The pandemic has profoundly reshaped all aspects of our lives, some temporarily and some likely permanently. Across payments, three key trends seem poised to continue once the US re-emerges into a new normal.
Firstly, there has been a significant shift away from cash with consumers and merchants increasingly preferring cards. Demand for ‘touchless’ transactions has also accelerated the adoption of technologies such as contactless, mobile payments and QR codes. Finally, there has been an exceptional increase in e-commerce transactions.
But beyond these individual trends, what has been most striking is the scale and pace of change. Behavioural shifts that have previously taken years, even decades, have taken place in a matter of months. At the end of 2020, cash usage in the US had declined to only 28% of total transaction volume. 67% of merchants now support touchless payments. And holiday season shopping broke all records for e-commerce sales, surpassing $100 billion for the first time.
The payments industry should be proud of the contribution it has made to supporting consumers, businesses and economies during a period of unprecedented challenges. Whether it be a consumer making their first ever contactless card payment, store associates feeling safer in their place of work accepting a card transaction, or a restaurant able to offer click-and-collect to stay afloat.
Understanding the importance of global specifications
Such rapid deployment of advanced payment products and services that deliver trusted, convenient payments has been possible thanks to the technical foundations already established by global initiatives, including the EMV® Specifications.
EMVCo – the technical body that manages and evolves the EMV Specifications – focuses on defining a seamless and secure technical interaction between the point-of-sale and payment products used by the consumer.
The EMV Specifications themselves (which are available royalty-free to all) provide technical requirements that enable any party to develop payment products safe in the knowledge that they will work anywhere in the world.
They also ensure that solutions are built to be interoperable no matter the issuer, supplier, manufacturer, merchant (big or small) or payments system provider.
Finally, specifications are defined on a global scale to reflect the increasingly interconnected world we live in and to reduce the inconsistencies that create points of weakness, from both a security and consumer convenience perspective. Global specifications are especially important during periods of major change, as seen with the rapid switch to online transactions during the pandemic. This change in consumer behaviour has required businesses to quickly build online and in-app payment options to meet demand. The existence of consistent global specifications reduces the risk of security and convenience issues as organisations rapidly respond to fundamental shifts in payment patterns.
Put simply, EMV Specifications mean you can expect a safe, secure and successful purchase whether you are shopping in-store or online.
Building consensus
Developing global specifications requires extensive collaboration and engagement. EMVCo’s members are the six global card payment networks, reflecting a shared responsibility for the reliability and security of the payment networks that facilitate trillions of dollars of spending each year.
As a global technical body, EMVCo works with hundreds of organisations around the world to develop and advance EMV Specifications. In fact, all interested stakeholders are actively encouraged to share opportunities and challenges, which for example, have recently led to productive cross-industry collaborations with the travel and gaming sectors.
EMVCo also works closely with many technical associations and standards bodies across the globe to support interoperability and innovation by identifying synergies and flagging potential gaps.
This is a proven, effective model for creating, evolving and promoting globally adopted specifications, and supporting testing, product certification and marks programs.
As a result, all payment organisations (including domestic debit networks, who have widely implemented EMV Specifications) benefit from reduced product development costs and accelerated innovation. At the same time consumers, merchants and businesses enjoy increased choice, security and reliability.
Balancing global consistency with local requirements
Of course, the need for consistency on a global scale must also be balanced with the unique local requirements of different marketplaces.
For example, it is often asked why the EMV Chip Specifications support multiple types of cardholder verification methods (CVM). Wouldn’t it be better to reduce the options?
This is a fair question, but the answer is no. Every marketplace is different with varying consumer preferences, adoption rates and regulations. The best way to do something in one marketplace doesn’t mean it is the best way to do it everywhere.
This means that overly-prescriptive specifications are simply not compatible with supporting seamless and secure payments on a global scale. Consequently, the EMV Specifications are intentionally designed to be flexible.
This is a good thing. It is this flexibility that means the EMV Specifications enable transaction routing choices and support network competition in support of U.S. regulation, for example.
And for the same reason, EMVCo is not a regulatory body and does not set mandates or implementation requirements, and has no involvement in determining fees or any other commercial aspects. Rather, EMVCo focuses on its single key aim: the facilitation of secure, convenient card-based payment transactions around the world.
Addressing the challenges and opportunities of the future
As we look ahead as an industry, EMV Specifications continue to have a critical role to play. With more devices and ways to pay both in-store and online, fighting payment fraud without compromising user experience is a growing challenge but also a significant opportunity.
By building on the foundations that enable card-based payments to work seamlessly and securely worldwide today, the industry can continue to effectively support the rapid adoption of new payments technology, advance security and support convenience in an ever-demanding world.
by Carey Ferro
by Brian Byrne