Adoption of chip card technology has continued growing steadily since its inception, fueled by the success of the initial deployments in Europe, and the fraud saving figures reported by these countries.
As of June 2011, the number of EMV cards issued around the globe surpassed the 1.2 Billion figure, and the number of POS devices accepting EMV cards reached over 18 million units.
Globally, with the exception of the USA, 40% of payment cards issued are EMV compliant chip cards, that can be accepted in over 71% of the POS devices.
ACI´s opinion is that is safe to accept that the critical masses of acceptance terminals and payment cards have been reached, and that the full deployment of the technology is almost inevitable.
The following table shows the global distribution of EMV deployments around the globe:
| Region | EMV Cards | Adoption Rate | EMV Terminals | Adoption Rate |
|---|
| Canada, Latin America and the Carribbean |
207,715,356 |
31.2% |
3,900,000 |
76.5% |
| Asia Pacific |
336,602,681 |
27.9% |
3,480,000 |
43.0% |
| Africa and the Middle East |
23,003,747 |
17.6% |
345,000 |
60.7% |
| Europe Zone 1 |
645,472,323 |
73.9% |
10,500,000 |
89.0% |
| Europe Zone 2 |
27,516,286 |
12.7% |
513,600 |
65.4% |
| Totals |
1,240,310,393 |
40.1% |
18,738,600 |
71.1% |
*Q1 2011, figures do not include data from the United States
Europe
In Europe the migration to EMV is virtually complete, with close to 90% of endpoint devices already migrated, and nearly 80% of issued cards EMV compliant.
The migration has been pushed by both the card payment associations and the European Central Bank, aiming to reduce fraud losses on card payments.
Fraud figures have shown a clear decline when compared to magnetic stripe only, and fraud has moved to areas where there is no chip enabled infrastructure, like the USA or to card not present transactions, such as Internet payments.
Canada
EMV chip cards were introduced in Canada in 2008, and have progressed since then with high success rates.
Canadian processor Moneris Solutions released data in 2009 that affirmed an important reduction in fraud with chip card use. Moneris claims that “merchants who processed greater than 40 percent of total transactions using chip technology experience on average, up to four times fewer chargebacks than those who processed less than 40 percent of total transactions using chip technology.”
Also, the Interac Association, which manages the Canadian debit card network, published data in March 2011 that indicates a 16% decline in fraud year-over-year from 2009 to 2010.
Public perception favours chip cards as a more secure alternative, with 80% of Canadian credit cardholders preferring chip technology to magnetic stripe. In the U.K., EMV has been successful enough that 96% of merchants that have implemented chip and PIN payments would recommend it to other retailers.
The Canadian card associations (Interac, MasterCard and Visa) agreed in 2006 to implement the EMV standard in Canada and within this agreement, each card association established its own implementation dates.
The Interac Association established migration dates for cards and terminals with complete card and ABM conversion required by the end of 2012 and complete point of sale (POS) conversion by the end of 2015. After 2015, Interac debit magnetic stripe transactions will no longer be accepted at devices in Canada. Interac also set the following conversion goals which were achieved by the end of 2010.
o 90% of deposit taking ABMs converted
o 50% of non-deposit taking ABMs converted
o 35% of POS terminals (Interac Direct Payment) converted
o 65% of Debit cards converted
Visa and MasterCard committed to a critical mass of EMV chip cards and terminals in market by 2010 and from April, 2011, the liability for any fraudulent transaction that would have been prevented by chip technology now falls on the party that has not yet migrated to chip.
United States
The U.S. market has been caused to stir following announcements by Visa and MasterCard of specific incentives to migrate to EMV.
Fraud figures had been expected to grow substantially as fraudsters were attracted to the U.S. as a source for cards to counterfeit and as the destination for stolen chip cards that can used in a non-chip environment. Fraud losses on credit, debit, and prepaid cards in the U.S. already totaled $6.89 billion in 2009 and without EMV in place this figure had been estimated to reach $10 billion by 2015.
The United States had previously rejected the migration to EMV on the basis of a nonexistent business case and a complex infrastructure. The attitude of some issuers initially began to change as they found U.S. cardholders were increasingly facing issues when travelling abroad and trying to pay with magnetic stripe cards in markets where merchants rejected non-chip payments. However it is the specific compliance mandates and incentives for U.S. merchants and card issuers to migrate to EMV that are really drinving organizations to act.
China
Chinese citizens from some of the major cities in the country are very used to chip cards for payments, and have been using them for years for a varying number of applications. In cities such as Hong Kong, Beijing, Shanghai and Shenzhen, multi-functional smart cards are not only used for transportation, but also for payment of electricity, gas and water bills.
The People’s Bank of China and UnionPay jointly developed the PBOC 2.0 standard, a Chinese technical and security standard for smart cards, which is broadly similar to the EMV standard.
People’s Bank of China announced in 2011 the launch of a huge project to convert all payment cards in China into smart cards by 2015. This means that the country will go from 6.4 million smart cards already delivered by Chinese banks (mainly ICBC) to a total distribution of over 2.4 billion cards.
Middle East and Africa
Adoption of EMV in the Middle East and African countries varies largely from country to country. Some of these countries have a well developed banking infrastructure, like South Africa, most of the Arabian Peninsula, and some countries in the northern coast of Africa that are being prepared for EMV acceptance. EMV issuance is however progressing at a slower pace.
Latin America
Adoption in Latin America varies from country to country, with Brazil and Mexico leading the trend, with countrywide migrations well underway, and several other countries starting the planning phase or already launching the first pilot phases.
There are 19 countries actively working on EMV projects or plans. Some of these countries are still in the very early stages of the process, establishing plans and deciding strategies, while others have started the roll-out of EMV capable terminals and planning EMV card issuance.
Australia
Australia is currently in a progressive migration to EMV with the liability shift taking place in 2013. Financial institutions are already moving towards full migration which is impacting multiple payment channels and associated infrastructure.
The Australian Payment Card Association reported that skimming fraud on Australian-issued credit cards has already dropped for the first time ever, from $50.1m in 2008 to $37.5m in 2009, a 25 per cent fall, following the steady roll-out of EMV credit cards by the country’s major banks.
However, skimming fraud on PIN-only debit cards increased from around $5m to $17.5m following a spate of attacks on merchant terminals in 2009, demonstrating the loophole that only full compliance will reduce.
In Australia, financial institutions have also been taking the opportunity to modernize infrastructure when migrating devices to accept EMV, with ATM landscape notably benefiting from the technology refresh. This new technology will undoubtedly bring greater flexibility to ATM deployers, which will improve service level uptime and reliability. In addition, legacy systems that are now earmarked for replacement or upgrade will no longer inhibit banks from rolling out cutting edge ATM services.
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