Originally Posted by
garyschmitt
But even that approach is not ideal, because EMV is 20 years old, and requires account holders to carry a physical chip around, at an age when everyone has a mobile phone, and many are moving to smart phones. Why blow money on intermediate technologies? IMO, if money will be spent upgrading security, it makes more sense to make the full leap and skip the EMV. Go straight to something that doesn't eat wallet space. Have the bank authenticate users via their phone using 2 or 3 factors, and then have the bank securely authorize the transaction with the supplier.
Just because there's already the "next big thing" on the horizon doesn't negate the defacto global standard issue.
The rest of the world is already using EMV except for Americans.
A French, German, British, Japanese and Canadian VISA/MC/AMEX cardholder will have no problems using his/her hybrid card anywhere in the world. If a French cardholder visits Montreal, he/she can use the chip at Tim Hortons. If a Japanese cardholder visits New York, that cardholder can use the mag-stripe portion of his/her hybrid card when paying for his/her subway ticket.
In contrast, an American cardholder using his/her mag-stripe only card would face problems once he steps outside of the US. Obviously the American cardholder would have no problem using his/her mag-strip only card at BestBuy or Walmart in the US. But once the same cardholder steps outside of the US, problem arises. Can an American with his/her mag-stripe only card buy a TGV train ticket from the automated machine in France? Nope, he needs to stand in line at the counter. Can an American fill up the tank at a petrol station in Italy? Nope, he'll need to pay cash. And good luck finding a petrol station in Italy that's actually staffed these days. What are you gonna do, yell at the machine?
So just because NFC "wave techonology via cell phones" is just around the corner, does that mean the US should just skip EMV, keep screwing American cardholders for a decade once he/she steps outside of the US, and wait another decade for the rest of the world to ditch EMV and start using NFC instead? Changing the number of terminals across the world across 180+ different countries to accept "cell phone waving technology" is not going to happen overnight ya' know.
As such it's understandable that VISA would mandate US issuers to start issuing EMV cards in the US. It's 180+ countries across the world vs. 1 America. It's cheaper for VISA to convince US banks to start issuing hybrid cards in one year than convincing the other 180+ countries to say "umm, we're really happy that you guys went to EMV as we supported, but now can you guys go onto NFC in one year, on your own dime?" Yeah, like that's gonna happen.
Even if VISA somehow managed to convince the rest of the world to ditch EMV and move to NFC because arrogant American banks don't want to issue costly EMV cards when "the next big thing" that's much more cheaper is around the corner, millions of merchants and retailers in 180+ countries around the world are never going to do it on their own dime. VISA would have to pony up the cost, and in that light, it'll just be passed onto us.
Pretty much it is a chicken-or-the-egg issue. Sure, NFC sounds great, it's cheaper and it's already the next biggest thing. But then there's the reality that 180+ countries around the world are not going to be installing NFC card readers or issuing NFC capable cards overnight either.
If NFC is just around the corner, the smarter way to go is to follow what US Bank did and
issue multi-interface chip cards that has all three features built into one card. The US Bank Flex Perks has the mag-stripe, the chip
AND the contactless built into one single card (technically four if one includes the embossed number for those carbon copy imprinters if anyone still uses them these days).