Payments have always been about conveniently exchanging value, whether by bartering, swapping livestock, using metal coins or paper money. As commerce has gone global, payment methods have had to adapt in order to enable broader acceptance. Not so long ago, after paper money had firmly established its place as the primary mechanism of exchange for goods and services, came the idea of a global payment standard that would manifest itself through what is now known as the credit card. Soon after its inception, the credit card swiping phenomenon took off and people were using credit cards at an increasing rate. By 2017 a staggering 20 billion cards are expected to be in circulation worldwide.
As payment methods go global so do challenges with security and protecting these exchanges of value. Security standards are forced to change in order to keep up with changing payment mechanisms and, since commerce is now a global phenomenon, need to be applied around the world. The latest evolution of these standards is EMV. Originally known as the Europay, Mastercard and Visa standard, EMV is the new security blanket for merchants and consumers. At its core, EMV is designed to offer higher levels of protection against fraud. This protection comes by way of a dynamic duo that includes an embedded computer chip and a PIN. When chip-and-PIN card are broadly adopted the number of fraudulent transactions has been seen to decrease by almost 75%. With EMV enabled in 86% of cards worldwide, the US remains the final frontier for mass adoption. With the EMV mandate coming this October this is going to change.
The EMV mandate accomplishes a few things. First, it compels issuers to upgrade their customers’ cards to smart cards. Second, the liability shift will provide merchants and banks alike the motivation to ensure they are equipped with payment terminals that can support EMV technology. However, with all the innovation taking place in mobile, EMV is certainly not the final frontier for payments. As payments migrate to the phone to drive further convenience and a better consumer experience, technologies like NFC are likely to see a greater level of adoption.
Payments - the exchange of value - is constantly evolving. For merchants this poses a challenge as they now need to accommodate more than just cash and plastic. To do so they will need to rethink the technology they have in store. Payments technology is often viewed as an expensive annoyance - confusing and complicated tools that cost too much and add overhead, particularly for small and medium sized businesses. Unfortunately, too often this is true.
The migration to EMV presents an opportunity for merchants to rethink the technology they use, the best way to future-proof their stores, and to ensure they aren’t forced to constantly upgrade their hardware or software with every new innovative payment method. As we enter the new age of commerce centered around the experience as opposed to waiting to pay, technology will play an ever increasing role in driving efficiency and productivity within a business. Businesses that embrace the amazing tools and technology available to them will untether themselves from the traditional, payment-centered commerce experiences of the past and have the freedom to shape a unique commerce future for their customers.