Yoav Tchelet
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Why South Africa is way ahead of the US with EMV

So what exactly is EMV?

“EMVstands forEuropay,MasterCardandVisa, a global standard for inter-operation ofintegrated circuit cards(IC cards or “chip cards”) and IC card capablepoint of sale(POS) terminals andautomated teller machines(ATMs), for authenticatingcreditanddebit cardtransactions.” (source:http://en.wikipedia.org/wiki/EMV)


Essentially the advent of chip and pin technology hasdemocratized card based payments much like the web has done for small and medium businesses. Companies such as Square would be hard pressed to succeed if not for EMV.

So why is there such debate in the US about the move to EMV?

South African banks seem to have quietly but effectively rolled out EMV on a massive scale. Sure there are still many card holders that need to have their cards replaced in SA, but the standard has been set and the infrastructure has already been rolled out in SA.

In the US this isn’t quite the case. Theinfrastructure for EMV based payments is 5-10 years behind SA and the cost to implement a nationwideroll outis estimated in the billions. Some banks have adopted the move but without a united move by all the financialinstitutions, UStravelersin particular willhavea hard time using their cards while travelling.

Europe much like South Africa has also moved far ahead with EMV implementation and Americans traveling to Europe and making use of a traditional magnetic stripe card will most likely find that the card gets declined or requestingauthorizationfrom the issuing bank, requiring a long wait while a phone call is made toauthorizethe transaction.Payment interoperability is one of the major benefits of EMV – making global travel and payments easy.

Fraud is the other major benefit of EMV, something us South African’s are quite familiar with. Major card issuers such as Visa have stated that if US financialinstitutionsdo not make the move to EMV by April 2013 – any fraudulent transactions will not be protected.

This potentially opens up massive opportunities forentrepreneurs in SA. The widespread adoption of EMV and the infrastructure roll out is allowing for the mobile payments industry torapidly develop. Chip and pin based mobile transaction systems for small businesses will allow for less risk (not having to carry cash on site) and allow for credit based purchases – potentially exposing them to a new whole new market for their goods. SA is no slouch when it comes to financial systems, and more so mobile. Maybe the US can learn a thing or two…

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