By Glen Sarvady
Maybe it was the cold medication talking. I was multi-tasking one recent morning- reading payments headlines online, listening to political turmoil on the radio, and sneezing for about the fifth day straight. Suddenly I saw the connection: Obamacare and the US EMV migration to chip-based debit and credit cards have traveled very similar paths.
Remember those lists of eerie coincidences linking the Lincoln and Kennedy assassinations? Consider the following about EMV and the Affordable Care Act (or ACA, better known as Obamacare):
- The United States was the last of the developed western economies to pursue both chip card security and government-driven access to health care. In both cases other countries openly wondered what took us so long.
- Both initiatives moved an important but background topic to the forefront of everyday conversation. Before 2016 you’d be hard pressed to find even payments geeks discussing card processing times at the point of sale. Last year they became fodder for internet memes and a Cosmopolitan feature.
- Neither solution was ever meant to be a cure-all. The Obama administration readily acknowledged the ACA was a Version 1.0 starting point ripe for ongoing improvement. Payments professionals were aware that EMV addressed only specific types of fraud (counterfeit cards, brick and mortar transactions) and that further advancements were needed to combat the growing scourge of online and card not present schemes.
- Suddenly every operational flaw was pinned on these twin endeavors, no matter how tenuous the connection. Spiraling health care costs have been a headline topic since the 1980s, but poll the public today and many recall everything running just fine before Obamacare. Last fall the receipt printer malfunctioned during my checkout at a neighborhood pharmacy. The clerk’s immediate reaction was to curse “those damn chip terminals.”
- Both have generated backlogs, real or imagined. A few years back one of my friends endured a 45 minute wait in a doctor’s examination room. When the nurse finally entered, her first words were to blame the delay on Obamacare- and this was before the ACA’s provisions had gone into effect! Those much-feared long department store checkout lines when EMV rolled out during the 2015 holiday shopping season never materialized- nor did the ACA’s “Death Panels,” to my knowledge. However, retailers did find themselves ensnared in certification queues as testing resources were strained by the wave of companies rushing to activate chip terminals just before the cutover date.
- In neither case have naysayers offered a feasible alternative, even as they acknowledged the status quo was unacceptable. Let’s take this analogy a step further- some retailers complained the chip card transition didn’t go far enough, arguing that all debit transactions should be routed through PIN networks as is the practice in other countries. Compare this group to the wing of the Democratic Party frustrated that the ACA stopped short of implementing a single payer system. Note that on both fronts, the opposing camp played the “consumer choice” card.
- Kennedy once went to the theater and attempted to buy tickets with a credit card belonging to Lincoln- wait, I’m mixing my stories…
So what can we make of these similarities? There’s no reason to expect a repeal of EMV, with or without replacement. Even as the players wage battle on current EMV provisions, this shouldn’t preclude enhancement efforts. In thwarting major categories of point of sale fraud, chip card security has prompted a notable shift to the next “soft underbelly” of online and card not present fraud. All parties have strong incentive to craft a breakthrough to combat this wave, independent of their squabbles over existing ground rules.
What’s clear is that no highly visible attempt to upend the status quo is likely to go unpunished, regardless of its intentions. But hey, nobody knew that retooling an entire payment system would be so hard.