Are global traveller’s driving the business case for EMV?

Are global traveller’s driving the business case for EMV?

Visa Inc. and MasterCard recently announced plans to accelerate chip migration in the United States by 2015; long overdue some may say. This includes the initial approach of migrating the payment infrastructure over to accept EMV® and NFC technology (contactless). Additionally, most other payment infrastructures around the globe already have or are in the process of implementing chip-based methods with EMV technology as the processing standard.

Looking at how EMV has been progressed globally we can see that the US is some way behind Europe on the issuing side (EMV card adoption stands at just 31.2%) but on the acquiring side performs comparably to Europe with some 76.5% of retailers having the technology already in place to accept EMV chip cards.

Worldwide EMV Deployment and Adoption


EMV Cards

Adoption Rate

EMV Terminals

Adoption Rate

Canada, Latin America and the Caribbean





Asia Pacific





Africa and the Middle East





Europe Zone 1





Europe Zone 2










*Figures reported in 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

Considering the nearly 100% coverage in the extended Euro zone and soon in Canada, the magnetic stripe technology becomes antiquated.

What happens when you make a purchase in Europe?

And here is where this begins to cause real pain, over the last few years tens of millions of U.S.   cardholders have been inconvenienced abroad by attendants at POS terminals refusing to take their non-EMV cards and even more by being unable to buy gas at unattended terminals or transportation tickets at ticket machines (and therefore being forced to join the usually long lines at the few remaining – if any – attended ticket booths). U.S. media are more and more frequently covering the issue, not only via the trade press but also in daily newspapers.

Before you trip you have to read these articles

The New York Times, for instance, published a feature article titled “For Americans, Plastic Buys Less Abroad” in its popular travel section on last summer stating:

Until businesses change their minds, American travellers will continue to encounter payment issues abroad.”

Another New York Times article titled “For Americans, Plastic Buys Less Abroad

American’s have a real issue using the American card so maybe you should consider before you go on the next Vacation or Business Trip taking some advice from the New Times Travel section article titled.    “Small Players Offer Smart Card, but not Big Banks

The problem is two-fold. Firstly, even though most European cash registers are equipped to handle American cards, some cashiers simply don’t know how to process them having become used to dealing exclusively with chip and pin transactions. Secondly, many automated ticket kiosks like those commonly found at train stations, gas pumps and parking garages simply don’t accept cards without a chip and PIN’

The negative trend vis-à-vis acceptance of magnetic stripe cards will be aggravated by the recent resolution of European banks – at the request of their regulators at the European Central Bank – to eliminate the magnetic stripe from European cards altogether and/or to allow merchants generally to reject magnetic stripe card based transactions.

The European Payments Council recently passed a resolution mandating that use of “use of magnetic stripe fall-back (be restricted) to exceptional cases” and allowing banks to “to refuse magnetic stripe transactions if they so wish.”

As a recent banking blog put it, the European council wants to “kill the old magnetic stripe.”

All of the above will drive some interesting consumer behaviours. Americans will struggle to use their cards in Europe, most likely resorting to cash or traveller’s cheque. Many Americans travelling in Europe are reporting that they are no longer able to use their magnetic stripe cards in many shops let alone places like Mc Donalds, and 7 11 Stores.  Europeans on the other hand will resort more and more to cash when they come to the U.S. when their debit and credit cards no longer work because of the absence of the magnetic stripe.  .

To solve this traveller payment problem which will only grow worse, it is an ideal time for the United States to accelerate the move to EMV by upgrading infrastructure and issuing compliant cards. As it stands some of a bank or card companies most valuable customer’s (the high-flying business traveller) are on the receiving end of the brand destroying “card declined” or “card not accepted here” messages which are just the things to lead them into the arms of a competitor. Surely the winners will act early to head of this impending threat.

While I was traveling in Europe trying to purchase a travel ticket at the ticket counter, a hand-lettered sign (in English) said that some cards from the United States might not work, and that it was best to use cash.  Even though I spent 250 days in Europe last year I guess my bank did not consider me as a high-flying business traveller.

Have your customer’s encountered similar issues when living or traveling abroad?

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