INTRODUCTIONTO EMV

01

WHATIS EMV

EMV is a global standard for credit and debit card processing designed to replace magnetic stripe cards. Also referred to as chip and PIN or chip and signature, this smart chip technology consists of a microprocessor embedded into payment cards and smart devices such as mobile phones.

02

THE4 W’S

OFEMV

WhatEMV refers to the global specifications that ensure interoperability of chip cards, POS terminals and ATMs for chip based transactions. Originally, EMV referred to the founding organizations from 1994—Europay, MasterCard and Visa—today the EMV trademark is owned by all of the equity owners of EMVCo: American Express, JCB, Discover, MasterCard, UnionPay, and Visa.

WhenMany parts of the world have already implemented EMV and seen considerable reduction of fraud at the point of sale. The U.S. is now in the process of migrating to EMV and the card brands are making a push for it by instituting deadlines including the fraud liability shift of October 2015.

WhyEMV provides better protection from fraudulent activity such as skimming and the creation of counterfeit cards. In parts of the world where EMV has been implemented, there has been a significant reduction in incidents of fraud at the point of sale.

WhoThe players affected by EMV include the card issuers, consumers and merchants.

Issuers will need to ensure their customers are equipped with EMV cards and know how to use them.Cardholders will need to adapt to a new way of paying via contact or contactless EMV chip technology.Merchants will need to upgrade their POS terminals to be able to process EMV cards and understand how they work.

03

WHAT MAKES EMV MORE

SECURE?

Cardholder data is more secure on a chip‐embedded card that utilizes dynamic authentication, than on a static mag‐stripe card. With EMV, both the terminal and the card play important roles in the authentication process which is not the case when using magnetic stripe technology.

According to a recent study, U.S. credit card fraud is now a whopping 10 basis points, a 100% increase from just seven years ago, thanks to increasing fraud at the point of sale (POS).

Criminals are targeting the U.S. because they are still relying on the less secure magnetic stripe. This is why card issuers are addressing the need for EMV-based transactions. From a security

standpoint, the majority of fraudulent activity can be contained by issuing chip cards.

DID YOU KNOW…

MAGNETIC STRIPE EMV

Cardholder data resides in a secure chip embedded in a plastic payment card or personal device such as a mobile phone. Dynamic values exist within the chip itself that, when verified by the point-of-sale device, ensure the authenticity of the card.Fraudsters need physical access to the card and even then, the card itself is extremely difficult to clone, thus limiting any potential damage.

Cardholder data resides on a magnetic stripe on the back of the card.Data is static and can be easily skimmed and used to create counterfeit cards.The terminal performs all the processing and applies the rules for payment.

Embeddedcircuit chip

04

EMV-enabled payment terminals and peripherals are

able to read and process the information either by direct

contact with chip, or by close proximity through contactless

(NFC) technology.

HOW IT WORKS: TYPICAL EMV TRANSACTION FLOW

05

Chip and PIN requires the cardholder to enter a four digit PIN (could be more digits), which must correspond to the chip embedded in their card. Chip and Signature requires the cardholder to sign in order to authorize the transaction.

While Chip and PIN is the more secure option, issuing banks in the U.S. will begin by providing their customers with Chip and Signature cards. An EMV terminal will still be required to read the chip.

CHIP AND PINVS.CHIP & SIGNATURE

CONTACT EMVTRANSACTION

CONTACTLESS EMVTRANSACTION

A contact EMV transaction consists of the following steps:

1. Cardholder inserts the chip card into the chip reader. 2. Cardholder follows prompts which may include: language selection, card brand selection, confirmation of amount or PIN entry. 3. Result of the transaction is displayed and a receipt may be printed.4. Cardholder removes the chip card.5. In some cases a signature may be required to authorize the transaction.

A contactless EMV transaction consists of the following steps:

1. Cardholder taps or waves the card or smart device over the terminal.2. No signature or PIN is required for purchases under the merchant's set limit.3. For purchases over the merchant's set limit, the customer may be asked to sign, swipe or insert their card.4. A receipt is printed and the transaction is complete.

06

According to the latestfigures from EMVCo, thereare 80 countries across theglobe in the process of migrating to the EMV standard, many of which are at different stages of their migrations. Simply put – the majority of the world, with the exception of the U.S., is utilizing EMV payment cards.

WORLDWIDE EMV ADOPTION

EMV DEPLOYMENT MAP

REGION

Canada, Latin America, and the Carribbean

Asia Pacific

Africa &the Middle East

Europe Zone 1

Europe Zone 2

EMV CARDS

741M

942M

77M

794M

84M

ADOPTION RATE

54.2%

17.4%

38.9%

81.6%

34.4%

EMV TERMINALS

7.1M

15.6M

699K

12.2M

1.4M

ADOPTION RATE

84.70%

71.70%

86.30%

99.90%

91.20%

*Figures reported in Q4 2013 and represent the latest statistics from American Express, Discover, JCB, MasterCard, UnionPay and Visa, as reported by their member institutions globally.

07

It is estimated that EMV terminal penetration in the U.S. will grow fastest in the next year, rising to 57% over the course of 2015. U.S. merchants will upgrade to a new EMV credit card standard fairly quickly as they race to meet the 2015 fraud liability shift deadline set by MasterCard and Visa. Large merchants like Home Depot and Target will drive this growth as they make upgrades across all of their stores.

EMV PENETRATION IN THE U.S.

Source: Aite Group, BI Intelligence Estimates

According to statistics from Aite Group:

• In 2013 there were approximately 1.5 million EMV terminals in the U.S. This number is projected to rise to 12.4 million by 2017. • That means that EMV penetration of checkout systems will increase from 14% in 2014 to 87% by 2017.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%2011 2012 2013 2014 2015 2016 2017 2018

Year

EMV Terminal Penetration Forecast - USA

% P

enet

rati

on

4%

14%

35%

57%

70%

87%

08

Visa and MasterCard have instituted a fraud liability shift policy, which will transfer liability for certain types of

fraudulent transactions away from the party that has the most secure form of

EMV technology. Merchants can protect themselves from this liability

by ensuring they have implemented an EMV compliant solution.

THE RUSH TOWARDS EMV COMPLIANCE IN THE UNITED STATES

09

FRAUD LIABILITY SHIFT

CHANGES TO THE PAYMENT PROCESS

WhatMerchants of any size will be liable for domestic and cross‐border counterfeit fraud committed at the point of sale if they are not using a compliant EMV point-of-sale solution.

Contactless technology is creating opportunity for innovation within the payments industry and consumers are already embracing new ways to pay. When a merchant

enables contactless EMV on the payment terminal, customers are able to make purchases by simply holding their EMV chip card or mobile device (with compatible

mobile wallet) over the terminal. Faster, more convenient transactions are on demand and merchants are under pressure to deliver!

Additionally, merchants with EMV contact and contactless-enabled POS devices reduce PCI scope and associated costs. Just another incentive to adopt EMV today!

WhenThis will take effect as of October 1, 2015.

WhoMerchants will be liable for fraud that occurs on any chip card used on a magnetic swipe terminal. This means that merchants need to upgrade their POS terminals to an EMV compliant machine before October 1, 2015.

Card issuers will be liable for fraud that occurs when a chip enabled terminal is available but the consumer presents a magnetic stripe card for payment.

10

PREPARING FOR EMVMany U.S. banks are already issuing EMV cards to their customers. Merchants need to be prepared to accept these cards or risk losing business from customers who are concerned about security.

CATERING TO MERCHANTS

PARTNERS/RESELLERS

In preparation for EMV, merchants will be looking for: 1. A payment processor who understands EMV: A priority for merchants will be to find a provider that understands EMV and can help them migrate with ease. Pivotal Payments is ready to provide the required technical and product support for all EMV-related queries.2. Point-of-sale terminals with EMV hardware: Merchants will be looking to upgrade their point-of-sale terminals. Pivotal Payments has EMV hardware available now and our partners will be in a position to advise merchants on the various implementation options available, depending on their size and unique business needs.3. Terminal Setup: Merchants will need assistance with terminal set up and proper configuration for EMV. Pivotal will provide coaching on key points to consider.

1. Choose an experienced partner: The ideal provider of EMV solutions should already have EMV implementation and support experience to begin fulfilling your needs immediately.

2. Identify priority for processors/resellers: Ensure high risk merchants receive priority in terms of becoming compliant because they face a higher risk of fraudulent activity.

3. EMV Education: Pivotal’s Sales Partners can be a valuable resource merchants utilize for direction and information on EMV. At Pivotal, we help you every step of the way by providing the necessary information and ongoing communications regarding EMV.

4. Consultative Selling: Take a consultative approach with merchants and provide them with information regarding EMV, especially key dates such as the fraud liability shift deadline.

5. Retain and Grow: Retain existing merchants and sign new ones with a clear and concise EMV strategy. Any questions? Contact Pivotal Payments today.

11

IMPLEMENTATION OPTIONS The implementation process for EMV contact and contactless POS transactions varies by merchant type, size and payment infrastructure.

There are two basic merchant payment system environments: Standalone and Integrated.

IntegratedAn integrated solution means the payment application software directly communicates with the core POS software solution. Since the POS software solution is also integrated into other back-office applications such as the merchant’s accounting system or CRM, payment integration assists the merchant in enhancing efficiency and productivity in processing payments, plus reporting and reconciliation.

Streamlines operational capabilities and back-office management. Reduces errors from double entries, especially during periods of peak activity.Provides faster checkout times that can improve customer satisfaction.Makes management easier and allows merchants to perform checkout functions more smoothly and efficiently.Integrates with reporting modules and back-office systems, consolidating transaction information.Reduces PCI scope since the secure payment application, not the hardware, handles card data.

StandaloneA standalone POS device serves the single purpose of authorizing and clearing payment card transactions and does not communicate with the merchant’s POS software on their Electronic Cash Register (“ECR”). With the standalone implementation, the merchant would obtain the sale total from the ECR and then manually input the total into the POS device.

Connects directly to a host processor.Infrastructure is totally managed by the acquirer or processor.Is easier to implement with minimal effort on the part of the merchant.

12

YOU’RE IN GOOD HANDS

ABOUT

Pivotal Payments is a leading provider of merchant services and global payment processing solutions. The company provides to point of sale, online and mobile merchants a variety of services such as debit and credit card processing, electronic check conversion, merchant

cash advance programs, business discounts, loyalty/gift card programs and terminal management solutions. Pivotal Payments helps businesses of all sizes maximize their

revenue, reduce costs and become more successful.

Contact Informationwww.pivotalpayments.com

1 866 693-2000

As your trusted partner, Pivotal Payments has years of real-world EMV implementation and support experience that can address your requirements. Our turnkey solutions are ready now.

EMV IMPLEMENTATION EXPERIENCE

KEY FACTS AND FIGURES

• 5 years of EMV product experience in Canada.• Technical expertise in all implementations of EMV.• EMV technology, ready now!• EMV knowledgeable client care team and support.• Provides you with a unified EMV strategy.

• Founded in 2003.• Over 70,000 merchants.• $12 billion in processing.• Over 1,500 sales partners.• Over 500 employees.