AJB Software Design Inc., a payment integrations software provider, announced a new EMV migration system for retailers in the U.S. called FIPay. The system enables EMV transactions on hardware that merchants already have, speeding up the conversion to EMV while also allowing merchants to integrate with new mobile and other point-of-sale payments solutions.
EMV chip credit cards, already the norm in many other countries, provide greater security than the magnetic stripe cards widely used in the U.S. The increased security means fewer fraud cases and disputed charges, and a lower chargeback rate. AJB has worked on dozens of projects helping retailers in Canada and the UK make the migration to EMV, and the company says that several of those retailers have already seen a decline in chargeback rates. This reduction in fraud and chargeback rates will lead to the widespread adoption of EMV, says Pat Polillo, AJB's vice president of sales. "I think it's inevitable that 3, 4, maybe 5 years from now you will see a mass migration to chip and pin [EMV cards]," Polillo predicts.
Since everyone acknowledges that EMV is more secure than magnetic stripe, Polillo says that card issuers like banks, Visa and MasterCard will use a stick and carrot approach to pull merchants off of magnetic stripe cards. On the on hand, he says, card issuers will put pressure on retailers to adopt EMV by refusing to pay back for fraud cases associated with magnetic stripe cards. Issuers also currently require larger retailers to conduct annual audits to make sure that their hardware for accepting credit card payments is PCI compliant. Preparing for these audits typically costs a major retailer between $200,000 and $300,000 per year, according to Polillo, but he suspects that issuers may let retailers forgo the audits if they make the migration to EMV.
Although Polillo says that the mass migration to EMV is still a couple of years away, AJB is rolling out FIPay for U.S. retailers now to help them get a head start on the conversion. Polillo says that after working with retailers in Canada on EMV adoption, AJB discovered that waiting to roll out their software until retailers begin migrating makes it difficult for the retailers to scale the solution. EMV cards require more vigorous testing of the cards and payments systems, but by introducing FIPay now AJB will be able to plan ahead, making the solution easier for retailers to integrate and scale.
FIPay is PA-DSS certified for EMV transactions, which AJB says will make compliance simpler for merchants. It is also one of the first systems that can accept EMV transactions on mobile point-of-sale hardware.