Two years after the EMV deadline for U.S. merchants, Auriemma Consulting Group, a boutique management consulting firm, has identified six notable EMV trends:

1. Counterfeit fraud claims have declined for five consecutive quarters and are down 34 percent from their peak in early 2016.
2. EMV helped trigger a shift from fake cards to fake identities. Synthetic identity fraud was responsible for up to 20 percent of credit losses in 2016, according to Auriemma.
3. While chip fallback volume is low — less than 2 percent of transactions — fraud associated with fallback is on the rise, accounting for 24 percent of total counterfeit fraud and 43 percent of lost-and-stolen fraud in Q2.
4. The decision not to use chip and PIN in the U.S. has contributed to a 25 percent increase in lost-and-stolen fraud claims since the liability shift, which costs major card issuers $50 million annually, on average.
5. The EMV user experience has been panned as slow and confusing, and has triggered calls for contactless and mobile payments. More than half of cardholders believe mobile payments are faster than chip transactions.
6. Knowledge-based authentication is considered increasingly unreliable; more than two-thirds of card issuers now use randomly generated passwords sent to a registered mobile number or email address to validate online and mobile transactions, and many see line and voice biometrics as the next step.

The 2017 Debit Issuer Study commission by PULSE has shown a decrease in debit fraud loss after US financial institutions increase issuance of chip debit cards in 2016.

From 2015, an estimated 80% of US debit cards have been converted to chip cards. The study found that fraud loss rates dropped by 28% in 2016 compared to the previous year. In spite of these improvements, fraud continues to be a major issue for financial institutions which lost an estimated USD 900 million to debit card fraud in 2016.

The study’s authors say that a number of measures like conversion to chip debit cards, greater use of tokenization in mobile commerce and continued investment in fraud-mitigation solutions have reduced debit card fraud losses. 

Mobile wallets see increased enrolment but low usage

Besides, debit fraud, the study also focuses on mobile wallets, a sector which has seen increased enrolment, but usage still remains low. Acceptance for debit cards on mobile wallets has increased and, in 2017, three out of four issuers support such services. Apple Pay is the most popular mobile wallet in the US and enrolment has increased. However, in spite of this boost, usage of debit cards in mobile wallets account for only about one-quarter of 1% of US debit transactions.

US debit card transactions have increased

Debit card usage grew in 2016, driven by an increase in both the overall card base and transactions per active card. Study findings show that debit transactions have increased by 7% in 2016 and the number of issued debit cards increased by 1%.

The 2017 Debit Issuer Study is the 12th installment in the study series, commissioned by PULSE and conducted by Oliver Wyman, an independent management consulting firm. Fifty financial institutions – including large banks, credit unions and community banks – participated in the study.

(Source: www.thepaypers.com)

Within the top-10 markets for non-cash transactions volumes, China climbed to third place with 38.1 billion transactions, surpassing 2014’s number three market Brazil, which fell to fourth place with 29.0 billion transactions (Figure 1.3).

China’s rise was fuelled by its phenomenal growth rate of 63.2%, a result of higher adoption of digital payments initiatives in rural areas and a shift from cash to mobile payments among payment services users. China’s e-commerce market is expected to record a compound annual growth rate (CAGR) of 23% through 2020.

Multiple factors will fuel this growth, including expansion of online retail categories such as fast-moving consumer goods facilitated by upgraded logistics infrastructure, and new rural online shoppers.

The payment channels of the country’s top two e-commerce companies, Alibaba Group’s Alipay and JD.com’s WeChat, have fuelled the phenomenal growth of mobile and online sales. The 2016 introduction of regulations to curb cash deposits through alternate payment instruments by the People’s Bank of China is expected to stabilise the growth in coming years.

Another ranking change occurred in the eighth position as Russia, with 30.0% growth and total transactions of 12.7 billion, overtook Canada, which recorded 12.0 billion transactions on growth of 4.1%. Russia’s climb was due to improved financial literacy and card- acceptance infrastructure.

Asia Pacific markets China, South Korea, Japan, and Australia are all among the top-10 non-cash markets. South Korea grew at 11.9% with total transactions of 21.1 billion, to become the only country in the top 10 — aside from China and Russia — to achieve double-digit growth.

This was due to the growing popularity of cards and FinTech payments offerings. Because of India’s November 2016 demonetization efforts, the market witnessed increased volume of digital payments and expansion of e-payments infrastructure (POS terminals increased from 1.5 million to 2.7 million between December 2016 – March 201710, 40% of which are mPOS terminals).

To increase digital payment adoption, India has announced an aggressive target of 25 billion non-cash transactions for 2017-18, with mobile, government benefits/subsidy transfer, and micro (including tollway and public transport) payments being priorities.

Further growth is expected in South Korea as cashless initiatives such as the T-money card are rolled out for public transportation payments. Australia experienced impressive 9.9% growth in 2015 across all payment instruments as contactless payments volumes grew along with direct-entry payments.

An electronic payment instrument, direct-entry payments comprise direct-debit and direct-credit transactions and are used by businesses to credit employees’ accounts with salary payments and by government departments for regular payments. In recent years, direct credit is also being used to provide widespread access to internet- based (sometimes called ‘Pay Anyone’) and phone- based banking services. Businesses initiating direct credits are known as Credit Users.

The United States remains by far the top non-cash market, with 135.4 billion transactions, almost double that of the Eurozone, at number two, with 70.5 billion transactions.

(Source: http://www.paymentscardsandmobile.com/china-surpasses-brazil-rank-third-among-non-cash-markets-us-still-tops-league/)

In an unscheduled televised appearance on Nov. 8, Indian Prime Minister Narendra Modi announced that 500 and 1,000 rupee notes (which accounted for 86 percent of all currency) would be removed from circulation overnight.

The purpose of this demonetization policy was to promote fiscal transparency, modernize a complex, cash-centric economy and empower social inclusion.

As one would suppose, the impact of such a radical, unexpected approach was immediate and profound. Cash accounted for 90 percent of all transactions, so the early days of demonetized India were defined by queues at ATMs and an economically damaging liquidity crisis. 

With liquidity stabilizing and a more certain picture emerging, however, it is clear that identity, mobile and payments are increasingly converging to meet the challenges of the Indian digital economy.

The Aadhaar program

One of the fundamental pillars supporting demonetization in India is the Aadhaar program.

Aadhaar is a 12-digit unique identification number, which contains biometric and demographic data. Uptake has been extraordinary, with 99 percent of Indians age 18 and older having enrolled as of January 2017, making it by far the world’s most advanced biometric identification scheme. 

The importance of Aadhaar in India’s brave new digital economy cannot be underestimated. This is because it can be used as the sole means of identity verification when accessing financial services, removing the key barrier for India’s unbanked population.

Already, more than 270 million bank accounts have been opened using Aadhaar. 

Mobile infrastructure

This wider and simplified access to financial services is coupled with an increasingly advanced mobile infrastructure.

India boasts the globe’s highest mobile per capita rate, and it will lead the world in smartphone adoption by 2020. Additionally, mobile data use will increase fivefold by 2021.

Consequently, the Indian mobile wallet market is set for 148 percent growth between 2017-22, accounting for $4.4 billion in transactions.

Indeed, we are already seeing considerable innovation across mobile payments and the emergence of a sophisticated mobile payments infrastructure.

For example, the National Payments Corporation of India — an umbrella institution for all retail payment systems designed to facilitate affordable payment mechanisms in the country — has developed its Unified Payment Interface platform. UPI is a payments application that enables users to transfer and transact using just a mobile number, dedicated UPI address or Aadhaar ID.

We also expect several HCE-based mobile wallet solutions to emerge as a quick and cost-effective means of delivering mobile payment services.

In the absence of hardware security, however, the security of cardholder data is integral to ensuring consumer confidence and driving adoption. Compliance with industry standards such as PCI DSS, therefore, is key.

In parallel, the strategic and commercial importance of the Indian market means the OEM “Pay” platforms will undoubtedly have a role to play. Samsung Pay has launched already, and we can surely expect similar announcements from the other technology giants.

POS enablement 

The demonetization process, in parallel with the ongoing EMV migration, means that the merchant community is embarking on the huge task of upgrading the acceptance infrastructure nationwide.

For India’s terminal manufacturers, this expanding market is an unprecedented opportunity. But they must move quickly. 

Tax exemptions for domestic manufacturers are providing an incentive for entry into this increasingly lucrative space, and governmental regulation to relax certification requirements for imported POS terminals will foster further competition from overseas.

Accelerating time to market is key to meeting demand. Manufacturers and developers may therefore want to work with local partners to streamline the certification process for their solutions.

Getting to the next level 

Let us be clear. Demonetization in India is a policy of extraordinary scope and ambition, combining advanced solutions across identity, mobile and payments to revolutionize commerce and financial services across the nation.

It is imperative, therefore, that local players upgrade their knowledge and work with the right partners to assess and analyze the changing landscape to enable them to make the right decisions swiftly, now and in the future.

(Source: https://www.atmmarketplace.com/articles/the-3-things-india-needs-to-go-cashless/)

Visa says it will support of the new global QR Code Payment Specifications from EMVCo, the global technical body that manages the EMV Specifications.

The specifications cover consumer-presented and merchant-presented QR code payment use cases for digital payment acceptance. QR codes are two-dimensional machine-readable barcodes, used to facilitate mobile payments at the point-of-sale.

Visa and the other EMVCo Members worked to develop these new globally interoperable EMV specifications. Visa has already successfully enabled the merchant-presented QR technology in 15 countries around the world, with India, Kenya and Nigeria currently live in mark“We’ve already seen tremendous progress towards adoption of standardized, interoperable QR code payment systems in the developing world,” says Sam Shrauger, SVP, Digital Products, Visa. “We are working with governments and central banks in countries like India to develop and implement QR code payment solutions that provide the convenience and security that are synonymous with Visa and help the journey toward a cashless future.”

Easy Implementation for Merchants

Visa has enabled the growth of merchant-presented QR code payment around the world with its mobile payments solution, mVisa.

mVisa allows consumers to pay for goods and services by scanning a QR code on a smart phone or entering a merchant number into their feature phones. Payment goes straight from the consumer’s Visa account into the merchant’s account and provides real-time notification to both parties.

mVisa is completely interoperable, meaning that the consumer and the merchant do not need to be customers of the same bank. This brings the same convenience, security and reliability provided by the trusted Visa brand.

QR Code Payments Driving a Cashless Future

As digital payments help continue a shift toward a cashless future, this new global specification is an important step that promotes interoperability and standardizes the fast growing ecosystem of QR code payments across the world. Already, 33 banks and more than 328,000 merchants across India, Kenya and Nigeria have adopted the interoperable standards as they accelerate their QR code digital payment programs.

“mVisa enables successful completion of the transaction independent of the mobile operator service on both the consumer and the merchant’s phone, and the consumers and merchant’s banks,” continues Shrauger. “This addresses a major challenge with mobile money programs, and lets consumers and merchants choose their own bank or mobile operator.”

Reserve Bank of India has encouraged the adoption of standardized QR code payment to provide access to low-cost, secure digital payments to millions of consumers and merchants. Working with our partners, Visa is converting both everyday and recurring cash purchases to digital payments through direct integrations with supermarket chains and large utility billers.

By presenting dynamic QR codes to consumers that provide a seamless payment experience, billers such as Tata Sky, Idea Cellular, Reliance Energy, Mahanagar Gas, as well as Pizza Hut and supermarket chains Nakumatt, Spar, and Zucchini, are bringing benefits of digital payments to millions of potential customers.

Visa intends to replicate this success in 12 other countries where mVisa has been enabled: Cambodia, Egypt, Ghana, Indonesia, Kazakhstan, Malaysia, Pakistan, Rwanda, Tanzania, Thailand, Uganda and Vietnam.

– PaymentsCards&Mobile –