Networks Must Face EMV Realities: Extend Deadlines, Address CNP Fraud 

Jan. 31, 2013

The Merchant Advisory Group (MAG), a trade association of national merchants focused on payments issues, today issued an update to its payments road map. In addition to clarifying its position on routing debit transactions within the coming EMV payments infrastructure, the merchant group also called out the payments industry for so far ignoring “the certain migration of fraud from the face-to-face channel to the e-commerce channel” inherent in the switch to EMV.

On the same day a group representing U.S. debit networks called on the entire payments industry to get behind a common solution to the EMV/Durbin debit routing dilemma, the MAG said merchants are seeking a long-term solution to the problem. While the group noted that most of the industry has backed the common AID approach formulated by the EMV Migration Forum ( detailed here ), key players including MasterCard and Visa are yet to sign on. And, while the MAG suggests the networks are at least partially responsible for continued debate on a solution to this thorny issue, their mandates for processors to have EMV technology in place by April of this year remain in force.

“The MAG strongly suggests that deadlines for existing network mandates and liability shift implications be extended in order to allow a more reasonable time frame for all stakeholders to migrate towards EMV,” the group said in its statement. “More specifically, the MAG suggests that for every month that passes without a consensus solution to the debit issue, a month needs to be added to all of the originally announced mandates. This implies that existing mandates must now be extended by over one year from the date they were originally announced.”

While the debit routing issue has received significant industry attention, another consequence of moving to the EMV standard has been all but ignored by the networks. In market after market where EMV has been implemented , a shift of fraud from card-present to card-not-present transactions inevitably has followed. The MAG said it expects the same to happen in the U.S. unless the industry, including the networks, work on a solution.

“Existing attempts to address e-commerce fraud by the networks are unacceptable to most e-commerce merchants and result in lost sales and confusion by consumers attempting to complete online purchases,” the group said. “EMVco created one common consumer interface for two- factor authentication for card-present transactions. Likewise, the payments industry must develop an interoperable structure for e-commerce transactions.”