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VeriFone exec: NFC and EMV payments need to co-exist

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January 15, 2013

VeriFone offers merchant solutions for mobile payments

NEW YORK – A VeriFone executive at the NRF 102nd Annual Convention & Expo said that EMV payments and near-field communication technology will need to co-exist as a payment method for brands and merchants in the future.

During the “Conversational EMV: Learn to Speak EMV in 45 minutes,” the executive presented a quick overview of EMV technology and what it means for merchants. The session also covered how the payment space will evolve in the coming years.

“It is incorrect to look at it as a replacement technology,” said Erik Vlugt, vice president of product marketing at VeriFone, San Jose, CA.

“Both of them will co-exist – fundamentally NFC is a different way to present your card through a tap versus a swipe,” he said.

Pay on mobile
EMV technology is a joint venture between Europay, MasterCard and Visa.

There are three types of authentication for EVM payments that involve a chip card – a signature, a PIN number or nothing. Merchants and retailers need to expect for their payment terminals to accept all three, per Mr. Vlugt.

Contactless and mobile payments require a fundamentally different action than consumers are familiar with.

Essentially, NFC lets consumers tap their mobile devices against something, which triggers a payment. From there, merchants and retailers can layer things such as loyalty, coupons or offers on top of the technology.

Many marketers consider going NFC-only and skip EMV, per Mr. Vlugt. However, since both are emerging technologies, it is important to include both.

The underpinnings of NFC are from EMV, per Mr. Vlugt. This means that the communication between the phone and a point-of-sale terminal is an EMV transaction.

Both EMV and NFC rely on the same level of security.

“Clearly not everyone is going to be paying with a phone in the next ten years, so we need both EMV and NFC –type scenarios,” Mr. Vlugt said.

Evolved shopping
EMV technology has been around for a while.

Fraud is one of the biggest differences between a magnetic-strip card and a chip card. For example, the executive said that it only takes seconds to counterfeit a magnetic-strip card. Chip cards on the other hand are harder to duplicate.

However, the United States is one of the last countries that is prepared to transition to EMV, per Mr. Vlugt.

Retailers such as Walmart have steadily been testing the technology as a push to get standardization in the U.S.

Merchants also need to be ready to update their software regularly because of the standards.

“Don’t make the mistake of treating EMV upgrade as you would have any other upgrade in the past,” Mr. Vlugt said.

“There will be frequent changes – certainly talking once a year if you take all the NFC mobile wallets and EMV together – you will be making updates to your software fairly frequently,” he said.

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York

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