E-Commerce Payments

“Why South Africa is way ahead of the US with EMV”

So what exactly is EMV?

“EMV stands for Europay, MasterCard and Visa, a global standard for inter-operation of integrated circuit cards (IC cards or “chip cards”) and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions.” (source:


Essentially the advent of chip and pin technology has democratized 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. The infrastructure for EMV based payments is 5-10 years behind SA and the cost to implement a nationwide roll out is estimated in the billions. Some banks have adopted the move but without a united move by all the financial institutions, US travelers in particular will have a 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 requesting authorization from the issuing bank, requiring a long wait while a phone call is made to authorize the 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 financial institutions do not make the move to EMV by April 2013 – any fraudulent transactions will not be protected.

This potentially opens up massive opportunities for entrepreneurs in SA. The widespread adoption of EMV and the infrastructure roll out is allowing for the mobile payments industry to  rapidly 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…