EMVCo Associates from Consult Hyperion, the Merchant Advisory Group, Nets, Square and Verifone, share perspectives on how an EMV® contactless kernel will impact contactless payment acceptance.

EMVCo recently published a new EMV Specification to standardise contactless kernels, the software that point-of-sale terminals and ATMs use to process contactless transactions. The specification addresses industry demand for an EMV contactless kernel that can be used by all stakeholders globally for seamless and secure contactless acceptance.

Simplifying contactless acceptance

Consult Hyperion, with Edgar Dunn, conducted a feasibility study during 2020 to 2021 for EMVCo that informed the development of the EMV Contactless Kernel Specification. Gary Munro, who led the research initiative at Consult Hyperion, highlights the value of the EMV contactless kernel for the industry based on their findings:

“We spoke to a number of stakeholders around the world to understand their position and where things were, and the message came back really clearly from the industry that contactless should work in the same way that contact works – so that it’s one kernel, because it means single deployment,” he says.

“Around the globe, there are about 22 different payment kernels. Getting access to acceptance footprint and maintenance is expensive and it’s difficult. With a single contactless kernel, we can solve a lot of those problems.”

Ultimately, says Munro, “it makes access simpler, it makes it cheaper, and it simplifies everything for everyone.”

Steve Downey from Verifone reiterates these findings, noting that the EMV Contactless Kernel Specification is meeting a need from a number of players in the industry, and specifically “acquirers, processors around the world who are looking to simplify their whole contactless infrastructure, where we currently have a large number of contactless kernels.”

From his perspective, the specification will significantly reduce over a period of time the number of contactless kernels, which “will be a benefit to everyone in terms of maintenance, cost of maintenance and time to market for the various kernels that would be over time replaced by the single contactless kernel.”

The merchant community also welcomes the specification to help simplify contactless payments. Merchants have advocated for an EMV contactless kernel for a long time, says Steve Cole of the Merchant Advisory Group, which is encouraging the industry to get on board and create plans to support the new EMV Contactless Kernel Specification:

“We see [the EMV Contactless Kernel Specification] as a very positive development in simplifying the contactless payment experience at the point-of-sale for the merchants and reducing the effort it takes for a merchant to certify for contactless payments acceptance.”

Advancing contactless payment security

One of the key features of the EMV Contactless Kernel Specification is its use of state-of-the art cryptography to protect sensitive information without impacting transaction speed.

This benefits the industry from both a security and privacy perspective. Kim Münzberg of Nets highlights the value of this for the European market specifically, noting that the EMV Contactless Kernel is “extremely important to Europe”, especially in relation to the PSD2 (Payment Services Directive 2) and GDPR (General Data Protection Regulation) and the need to ensure use of dynamic linking for strong customer authentication and data encryption to protect sensitive information.

Square’s Shane Hamilton echoes the importance of the specification for advancing contactless payment security: “I’m most excited about the enhanced security properties that will encrypt payment data much earlier on in the payment transaction lifecycle.”

Supporting the future of payments

According to Hamilton, contactless is the future of payments, and this includes expanding use cases:

“Currently, contactless payments are not able to address all of the use cases that contact payments do today,” he says. “As the number of use cases continues to expand, it makes a lot of sense for EMVCo to create a single contactless kernel that streamlines the technology.”

He sees an opportunity for the EMV Contactless Specification to support “a future where every payment device can use just one contactless kernel to accept payments from any card that it interacts with.”

Consult Hyperion observes potential for the specification to support a variety of use cases beyond retail card-based payments, such as transit and digital currencies.

Transit providers, the cities that run the transit systems, will be beneficiaries of the EMV Contactless Specification too, says Munro. “It will make it easier for them to maintain and have more acceptance and be more ubiquitous.” He also notes interest from central banks in the EMV Contactless Kernel Specification, as they explore development of digital currencies that can be used in retail payments.

Thanks to the EMVCo Associates featured for their valuable insights. To hear more from the companies featured in this EMV Insight post, listen to Episode 7 of Talking Payments with EMVCo.