There is a giant disconnect in the U.S. Payments market that is going largely unnoticed. The parties involved seem to be talking past each other at a fairly crucial time.
Somebody has to say something.
The incongruity has to do with processor certifications, in particular those that involve Near Field Communication, or “NFC”.
Sounds boring, but it could turn out to be really important. Here’s why:
NFC is the technology that’s used in the “contactless” variant of EMV. It powers programs like Apple Pay, Google Pay and those tap-and-go cards that are now so heavily advertised by Visa. Everyone, it seems, wants NFC to take off like a rocket ship.
What most people don’t know, however, is that NFC certifications can be four times as messy as those of contact chip cards.
That’s because, way-back-when, Visa, MasterCard, American Express and Discover thought that they, alone, would compete for tap-and-go payments.
Each card brand produced its own specification for an NFC “kernel”, the root software that enables card readers to conduct NFC transactions. The four kernels vary in certain respects and must each be thoroughly tested during a certification with an authorization processor.
The experience can be excruciating.
Right now, only a few of the industry’s worker bees are even aware of this mess. Most are too busy just trying to get insert-type card readers to work.
Soon, though, they will catch wind of it.
As tap-and-go cards and Apple Pay popularize, the reality of a mass update will set in among the technical people who make payments work at merchant locations.
Their heads will explode.
Lopping a 4X workpile on to people who are already buckling under the weight of complexity will never succeed. It will take too long and the market will speed toward product substitution.
Instead, card brands, processors and their tech providers should be working together to reshape EMV-NFC certifications for the modern day.
Here are a few examples of what can be done:
- Expand the Entry Point specification and create a common NFC kernel for all payment brands. It worked for contact, so why not for contactless?
- Adopt a “component approach” to certification just like the PCI Council did for its Validated P2PE Solutions. This would allow components like terminal hardware, payment application software and gateway hosts to be combined interchangeably without having to re-certify them as a group.
- Enable processors to centralize certification documentation and results. The sharing of paperwork, alone, could create material efficiency.
Thankfully, this kind of work is underway in a few pockets of the U.S. merchant acquiring community. The key to success, though, will be coalescing the efforts before it’s too late.
Much depends on the personalities involved.
Organizations that govern EMV-NFC certifications are heavily populated with rules purists whose formative experiences came in countries where slow banks controlled the entire transaction chain. Now, that same body floats like an iceberg on a direct collision course with a freewheeling U.S. market where creative non-banks stir up constant change in the name of innovation.
Something’s gotta give: either the iceberg melts or the ship changes course.
RevChip was instrumental in the adoption of the first U.S. EMV enhancement, Quick Chip. The company will remain equally proactive in the ramp-up of NFC payments, smartphone wallets and the value-added services that accompany them.
RevChip is the most comprehensive and affordable EMV and Apple Pay software built for the U.S. market. It connects to major processors without a transaction fee and runs equally on Verifone and Ingenico devices. Using RevChip, merchants eliminate card data from their systems and shrink the burdens of PCI. The RevChip SDK provides POS developers with a quick and thorough integration without the hassles of middleware.
To learn more about how RevChip solves for EMV and Apple Pay, download our POS Developer Guide or reach us at (800)560-0415.