The Long Road to EMV

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Welcome!

Thank you for joining us.

Rebecca Hellmann is Marketing Manager for Welch ATM. She has over 7 years of experience in marketing and branding. Over the past two years Rebecca has written and contributed to several articles, papers and ebooks on EMV and FI branding.

David Tente is the U.S. Executive Director of the ATM Industry Association (ATMIA). David has over 30 years of experience in IT sales and business development and 13 years in the payments industry.

Our Presenters:

Why is the U.S. Moving to EMV?

• The ATM & Card Security Arms Race

• EMV was developed by three of the major card networks – Europay, MasterCard and Visa

• The same size and thickness as a standard magnetic-stripe card…only with an embedded microprocessor

• So far, criminals have not been able to clone of create fake EMV cards

• Most of the world has already or is in the process of switching to EMV

Why is the U.S. Moving to EMV?

• Card fraud shifting to markets that still rely on mag stripes cards

• Visa and MasterCard announced their liability shift timetables in 2011o MasterCard & Visa Shift for POS = October 1, 2015o MasterCard Shift for ATMs = October 1, 2016o MasterCard Shift for Fuel Dispensers = October 1,

2017o Full Visa Shift = October 1, 2017

Can the U.S. Meet the Deadlines?

Steps to EMV Migration

1. Agreement on Debit Solution

2. Network Testing & Certification

3. Card Production & Distribution

4. Processor Testing & Certification

5. ATM Testing & Certification

6. Upgrade/Replacement of all ATM fleets

Can the U.S. Meet the Deadlines?

1) Agreement on a Debit Solution – or AID

AID – the numerical code that points to an application on the chip embedded on the card.

• An EMV card and EMV terminal MUST have at least one AID in common

• MasterCard, Visa and Discover each have their own solutiono The Secure Remote Payments Council has adopted

Discover’s solution

• No AID agreement = EMV upgrades at a standstill

• Impact of Federal Court ruling on debit solution development is unclear

Can the U.S. Meet the Deadlines?

2) & 3) & 4) Testing, Certification and Card Production

• U.S. EMV certification will take at least 6 months

• Canada, a much less complex market with only one debit network took as long as two years

5) & 6) ATM Testing and Certification + Software & EMV Installation

• Despite certification in other countries, each ATM manufacturer will have to have their terminals certified on U.S. networks

• Each ATM takes about a month to certify

Comparing the Costs: Fraud vs. EMV

The Costs of Upgrading to EMV

• As of 2012 – 537 million credit & 560 million debit cards in the U.S.

• Estimated $6.8 billion to issue EMV card replacements for current magnetic stripe cardso Magnetic Stripe < $1 VS. EMV > $4 (including mailing)

• Estimates for upgrading ATM card readers start at $300o Overall ATM upgrade costs estimated at $2,000 -

$4,000

• EMV does NOT protect against card-not-present fraud

• Recent major breaches have occurred at the processor level

Comparing the Costs: Fraud vs. EMV

• Card skimming attacks at the ATM = 46% of all card skimming fraud in the U.S.

• Card skimming attacks at the POS = 36%

• U.S. fraud losses in 2012 = Over $5 billion

• EAST and Europal estimate that 80% of fraud on European cards is occurring in the U.S.

• Costs of fraud:o Casho Card re-issueo Loss of confidence in the Financial Institution Brando ATM Damage

Comparing the Costs: Fraud vs. EMV

Other Ways to Mitigate Fraud:

• Moving to PIN-based transactions

• Investing in low-cost anti-skimming devices

• Eliminate the Card – Move to mobileo Secure QR code tokenso Near Field Communications (NFC)

…EMV compliance could set the stage for future technologies, including mobile.

Where We Stand Today

Cards• Some financial institutions have already issued EMV chipped

cards to their more prominent customers/members who are likely to travel overseas

• EMV chips cannot feasibly be issued without an agreed upon AID

ATMs• All major vendors offer EMV-capable ATMs and many existing

ATMs are capable of being upgraded

• Approved PIN pads are already available due to the mandated Triple DES upgrades.

• Some financial institutions and larger ATM deployers are already ordering new ATMs with EMV card readers.o Some manufacturers are encouraging their customers to choose the EMV option when buying new machines

Preparing for EMV

• EMV is a short-term projecto Service companies may be reluctant to add staff to

handle the extra field worko Manufacturers will be unlikely to significantly increase

productiono Plan for supply shortages and service delays…plan ahead.

• Anyone that certifies today will have to recertify

• Develop a customer/member education plano Direct Mailo Email Blastso Physical Signageo On-Screen ATM Messaging

• Make sure to keep informed of changes

What is ATMIA Doing?

• ATMIA and other industry groups have asked the networks to delay their liability shift deadlines.

• The MasterCard Maestro liability shift has already passedo MasterCard announced a new set of acquirer-based

fraud detection tools that are meant to help with industry fraud by blocking Maestro transactions at approximately 80 percent or more of the nation’s ATMs and monitoring the remaining machines.

• Participation on the EMV Forum – ATM committee

*Join ATMIA and receive the new Financial Institution member discount!

Questions. Comments. Concerns.

We will now take a few moments to address your questions.

Should we run out of time, please email further questions or comments to:

rhellmann@welchatm.comdavid.tente@atmia.com

Thank you!

About Welch ATM

• Independent ATM Company Since 1973• Thousands of Financial Institution &

Retail Partners• Providing a Full Range of ATM &

Marketing Services• ATM Branding• ATM Management• Online Locators – BranchMap ™• Loan Lead Generation - LoanSaver™

• Over 22,000 ATMs under management nationwide.