EMV Compliance
How committed are we in Canada to implementing the EMV standard? Very. Just look
at the numbers. EMV-compliant cards issued worldwide doubled in 2005, and Visa is
already offering two chip-based cards in Canada. Visa has stated that it expects
85 per cent of its transactions will be between chip based cards and terminals by
2010. Interac recently pledged its commitment to complying with the standard by
2010, and announced plans with Visa for a joint chip card trial in Kitchener-Waterloo
starting in Fall 2007. For their part, processors and banks are anticipating EMV:
"It is not a matter of if, but when EMV will become a predominant standard in Canada",
said Jamal Awad of Global Payments Canada. "We expect this standard to take hold
in Canada by 2010, as a common platform for processing payments, as well as the
enhanced security it offers", said Awad. Desjardins Banking Group similarly expects
to become EMV compliant very soon. In April, the company announced that it would
"issue chip-enabled debit and credit cards from 2008 onwards, although its chip
card processing infrastructure will ready by end-2006". Bank of Montreal announced
in 2005 that its EMV infrastructure will be launched and trialed in 2007.
EMV Will Spell the End of Datapac
While EMV carries with it the benefits of enhanced security and global interoperability,
it cannot be accommodated by the legacy Datapac infrastructure Canadian merchants
rely on to transport transactions today. A Datapac 3201 connection can handle up
to 8 locations, running at 1200 bps, generally handling transaction packets under
256 bytes in length. Because EMV encrypts the entire packet rather than just a portion,
it requires larger packet sizes of 750 bytes. The engineering cost to alter this
aging infrastructure is simply not worth the investment. Beyond bandwidth, EMV presents
additional challenges to the existing infrastructure. Terminals and other point-of-sale
equipment must be EMV compliant, and processors are already shipping out new EMV
terminals as part of the usual replacement cycle. As early as 2004, Desjardins had
ordered 30,000 EMV compliant terminals, and NSI has been rolling out EMV terminals since
the summer of 2005.
Migrating to IP Based Processing
The key to readiness for both the discontinuation of Datapac and the arrival of
EMV is migrating from Datapac 3201 onto IP networks, which do not have packet size
or bandwidth limitations, and offer cost savings along with faster transactions.
The easiest, most cost effective route for merchants may well be the solutions offered
by Precidia Technologies. Featuring both dial and serial ports, the devices migrate
existing terminals, ATMs and other store equipment onto a broadband IP network.
For merchants in a hurry for a Datapac replacement solution, they deploy easily,
thanks to an internet-based configuration manager called NetVu, which preconfigures
the device before shipping. With SSL encryption, EMV compatibility and bandwidth
to spare, the merchant will be ready when EMV takes hold. As for EMV, the 2010 deadline
is closer than you may think. Anyone who has been involved in large scale equipment
or system changes in the payments industry will tell of the many months required
to research, test, pilot and implement. Merchants would be wise to take their cues
from the banks and processors, already ordering and shipping EMV terminals, and
the card issuers who are well on track issuing EMV compliant smart cards.