International shopping is nothing new. Thanks to e-commerce, you can buy whatever you need with a simple credit card — even when the vendor is on the other side of the world.
It's also possible to use wire transfers to send and receive money across vast distances. When you physically go abroad, traveler’s checks are relatively easy to use, and most bank cards work at foreign ATMs.
Given all of these options, what effect (if any) could a latecomer like EMV cards have on international spending habits?
How EMVs Make Shopping Abroad Even Easier
Despite many older and more established international payment options, EMVs have gained tremendous traction in recent years.
There isn't anything inherent about EMVs that would automatically make them a "universal" payment option. If the U.S. dollar was mandatory worldwide, greenbacks could just as easily become the default standard. The same would be true if PayPal was required in every major market.
Yet, EMVs are quickly becoming a universal option — mostly as a deliberate decision by the credit card industry and financial regulators.
Let's explore why that is:
- Because EMVs are still credit cards, they work well for e-commerce shopping.
- Currency conversions aren't an issue — unlike with traveler's checks.
- Although EMVs are designed for chip-enabled terminals, they work with legacy readers as well.
- Some cards even allow you to withdraw cash at ATM machines.
Right off the bat, EMVs are on par with most other international payment options. However, they have a huge advantage over traditional credit cards, cash and checks — namely security.
In order to initiate an in-store purchase, the chip-enabled card must be physically present. It's very difficult to clone EMVs, making them less prone to fraud than their magnetic stripe counterparts.
Completing a transaction requires one additional step:
- Customers must sign their names (when using chip-and-signature EMVs).
- Customers must enter a personal identification number (when using chip-and-PIN plastic).
As a result of these security verification steps, EMVs are favored within the financial industry.
In most parts of the world, these chip-enabled cards are already mandatory — customers must use them and merchants must accept them. Thus, as many U.S. travelers discover when abroad, it is next to impossible to initiate or complete a transaction if they don't have EMVs in their wallets.
Thanks to new liability rules that go into effect toward the end of 2015, EMVs will soon become the official credit card standard in the U.S. as well. The rollout has been (and will continue to be) slower than expected. Though even if none of your stateside customers use EMVs, nearly all of your international ones will.
Once America’s transition is complete, EMV credit cards will become the closest thing to a universal payment option that the global community has ever seen. As a merchant, you should upgrade your credit card processing to accept the new standard.
To learn how we can help, contact our payment security team today.