09.23.09
EMV in the USA?
I have been asked repeatedly over the years if the USA would eventually move to the EMV standard. I wish I had a crystal ball when that happens, but I do not (it would be fun, as a consultant, to offer the crystal ball service to clients, at a premium of course 
. I have said repeatedly that EMV is likely to happen in the USA, but not soon, probably not the way it has been done up to now, and probably through contactless. And this is exactly what the Smart Card Alliance has concluded as well (see http://www.smartcardalliance.org/articles/2009/09/14/smart-card-alliance-says-end-to-end-encryption-is-not-enough-recommends-chip-and-dynamic-data-to-halt-card-fraud for the press release).
Why would EMV be required in the USA?
Fraud mitigation and risk reduction are the real answer. Many payment executives in the USA believe that there is no real fraud issue currently because fraud, as a % of transaction value, is not increasing. The problem is that, in absolute numbers, fraud is increasing. That problem will be compounded in time with fraud migrating from EMV countries to the USA. So American issuers and acquirers are likely to import much more fraud, my guess is within 3 to 5 years.
Risk reduction is another issue that is partly linked to fraud mitigation. Credit card debt in the USA is US$10,000 per household. Americans are quite adept at rolling debt into new accounts, keeping payments at a manageable level. But this is a huge industry issue. A lot of that debt is of sub-prime quality. There is a huge default risk as we have seen in the last year.
The combined effect is likely to be a prudent risk management strategy that, hopefully, will lead to a required technology update. The Smart Card Alliance’s position paper is a step in the right direction.