EMV: The Future is Now

1. EMV: The Future is Now

2. EMV: The Future is Now Moderator: Jason Putnam Vice President of Sales, First American Payment Systems Panelists: Patty Walters Senior Vice President of Merchant Products and Security, Vantiv Greg Boardman Senior Vice President of Product and Development, Ingenico John Badovinac Senior Manger US Acquirer Relations, Discover Financial Services 2

3. EMV: The Future is Now Session Objectives EMV - • What is it? • Why does it matter? • How does it impact me? • What opportunities does it create? • What should I be doing right now? • Who can help? 3

4. EMV – What is it? • Global standard for chip card technology • Developed by Europay, MasterCard and Visa in 1993 • Typically a chip inset within a plastic card • Chip stores cardholder and application data more securely • EMV provides protection against card reproduction fraud • EMV can be contact or contactless 4

5. EMV – Why does it matter?EMV Reduces Fraud • Cards include microprocessor chipthat stores info securely and performs cryptographic processing during transaction a payment transaction • Even if fraudsters are able to steal account data from chip transactions, this data cannot be used to create a fraudulent transaction in an EMV or magnetic stripe environment, since every EMV transaction carries dynamic data • Can address card-not-present fraudif cardholders use their EMV cards and individual readers to authenticate Internet transactions • What are the Specifics? • Card authenticationprotects against counterfeit fraud • Cardholder verificationprotects against lost and stolen fraud • Issuer and Acquirer defines rules used to authorize transactions 5

6. EMV – Why does it matter?EMV Reduces Fraud • BOTH CARD&TERMINAL capabilities impact authorization, authentication & CVM’s used for any given transaction • Offline data authentication may still happen even though a transaction is ultimately sent online for approval 6

7. EMV – Why does it matter?EMV Reduces Fraud 2008 – 2010, Canada noticed increased peaks of fraud due to holiday season In 2011, there was no spike in fraud due to holiday season As EMV penetration at POS increased, counterfeit as well as other types of fraud decreased 7

8. EMV Global Penetration Canada, Latin America, and the Carribean Asia Pacific Africa and the Middle East EMV – Why does it matter?EMV Provides Global Interoperability 73.9% of cards 89.0% of terminals 12.7% of cards 65.4% of terminals 31.2% of cards 76.5% of terminals 27.0% of cards 43.0% of terminals 17.6% of cards 60.7% of terminals Europe Zone 1 Europe Zone 2 United States * Figures reported as of Q1, 2011 and represent the latest statistics from American Express, JCB, MasterCard, and Visa, as reported by their member financial institutions globally. Figures do not include data from the United States 8

9. EMV – How does it impact me? To implement EMV we need to: • Build EMV Processing infrastructure • Establish merchant acceptance for EMV • Encourage issuance of EMV cards Payment networks have facilitated this by issuing compliance guidelines in their annual release: • Setting standards/timelines for processing capability • Promoting acceptance • Promoting issuance Liability Shift 9

10. EMV – How does it impact me? 1 Liability for counterfeit transaction shifts to terminal owners if they don’t accept EMV 2Liability for counterfeit transaction shifts to party who has least-secure support 10

11. EMV – How does it impact me? EMV How it Works • An EMV card is inserted into a terminal • The chip embedded in the card contains encrypted data, this is accessed by the reader in the terminal • Using data from the card, the terminal creates and sends a unique code, or “cryptogram” to the processor’s host during the transaction, validating the card • The card is removed when the transaction is completed 11

12. The Authentication Process EMV – How does it impact me? EMV How it Works 12

13. EMV – How does it impact me? EMV How it Works Remember that the incentives from the card brand associations are predicated on accepting both contact and contactless EMV as well as NFC • An EMV chip can be on a “contactless” card where the chip is “tapped” or “held” near the terminal …..or….. • A chip can be inside your smart phone and the phone is “waived” near the terminal… • Mobile wallets (eWallets) are rapidly growing in number, which multiplies the opportunity for incremental sales for merchants and new revenue options for ISOs 13

14. EMV Implementation Impacts EMV – How does it impact me? Terminals Acquirer Network Issuer Card Production • Provide user guides and technical specifications • Update policies, procedures, and operating regulations to incorporate EMV • Facilitate the testing and certification of network partners to ensure they can properly support EMV • Support EMV data elements in authorization messages • Define how chip cards will work • Enhance risk management systems • Determine the card migration strategy • Update customer support and operational systems • Modify the Terminal-to-Acquirer interface to support EMV • Add EMV data elements to authorization and clearing messages • Review disputes processes to support EMV • Obtain and store required security data • Enhance data preparation and card personalization • Achieve certification • Install EMV security data in terminal and upgrade to process EMV transactions 14

15. EMV - What new opportunities does it create? • An EMV chip can make decisions and do calculations • An EMV chip can operate ‘offline’ and speed transactions for transit, sporting events, concerts, etc. • An EMV chip can provide access control credentials for identification and campus access • EMV is enabling new payment technologies that will accelerate the development of mobile payment solutions 15

16. EMV - What should I be doing right now? 16

17. EMV - What should I be doing right now? • Designate an in-house EMV expert / program owner (critical for large merchants / ISO / Processor) • Ensure POS providers / VARS aligned with EMV (including plan and roadmap) • Ensure POS that I own or will soon own supports all payment types • Remember: Contact, Contactless / NFC, and magstripe • My NFC support includes mobile wallet (of my choosing) • The device bears all the necessary approvals (Lvl1, Lvl2, C’less approvals, PCI PTS) • Remember that V1 expires in 2014! • Ensure the ability to remotely manage (some peripherals may not accommodate this)… • Ensure EMV migration dates coincide with the Payment Network’s key dates for compliance • Ensure POS provider can assist in the migration process • Ensure processor / acquirer is available for the migration and planning • I have received my end to end certification process from them (if applicable) • I have all the test tools I need (cards, etc.) • Develop a training program for my personnel • To understand the new payment types • To understand the changes in consumer behavior at the POS • To dispel myths 17

18. EMV - What should I be doing right now? Retail Infrastructure Use Cases • Small • Typically tier 4 • Simple structure • Small EMV footprint • Easy conversion • Single – several store • Storefront • Mid-sized • Typically tier 3 • Small structure • Light EMV footprint • Small conversion • Regional chains • Storefront • E-commerce • Large • Tier 2 level merchant • Large structure • Large EMV footprint • Challenging conversion • Regional – nat. chains • Storefront • E-commerce • MOTO • Field Services • Super • Tier 1 level merchant • Complex Structure • Huge EMV footprint • Integrated POS • Difficult conversion • National chains • Storefront • E-commerce • MOTO • Field Services • Multiple brands 18

19. EMV - What should I be doing right now? Retail Infrastructure Use Cases 19

20. EMV - What should I be doing right now? Merchant Impact Chart 20

21. EMV – Who can help? Main page: EMV Migration: CSCIP Certification Program: Roadmap whitepaper: http://www.smartcardalliance.org/ http://www.emv-connection.com/ http://www.smartcardalliance.org/pages/activities-leap-about/ http://www.smartcardalliance.org/resources/pdf/Payments_Roadmap_in_the_US_091512.pdf 21

22. EMV – Who can help? Main page: http://www.merchantadvisorygroup.org/ 22

23. EMV – Who can help? Main page: Best Practices: Guide to EMV: White Papers: http://www.emvco.com/ http://www.emvco.com/best_practices.aspx http://www.emvco.com/best_practices.aspx?id=217 http://www.emvco.com/best_practices.aspx?id=33 23

24. EMV – Who can help? Blogs: Press: Portals: http://blog.visa.com/tag/emv/ http://corporate.visa.com/newsroom/press-releases/press1142.jsp http://discovernetworknews.com/stories/discover-implements-emv-mandate-for-u-s-canada-and-mexico/ http://newsroom.mastercard.com/press-releases/mastercard-extends-u-s-emv-migration-roadmap-to-atm-channel/ http://www.mastercard.us/mchip-emv.html 24

25. EMV – Who can help? Solutions Providers White papers: FAQ: Press: Portals: Blogs: http://pymnts.com/assets/Shared/Gemalto-EMV-Whitepaper.pdf http://ingenico.us/solutions/emv-payments/ http://pymnts.com/briefing-room/security-and-risk/EMV/Ingenico-s-Denis-Predicts-the-Future-of-EMV-in-North-America http://ingenico.us/solutions/emv-payments/ http://blog.verifone.com/uncategorized/a-four-step-guide-to-emv-for-merchants-part-iii/ • Consultation • Training • Enablement • Advocacy • Presence 25

26. Start Planning Today! EMV - What should I be doingright now? 1099Days remaining to October, 2015 liability shift days remaining 26

27. EMV: The Future is Now Q&A