1. EMV and Other Credit Card Processing Changes
Bret Johnson Sr Director of Sales
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2. Chip-enabled EMV Cards
EMV® (Europay, MasterCard®, Visa®) is a global standard for secure and convenient payment using bank cards and the EMV payments infrastructure. EMV began in France in 1992
The use of EMV contact and contactless cards for secure payments offers multiple benefits:
A common certified standard for processing transactions ensures global interoperability
Better authentication of cardholder data than magnetic stripe cards
Fraud risks are minimized by authenticating during online transactions
Digital seal or signature stored in the card’s chip proves authenticity of the card for offline transactions
© 2013 Total System Services, Inc. ® Confidential and proprietary. All rights reserved worldwide.

3. EMV – Counterfeit Card Fraud Elimination
Intelligence on the card supports…
Card Authentication Method (CAM)
Verifies that the card is authentic; hasn’t been counterfeited
SDA, DDA, CDA
Cardholder Verification Method (CVM)
Verifies the individual using the card
Adjustable to all card acceptance environments
Online PIN – Verified at the host, just like today
Offline PIN – Verified by the card
Signature – Verified by the cashier
No CVM Required – Just like no-signature and tap-and-go today
The CVM can be affected by other transaction details (e.g. amount)
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4. Introduction to the AID and Application
VISA AID
MasterCard AID
American Express AID
Discover AID
Diners AID (International only)
AID: Application ID
Application: Underlying EMV application on the card
When an EMV terminal encounters an EMV card, it must determine the correct AID and associated application
It is the application on the card that knows how to behave with the terminal and construct the EMV transaction recognized by the Card Network and Card Issuer
Affects all “Acquirers” – merchants, merchant processors, ATM acquirers. What AIDs and how many will their devices recognize and support?
Affects all “Card Issuers” – What brands and networks do my cards belong to? What AIDs and how many do I need to load onto my cards? What AID/App is supported by my card brands/networks? How will I personalize and configure the card based on functionality I want to offer my cardholders?
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5. Example: U.S. Credit Card
First U.S. EMV Credit Cards
Credit Only Card
Single Brand
Single AID & Associated Application
Single AID and App supports both Domestic and International Credit
Example: VISA AID
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6. Current Mandates / Liability Shifts
Published U.S. EMV Mandates and Liability Shifts
EMV Deployment Milestones
Key Dates
Visa
MasterCard
Discover
American Express
Notes
PCI Audit Relief
October 2012 Y
October 2013
POS Acquirer / Processor Compliance
April 2013
Mandate for POS Acquirers
Maestro ATM Liability Shift
Inter-Regional Maestro Cards at U.S. ATMs
Visa ATM EMV Mandate
April 2015
U.S. Third Party ATM acquirer processors must be able to support EMV chip data for all Visa and/or PLUS branded products
POS Counterfeit Liability Shift (Excluding Fuel Dispensers)
October 2015
Liability shift for merchants excluding AFD
POS Lost or Stolen Liability Shift (Excluding Fuel Dispensers)
MasterCard ATM Liability Shift
October 2016
All MasterCard Branded Cards
Visa ATM Liability Shift
October 2017
Liability shift for all U.S. ATMs for all Visa and/or PLUS branded products
POS Counterfeit Liability Shift for Fuel Dispensers
Liability shift for AFD
POS Lost or Stolen Liability Shift for Fuel Dispensers
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7. Pymnts.com Interview Q & A
2. Many countries have already adopted EMV standards, but is EMV’s relevance shifting now that there are many ways to secure data transmitted during a payment?
EMV is not really about securing data, it is about authentication. Data on the transaction, generated by the chip, authenticates the card to the issuer, ensuring that it is not a counterfeit or "cloned" card. EMV transactions may also include a PIN, even for credit cards, which authenticates the cardholder to help prevent fraud through lost or stolen cards. EMV is still the best existing technology in use today to authenticate cards and cardholders.
Methods of securing data during transmission, such as encryption, help protect the sensitive credit card information, but do nothing to address authentication.
3. The countries that face EMV adoption now are living in a very different world than EMV’s initial adopters. What’s the significance of EMV in a world that’s moving to a cardless environment?
One of the major reasons for the initial adoption of EMV in Europe was to provide a way of authenticating cards and cardholders in offline environments when communications were unreliable or prohibitively expensive to authorize every transaction online.
© 2013 Total System Services, Inc. ® Confidential and proprietary. All rights reserved worldwide.

8. NFC and Mobile How does NFC relate to EMV?
Near Field Communication (NFC) is a complementary technology that EMV can utilize to enable contactless payments such as with mobile wallets. With the anticipated growth of NFC-enabled mobile devices for contactless payments and other applications, EMVCo has been active in defining the processes for supporting EMV mobile contactless payments.
Consumers and businesses can benefit from NFC in several ways:
Interactions are initiated by a simple tap of the device
NFC is flexible; it is suitable for a broad range of uses in different industries and environments
NFC technology follows universally implemented ISO, ECMA, and ETSI standards
Transmissions are short range
NFC works with current contactless cards and readers
All of the SE technology shown employs the same security and functional architecture of a payment application residing on millions of EMV cards today. Depending on the mobile device and payment model, the secure element may either be hosted in an embedded device, in a removable SIM/UICC or in a separate device (e.g. a microSD card).
For more information, visit
© 2013 Total System Services, Inc. ® Confidential and proprietary. All rights reserved worldwide.

9. Previous Frequently Asked Questions
1. Why are EMV credit and debit cards and EMV payment transactions secure?
EMV secures the payment transaction with enhanced functionality in three areas:
Card authentication, protecting against counterfeit cards.
Cardholder verification, authenticating the cardholder and protecting against lost and stolen cards.
Transaction authorization, using issuer-defined rules to authorize transactions.
EMV cards store payment information in a secure chip rather than a magnetic stripe; the personalization of EMV cards is done using issuer-specific keys. Unlike a magnetic stripe card, it is virtually impossible to create a counterfeit EMV card that can be used to conduct a EMV payment transaction successfully.
2. How does EMV address payments fraud?
First, the EMV card includes a secure microprocessor chip that can store information securely and perform cryptographic processing during a payment transaction
Second, in an EMV transaction, the card is authenticated as being genuine, the cardholder is verified (PIN or Signature), and the transaction includes dynamic data
Third, even if fraudsters are able to steal account data from chip transactions, this data cannot be used to create a fraudulent transaction in an EMV or magnetic stripe environment, since every EMV transaction carries dynamic data
Fourth, EMV methodology can also potentially address card-not-present (CNP) fraud, with cardholders using their EMV cards and individual readers to authenticate Internet transactions
© 2013 Total System Services, Inc. ® Confidential and proprietary. All rights reserved worldwide.

10. Will This Speed Up EMV Adoption?
The Target Breach
Will This Speed Up EMV Adoption?
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11. The answer is yes, but not for the reason you would probably think
The answer is yes, but not for the reason you would probably think. EMV would not have prevented the Target breach. It was caused by lack of network security. However, it did bring light to the problems of credit card data security in the US. There's general agreement that EMV alone would not have prevented the Target breach, in which thieves accessed data from as many as 110 million customer accounts. But EMV would have reduced the value of the information by making it almost impossible to clone the cards.
© 2013 Total System Services, Inc. ® Confidential and proprietary. All rights reserved worldwide.

12. Why is the US slow in implementing EMV?
One reason could be because of cost. Traditional magnetic stripe cards cost about $2.00, chip card can cost between $15-$20.
Another problem with improving card security is that new cards will require new readers, and that presents a big expense for merchants. Mag card readers typically cost about $20 in volume purchases while a chip reader costs about $100
© 2014 Total System Services, Inc.® All rights reserved worldwide.

13. More Information--
Canada started the EMV conversion in 2003 and is now about 85% complete.
Implementation cost in the US estimated to be about $6 billion, 75% will be borne by merchants (Target estimates their cost to be about $100 million)
There are 1.1 billion credit and debit cards in circulation, only 15 million chip cards issued in the US
© 2014 Total System Services, Inc.® All rights reserved worldwide.

14. More Information--
Canada started the EMV conversion in 2003 and is now about 85% complete.
Implementation cost in the US estimated to be about $6 billion, 75% will be borne by merchants (Target estimates their cost to be about $100 million)
There are 1.1 billion credit and debit cards in circulation, only 15 million chip cards issued in the US
© 2014 Total System Services, Inc.® All rights reserved worldwide.

15. If I spend the time and money to upgrade to chip accepting parking equipment, will I get lower interchange rates? While this is the case in Europe and Canada, at this time it does not appear that the card brands are going to do this in the US.
© 2014 Total System Services, Inc.® All rights reserved worldwide.

16. Does EMV replace PCI DSS
Does EMV replace PCI DSS? The answer is no, you will still need to do an annual assessment. PCI DSS is to try to prevent credit card data beaches. EMV is designed to prevent fraud.
© 2014 Total System Services, Inc.® All rights reserved worldwide.

17. What do you need to do now?
Speak to your equipment companies about their plans for EMV conversion
The reality is that parking is a low fraud risk and implementation of EMV may be slow in our industry Be aware, but these is no need to panic
© 2014 Total System Services, Inc.® All rights reserved worldwide.

18. Questions
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19. Visa Mastercard Settlement Dec 13, 2013
A federal judge gave Visa and MasterCard the go ahead on a $5.7 billion class action lawsuit to resolve merchant complaints regarding the swipes fees they are charged. There is a great deal of dissatisfaction from many retail organizations because the deal does nothing to reduce swipe fees or keep them from rising in the future.
© 2014 Total System Services, Inc.® All rights reserved worldwide.

20. The settlement does allow merchants to surcharge if customers use Visa or MasterCard. However, because of competition and all of the regulations regarding surcharging, few merchants are doing this.
© 2014 Total System Services, Inc.® All rights reserved worldwide.

21. Merchant Additional Fee Programs
January 2014
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22. Agenda Convenience Fees Special Payment Network Programs
Merchant Surcharging
Programs At-A-Glance
© 2013 Total System Services, Inc.® All rights reserved worldwide.

23. Merchant Surcharging
© 2013 Total System Services, Inc.® All rights reserved worldwide.

24. Merchant Surcharging No MCC restrictions.
Visa and MasterCard modified their rules effective January 27, 2013 to permit surcharging as part of a litigation settlement.
No MCC restrictions.
Permitted in all acceptance environments, provided merchant’s state permits surcharging.
Several states have laws prohibiting surcharges. Where laws conflict with Visa/MC rules, merchants should adhere to the law.
30 day advance notification / registration required.
Visa
MasterCard
Discover
Acquirer
Not permitted on debit or prepaid activity.
Variable or flat/fixed amount permitted; surcharge amount may not exceed 4% or the merchant’s average cost of acceptance, whichever is lower.
Must be included as a part of the total amount of the transaction at time of settlement. 24
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25. Merchant Surcharging (cont.)
Discover modified their Op Regs in Mar to include surcharge notification / registration & consumer disclosure criteria which aligns with that of V/MC.
If a merchant elects to surcharge, they must impose surcharge on ALL credit card transactions accepted, regardless of network.
Permitted at brand level or product level.
Permitted on non-U.S. issued credit cards accepted at a U.S. merchant; including U.S. territories.
Specific fields containing surcharge information must be supplied at the time of transaction and passed through acquirer to Visa and MC.
Must not be assessed by any third party. May only be assessed by the merchant that actually provides the goods or services to the cardholder.
Merchants must surcharge MC & Visa on the same terms and conditions as any equal or higher cost competitor that imposes limits on surcharging.
Surcharging practice disclosure required at point-of-entry and point-of-sale. Transaction receipt must contain a line item with the actual surcharge amount. 25
© 2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

26. Programs At-A-Glance
© 2013 Total System Services, Inc.® All rights reserved worldwide.

27. Special Payment Network Programs
Programs At-A-Glance
Convenience Fees
Special Payment Network Programs
Surcharging
No MCC restrictions
CNP environment only
Flat/fixed amount
Single transaction
Assessed by merchant of record
Assessed on all payment methods accepted
Restricted to specific government & education MCCs
May be assessed in any environment
Variable or flat/fixed amount
Separate transaction
Assessed by merchant of record OR 3rd party service provider
May be assessed on all cards
Registration required
No MCC restrictions
May be assessed in any environment
Variable or flat/fixed amount
Single transaction
Assessed by merchant of record
Must not be assessed on debit or prepaid activity
Registration required
Merchants are not permitted to apply more than one additional fee program to cardholders.
© 2013 Total System Services, Inc.® Proprietary. All rights reserved worldwide.

28. “No Signature” Programs August 2013
Payment Network Rules
“No Signature” Programs
August 2013
© 2012 Total System Services, Inc.® All rights reserved worldwide.

29. “No Signature” Program Rules
Program Names
MCC Eligibility
Transaction Criteria
Benefits
Resources
© 2012 Total System Services, Inc.® All rights reserved worldwide.

30. Program Names Visa MasterCard Discover American Express
Visa Easy Payment Service (VEPS)
MasterCard
Quick Payment Service (QPS)
Discover
“No Signature Required” (NSR) Program
American Express
“No Signature” Program
© 2012 Total System Services, Inc.® All rights reserved worldwide.

31. MCC Eligibility Visa MasterCard
98% of businesses eligible to accept Visa may participate. Merchants with the following 21 MCCs are ineligible to participate:
MasterCard
All merchant categories qualify, except quasi-cash, money transfer, direct marketing and gambling.
MCC
MCC Description
4829
Wire Transfer Money Orders
6011
Financial Institutions-Automated Cash Disbursements
5542
Automated Fuel Dispensers
6012
Financial Institutions-Merchandise Svcs
5960
Direct Marketing-Insurance Services
7995
Betting, incl. Lottery Tickets, Casino Gaming Chips, Off Track Betting & Wagers at Race Track
5962
Direct Mktg-Travel Related Arrangement Services
9405
Intra-Government Purchases (Gov. only)
5964
Direct Marketing-Catalog Merchants
9700
Int’l Automated Referral Service (Visa use only)
5965
Direct Marketing-Combination Catalog & Retail Merchants
9701
Visa Credential Server (Visa use only)
5966
Direct Mktg-Outbound Telemarketing Merchants
9702
GCAS Emergency Svcs (Visa use only)
5967
Direct Marketing-Inbound Telemarketing Merchants
9751
UK Supermarkets-Electronic Hot File
(Region use only)
5968
Direct Marketing-Continuity / Subscription Merchants
9752
UK Petrol Stations-Electronic Hot File
5969
Direct Marketing/Direct Marketers (NEC)
9950
Intra-Company Purchases
6010
Financial Institutions-Manual Cash Disbursements
© 2012 Total System Services, Inc.® All rights reserved worldwide.

32. MCC Eligibility (cont.)
Discover
All businesses eligible to accept Discover may participate, except merchants with the following MCCs:
American Express
All Industries eligible to accept American Express may participate, except High Risk merchants or merchants placed in Amex’s Fraud Full Recourse Program. Additionally, the following MCCs are excluded from the No Signature Program:
MCC
MCC Description
4829
Money Transfer – Non-Financial Institution
6531
Payment Service Provider – Money Transfer for a Purchase
6010
Member Financial Institution – Manual Cash Disbursements
6532
Payment Service Provider – Member Financial Institution Financial Institution Payment Transaction
6011
Member Financial Institution – Automated Cash Disbursements
6533
Payment Service Provider – Merchant Payment Transaction
6050
Quasi-Cash – Member Financial Institution
6534
Money Transfer – Member Financial Institution
6051
Quasi-Cash – Non-Financial Institution
7995
Betting (e.g., Lottery Tickets, OTB)
MCC
MCC Description
5542
Automated Fuel Dispensers
7375
Information Retrieval Services
5964
Direct Marketing – Catalog Merchants
7393
Protective Agencies & Security Services
© 2012 Total System Services, Inc.® All rights reserved worldwide.

33. Transaction Criteria Card Present environment Card-read
Authorization obtained
Transaction amounts:
Visa
MCC 5310 (Discount Stores) & 5411 (Grocery Stores & Supermarkets) - $50 & under
Unattended environment - $15 & under
All other eligible face-to-face environment MCCs - $25 & under
MasterCard
Face-to-face merchant-attended terminal transactions - $50 & under
Discover
$50 & under, including applicable taxes, gratuities & cash over
American Express
$50 & under
© 2012 Total System Services, Inc.® All rights reserved worldwide.

34. Benefits Faster transaction speed Cost-savings Chargeback protection
Cardholder does not need to sign transaction receipt.
Cost-savings
Cardholder does not have to be provided with a copy of the transaction receipt unless they request one.
Chargeback protection
On transactions that meet Visa VEPS criteria, chargeback protection exists on reason codes: Illegible Fulfillment (60), Transaction Not Recognized (75) and Fraud-Card Present Environment (81).
On transactions that meet MC QPS criteria, chargeback protection exists for fraud dispute reason codes: Requested/Required Information Illegible or Missing (4802) & No Cardholder Authorization (4837).
On transactions that meet Discover NSR criteria, chargeback protection exists for the merchant’s failure to obtain the cardholder’s signature.
On transactions that meet American Express No Signature criteria, chargeback protection exists for disputes based solely on the merchant’s failure to obtain the cardholder’s signature at the point of sale.
© 2012 Total System Services, Inc.® All rights reserved worldwide.

35. Resources
Additional information on certain payment network specific programs can be found as follows:
© 2012 Total System Services, Inc.® All rights reserved worldwide.