The Green Sheet Online Edition

May 26, 2025 • 25:05:02

Revisiting the U.S. EMV transition challenges and solutions

By Goran Bosankić

– Field39

While much of the world embraced EMV chip technology years ago, the United States followed a more complex and fragmented adoption path. For ISOs and payment service providers (PSPs) operating with legacy systems, this transition continues to present significant challenges.

Even the large processors are more comfortable with a proper MV capable gateway being placed in front of their host, rather than handling the complex realm of EMV payment transactions directly from the terminals.

Let's explore the gateway-side hurdles these payment industry players face and how they might navigate these choppy waters.

The legacy landscape

Many payment gateways in the United States were built during the magstripe era, an architecture that fundamentally differs from the more complex EMV transaction flow. These legacy systems were designed for simplicity: a single message containing the card data, to be authorized in a straightforward process.

EMV, by contrast, introduces multi-step transactions, sophisticated cryptography and a variety of cardholder verification methods. This isn't merely an upgrade; it's a complete paradigm shift that affects every layer of the payment stack. Thus, ISOs and PSPs face multiple key challenges in navigating the EMV transition, which are discussed below.

Technical complexity

EMV implementation requires specialized knowledge that many smaller organizations lack in-house. The technical specifications are extensive, with thousands of pages of documentation. Each card brand has its own implementation requirements, creating a web of compliance standards that organizations must navigate.

A payment gateway must correctly handle:

• Application selection
• Multi-application cards
• Offline data authentication
• PIN management
• Secure cryptogram validation
• Fallback procedures
• Exception handling

For organizations with limited technical resources, these requirements can seem insurmountable.

Integration nightmares

Legacy systems often feature hardcoded dependencies and tightly coupled architectures not designed for the flexibility EMV demands. Retrofitting EMV functionality into these systems frequently results in "spaghetti code" that becomes increasingly difficult to maintain.

Many ISOs report that what started as a seemingly straightforward EMV implementation evolved into a complete system overhaul, absorbing far more resources than initially budgeted.

Certification bottlenecks

Perhaps the most frustrating aspect of EMV adoption is the certification process. Each processor and card brand requires separate certification, creating a matrix of approvals that can take months—or even years—to complete.

Many organizations find themselves caught in certification limbo, with merchants ready for EMV but unable to process such transactions because certification remains incomplete.

Cost concerns

The financial investment required for EMV migration extends far beyond initial development. Organizations must consider:

• Development resources
• Testing equipment
• Certification fees
• Ongoing maintenance costs
• Training for support staff
• Documentation updates

For smaller ISOs operating on thin margins, these costs represent a significant burden.

Merchant experience degradation

EMV transactions typically take longer to process than magstripe transactions—a difference merchants and consumers quickly notice. Gateways that haven't been optimized for speed risk creating transaction bottlenecks during peak periods, leading to merchant dissatisfaction.

The liability shift pressure

The card brands' liability shift policies have placed additional pressure on the ecosystem. Since 2015, the liability for fraudulent card-present transactions has fallen on whichever party in the payment chain is the least EMV-compliant. This creates an urgent business case for EMV adoption, even when technical resources are stretched thin.

According to recent industry reports, non-EMV merchants continue to experience fraud rates 75 percent higher than those who have completed the transition. For ISOs supporting these merchants, this represents not only a financial risk but a significant reputational one as well.

Modern approaches to EMV implementation

As challenging as EMV adoption has been, there's a growing recognition that maintaining the status quo is no longer viable. Forward-thinking organizations are exploring alternatives to internally-developed solutions. Increasingly, ISOs and PSPs are turning to specialized EMV gateway providers rather than attempting to build everything in-house. This approach offers several advantages:

1. Reduced time-to-market: Pre-certified solutions eliminate lengthy certification cycles
2. Technical expertise on tap: Access to specialists well-versed in EMV's
3. Focus on core business: Resources can remain dedicated to differentiated services rather than baseline payment functionality
4. Simplified compliance: Ongoing updates to satisfy changing regulations and standards are handled by dedicated teams

SaaS solutions: a viable alternative

Cloud-based payment gateways with robust EMV capabilities are emerging as a compelling option for organizations struggling with their EMV transition. These platforms offer PCI DSS certification out of the box, significantly reducing compliance burdens.

The SaaS model allows ISOs and PSPs to transform what would otherwise be a massive capital expenditure into a predictable operating expense, easing budgetary strains while accelerating implementation timelines.

A modern EMV-capable payment gateway delivered as SaaS can integrate with existing merchant management systems through well-documented APIs, creating a hybrid approach that preserves valuable legacy components while modernizing the payment acceptance layer.

Looking ahead

As the payment landscape continues to evolve with contactless transactions and mobile payments gaining momentum, having flexible infrastructure becomes even more critical. Organizations that solve their EMV challenges today through thoughtful partnerships are better positioned to adapt to tomorrow's innovations.

The EMV transition, while painful, offers ISOs and PSPs an opportunity to re-evaluate their technical infrastructure and consider whether building and maintaining payment acceptance technology internally still makes sense in today's complex environment.

By focusing resources on unique value propositions and leveraging specialized partners for standardized payment functionality, payment organizations can navigate the EMV transition successfully while positioning themselves for future growth in an increasingly competitive marketplace.

Goran Bosankić is CRO and a board member of Field39, which aims to set new standards in payment processing by offering secure, robust technology and a user-centric platform that drives efficiency and growth for businesses of all sizes. Contact Goran at >.

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