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
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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