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54
News
Processors, merchants, consumers ready
Back believes the already PIN-debit savvy Canadians will make the leap to
chip and PIN technology with minimal adjustment. "The front-end software
has been written on the terminals; the applications are written on the chip; and
the specifications have been figured out," he said. "The processors involved in
the pilot have all figured out the back end.
"There's certainly going to be some bugs, but the whole intention of the pilot
before Canadian financial institutions do a national roll out is to work out the
kinks. Also, consumers aren't used to entering a PIN for a credit card transaction,
so there's going to be some
learned behavior, but I haven't heard
anything negative about the pilot."
Mag stripes vulnerable
The magnetic stripe continues to coexist
with chip card technology so
that customers can use their cards
at non chip-enabled terminals.
Adam Atlas, Payments Attorney and
President of the Canadian Acquirer's
Association, is not sanguine about
mag stripe elimination anytime soon
and is concerned that chip and PIN
cards will remain vulnerable as long
as the mag stripes remain.
"I don't know if the cards in this pilot
program will have magnetic stripes
or not, though I don't see how they
could get rid of the mag stripe right
away since the chip POS devices are
not all that common yet," Atlas said.
"Some of the fraud that's happening
today is going to continue and won't
be eliminated completely as long as
there is a mag stripe."
Massive undertaking
Back said every merchant in Canada
will have a chip-enabled terminal,
and every cardholder will have a
smart card. "It's a huge shift in the
market – 30 million people and a
million businesses will need card
and terminal upgrades," he noted.
"Banks will even subsidize smaller
merchants to upgrade legacy systems
and convert to chip and PIN.
"There will be financial incentives
because conversion is mandatory.
We're dipping our toe in the water
right now, but most of the larger
retailers are already geared up for a
national roll out."
Despite the benefits of increased
security and lower dollar amounts
of fraud, the U.S. market has not yet
created a business case to move forward
with EMV adoption.
This is due to the huge costs of retooling
a transaction processing system
that is seen by many in the industry
as efficient and firmly entrenched.