Washington, D.C. – Yesterday, the House Small Business Committee held a hearing on EMV: “The EMV Deadline and What It Means for Small Businesses.” The witnesses present faced a number of tough questions about the EMV transition, including the cost and timeframe of the migration and their institutions’ commitment to reducing fraud with the shift. Witnesses included Stephanie Ericksen, vice president of risk products at Visa; Scott Talbott, senior vice president, government affairs at the Electronic Transactions Association; Paul Weston, president and CEO of TCM Bank (on behalf of the Independent Community Bankers of America); and Jan Roche, president and CEO of State Department Credit Union (on behalf of the National Association of Federal Credit Unions). No retail witnesses testified.
Chairman Chabot (OH-01) acknowledged in his opening statement “serious concerns” about the shift to EMV, including its cost to retailers and “how much this actually does for security.” He also questioned Visa’s Eriksen about whether the United States could and should learn from other countries’ implementation of chip and PIN—as opposed to just chip—and the proven fraud-prevention benefits of that technology.
Ranking Member Velazquez (NY-07) pressed Visa on whether any reduction in fraud achieved with EMV would be met with lower interchange fees, since the card companies often justify high fees as necessary to pay for the cost of fraud. When asked specifically whether Visa would commit to lowering swipe fees if fraud declines, Ericksen dodged the question and instead claimed that the fees are “competitive” and are set to attract business from both issuing banks and merchants. To that, an incredulous Rep. Velazquez responded, "I can't help but laugh."
Other members of the Committee questioned panelists on why it took so long to introduce EMV technology in the U.S. market, challenged the reasonableness of the October 1, 2015 deadline and the cost of the transition to retailers, and explored other obstacles to implementation facing merchants. Additionally, a fair amount of attention was paid to the potential migration of fraud from in-store to online transactions, given that chip without PIN does not protect against that type of fraud.
As expected, the panelists touted the security benefits of EMV without PIN—emphasizing over and over the potential for reducing card counterfeiting fraud. NAFCU’s representative went so far as to say that requiring PIN with EMV transactions would not substantially improve security.
When asked by Rep. Takai (HI-01) if retailers have the option of requiring PIN to reduce fraudulent transactions, Visa’s Ericksen responded that Visa supports “PIN, signature, and no authentication,” and Visa gives retailers the “flexibility” to invest in all of these options.
The Committee plans to have a retailer-only hearing on the same topic later this month.