected if you’re not prepared

14Slide16

Eco

mmerce

C

urrent onlineUses account numberExp

i

r

a

tio

n

da

te

Th

r

ee digit code

(

C

V2

,C

VV

)

Si

ng

l

e

us

e

a

cc

oun

t

s

N

ew

online

S

e

c

u

r

e

C

o

de

and

V

e

rifi

ed

by

Vis

a

M

a

c

h

i

ne

fi

nger

p

ri

n

ti

ng

Dy

nam

i

c

pa

ss

wo

r

ds

T

o

k

en

i

za

ti

on

vs

.

Acc

ount

number

15Slide17

7

7

Eco

mmerce – Why do you want to switch?More secureCustomer confi

den

c

e

f

or

o

n

li

ne tr

ansactionsFr

aud

i

s

c

om

i

ng

your way

f

a

st

!Slide18

Visa Checkout

Streamlines eCommerce checkout to increase conversion rates

Requires only username and password to check out using any major credit or debit card

Average eCommerce checkout conversion: 61% (2014) 1 55% on tablet 37% phoneVisa Checkout makes it easier, faster, and more secure for eCommerce customers to pay without leaving the merchant’s website.12014 eMarketer, Shopping Cart Abandonment: How Retailers are Using the Metric to Drive Better Results22015 comScore Visa Checkout study

No need to re-enter payment or shipping information

Device fingerprinting, step-up authentication, and advanced risk tools help reduce fraud

Easy

Fast

Secure

Visa Checkout conversion

2

66% higher than average checkout conversion

22% faster than traditional checkoutSlide19

Other Benefits of EMV Terminals

18Slide20

Mobile Commerce

N

ear

FieldCommunication

The growth potential is

19

HUGE!Slide21

Apple Pay overview

Mobile payment service launched in October 2014Visa

®, MasterCard®, American Express®, Interlink®

and Maestro® are the supported networksOver 500 financial institutions offer Apple Pay to their cardholdersConsumers can use their iPhone 6, iPhone 6 Plus and Apple Watch to pay in store by simply holding the device within range of an NFC contactless payment terminalConsumers can also use Apple Pay to make purchases within a mobile app (in app) with participating retailers while using their iPhone 6, iPhone 6 Plus, iPad Air 2 and iPad mini 3Slide22

Apple Pay – consumer experience

“in store”

On eligible devices, the consumer simply holds their device within range of an NFC contactless payment terminal to pay in store.

in app

On eligible devices, Apple Pay can be used to pay “in app”. Checking out is as easy as selecting Apple Pay and placing a thumb on the Home button (Touch ID) or entering a passcode.Slide23

1

212

Ch

ecklists – ConsumerDo you know what is in your wallet?How to

u

s

e

t

he

new car

d?

How

are you going to manage

y

our

P

IN

s

?

What

t

ype of card do

I h

a

v

e?

Con

t

a

ctl

e

ss/

C

o

n

t

a

c

t

H

ow

ab

o

ut

mob

il

e

w

a

ll

e

ts

?

Y

our

e

x

pe

r

i

e

n

c

e

i

s

g

o

i

ng

t

o

v

a

ry from

m

e

r

c

h

a

nt

t

o m

e

r

c

h

a

nt and different parts of the world.Join in using

new chi

p and

PIN card

s

!Slide24

1

313Chec

klists – Business

Have you started the terminal switch?Have you prepared t

o

t

he

s

w

itc

h to “

ca

rd not p

resent” fraud?Staf

f

t

r

a

i

n

i

ng

sw

ipe versus stays

i

n

t

he

t

e

r

m

i

na

l?

What

i

s

y

o

ur

f

a

ll

ba

c

k

p

l

an?

What

i

s

y

our

offli

ne

and on

li

ne

st

r

a

t

eg

y

?

What

i

s

y

our

g

lo

bal a

cc

ep

t

an

c

e

st

r

a

t

eg

y?Slide25

1

414

Qu

estions