Still Confused about EMV and Online Versus Offline? Read This…

Over a year ago, I wrote about the challenges facing the US payments market as we migrate to EMV with regard to offline PIN validation and transaction authorization. A lot has happened in the last 15 months. Clearly, online PIN authentication and online transaction authorization will be predominantly used in the U.S., given that the online infrastructure is so pervasive in the U.S. today.
So why even consider offline authorization?
The U.S. has a wide variety of merchants. If you consider those taking cards as payments today for things like mass transit, vending machines and parking meters, I can easily imagine certain categories of merchants wanting offline transaction with no CVM (no PIN or signature required) for low value – low risk payments. Where rapid checkout is essential, offline authorization of contact, contactless and mobile EMV makes sense.
What about Offline PIN authentication?
Offline PIN authentication is a whole different story. For issuers, producing a card that allows offline PIN authentication introduces complexity that not all are ready to handle. With EMV, issuers have to take into account that PIN information (not the actual PIN) must be kept in sync among the card, their transaction processing systems and their card management system if they will support offline PIN. For example, if a cardholder is allowed to establish or change their PIN in an offline environment, there is a chance that PIN information gets out of sync between systems that creates problems for the consumer.
So where does this leave us?
In the end, offline authorization of EMV transactions will be governed by rules and guidelines set forth by the card brands, card networks and the amount of risk any individual merchant/issuer wants to accept. I do foresee offline authorization with No-CVM as a viable U.S. EMV deployment option. Use of offline authorization AND offline PIN authentication will be few (if any) in the immediate future within the U.S.
We also need to keep in mind that not all EMV payment instruments will be created equal. There may be proprietary – closed loop specialty cards/payment instruments issued by financial institutions and other parties that will be different from standard debit and credit cards.
EMV is all about the flexibility to create secure and innovative payment instruments. As issuers take advantage of these flexibilities, and EMV-compatible contactless and mobile payment instruments are deployed, we will continue to see innovation and evolution in this space.
Related Blog Posts
An Executive’s Guide to the Top Five Fraud KPIs
Key performance indicators (KPIs) are a commonly used term across many industries. For KPIs to be a valuable way to measure success, they need to be properly defined, capable of being adjusted and connected to one another. When it comes to use of KPIs in fraud management, this is particularly important. With this in mind, let’s take a closer look at the different fraud KPIs, along with how they should ideally interact.
Real-Time Payments: A Mix of Simple, Smart and Secure Will Be Crucial for Further Adoption
In our global payments report, we predicted that 2020 would be Prime Time for Real-Time. And that was before the COVID-19 pandemic accelerated the adoption of real-time and digital payments around the world, which quickly became a necessity in keeping citizens safe and businesses afloat. During the recent ACI Edge Virtual event for banks and intermediaries, we discussed the challenges of real-time adoption with some of the industry’s leading experts. I caught up after the event with Lisa Neary, head of payments at Co-op Bank UK, Ian Gausden, head of real-time payments at Mastercard, Vincent Brennan, head of group payments and business continuity management at Bank of Ireland and Enrico Albertelli, head of payments and digital banking solutions at Nexi.
Merchants Don’t Need a Payments Gateway, They Need a Payments Hub
The term “payments gateway” over-simplifies what it takes to process a payment. The terminology comes from the early days of online payment processing, but has now entered the vernacular for all aspects of merchant payments, including online, mobile and in-store.
How to Recession-Proof Your Retail Business in 2021
2020 has been a challenging year for retailers, many of which who were — understandably — unprepared to deal with the pandemic. With millions of people in the U.K. in lockdown, consumers and businesses have had to change the way they work and live, and the way they shop and pay.
What Will the World of Post-Pandemic Payments Look Like? [Dave Birch Q&A]
Dave Birch is a leading global authority on payments and digital identity, who is no stranger to predicting what the future of financial services has in store. After delivering the keynote presentation at our recent ACI Edge Virtual: Banks & Intermediaries, we gathered some insights from Dave on what the world of payments could look like, post pandemic.
12 Ways Americans Changed How They Pay in 2020
ACI experts recently shared their predictions and industry expectations for billing and payments in 2021 and beyond. As we close out 2020, let us look back at just how much billing and payments have changed this year:
Comment DXC Technology et ACI Worldwide adressent-ils les enjeux règlementaires en Europe?
En Juillet dernier, Le conseil de gouvernance de l’ECB a pris une décision importante concernant le futur des paiements en Europe. En demandant aux PSP participants au système TARGET2 de se connecter à TIPS avant Novembre 2021. Dans le même temps les ACH domestiques devront effectuer le transfert de leurs comptes techniques vers TIPS.
Adding Fuel to the Fraud Fire
Payments fraud is a widespread and difficult issue in the fuel segment. Fuel dispensers are a common target for certain types of fraud – and fuel merchants often lack visibility into the level and impact of that fraud.
EBAday 2020: Reaping the Full Potential of Real-Time Payments
Real-time payments are growing rapidly worldwide. In fact, according to ACI’s Prime Time for Real-Time report, more than half a trillion real-time payments transactions will be processed over the next five years. ACI’s Dean Wallace, director solution leadership, Real-Time and Digital, recently took part in an EBAday panel to discuss what businesses need from banks to reap the full potential of real-time payments, how fintechs can assist and how collaboration can be advanced on a global scale. I caught up with Dean to discuss the latest insights.
The Role of Regulation, Collaboration and Competition in Pushing Forward Payments Modernization
While geographic regions have taken their own approaches to payments modernization, they all face some common challenges – a principal one being adoption of real-time payments, which is central to successful payments modernization projects. I spoke to some of the top minds tackling real-time payments adoption in key markets, including the U.S., Canada and the U.K.