JCB has joined MasterCard International and Visa International as an equal partner in EMVCo, a standards maintenance organization for integrated circuit (IC) card specifications, payment applications and terminal compliance. "We joined EMVCo to accelerate the process of EMV for JCB chip cards," says Tac Watanabe, senior vice president in the advanced technologies department at JCB (Tokyo).
Similar to the business model used by American Express, JCB acts as issuer, acquirer and partner to bank issuers. Since most major bank issuers and terminal manufacturers have relationships with MasterCard or Visa, JCB wanted its cards to use the same standards. "Because we were different from the EMV 'mainstream,' we were doing our own processes on top of the EMVCo process," says Watanabe. "But that was sometimes a burden for clients to proceed with a JCB implementation."
For example, terminal vendors would have to pass a separate JCB certification. Now, an EMVCo certification will suffice, simplifying matters for merchant-acquiring banks that choose to work with JCB and MasterCard or Visa.
JCB's participation benefits the other members of EMVCo as well. "For card payments to be a success, we have to cooperate in certain areas on the infrastructure so that when you present a card to a terminal, it actually works," says Simon Pugh, vice president, infrastructure and standards, MasterCard (Purchase, N.Y.). "These are things that it makes no sense to compete on, because we're all trying to achieve the same goals."
"It'll truly be a standard that can be relied upon for interoperability worldwide," says Phil Howell, vice president, application architecture and standards, Visa International (San Francisco).
The latest initiatives by EMVCo have involved easing the complexity and the difficulty of initiating and implementing chip programs, explains Howell. Through the creation of common core definitions and common payment applications, all three card associations can ensure the basic functionality of their programs across all card terminals.
As of mid-2004, there were 177 million EMV cards and 1.9 million EMV terminals deployed globally, a 36 percent increase in cards and a 34 percent increase in terminals over 2003, according to MasterCard's Pugh. Europe comprises about 70 percent to 80 percent of those totals, and the strongest growth is coming from the Asia-Pacific.
However, adoption of EMV in the U.S. marketplace has not been as forthcoming, mainly due to the fragmented nature of the U.S. banking marketplace and the difficult business case considering the prevalence in the U.S. of online verification of card transactions aided by neural networks.