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to reproduce, therefore EMV cards are considered more secure than tra- ditional magnetic stripe (mag stripe) cards seen in the U.S. today. Last year, Spinella wanted to get operators to consider the rami- fcations if their readers were not EMV ready. This year, with some large retail security breaches, such as Target, EMV has become head- line news and the move to EMV is likely to come sooner than 2018. Currently, the major card brands have deadlines in place to move the cashless payment industry towards EMV cards. The most important deadline for vending operators is October of 2015. At that point, card companies will shift liability for fraudulent credit card charges to the party with the least secure sys- tem. For the industry, this includes vending machines if the card reader isn't EMV compliant, which is the case for nearly all cashless devices on vending machines today. Operators would need to buy all new termi- nals to be EMV compliant — a huge investment and challenge. However, the full story of EMV and vending isn't so bleak. Vending's liability In case of fraud, what really is the vendor's liability? In many situations, the vending operator may have a mer- chant's agreement with a provider which migrates their responsibility. As long as the operator was in com- pliance with this agreement, EMV wouldn't change the liability for the operator. Even without a merchant's agreement, fraud in the vending industry is quite low. "The fraud risk for vending is somewhere in the area of 0.16 per- cent," said Brendan Kehoe, vice president of Streamware at Crane Merchandising Systems. "With the fraud risk that low, there would be no justifcation for replacing an existing reader." Kehoe uses the example of a vending company doing a million dol- lars in vending transactions a year. At 0.16 percent fraud, that's a fraud exposure of $1,600. When each EMV reader is likely to cost in excess of $200 apiece, that's $40,000 to replace the reader on 200 machines. "The economics in vending will probably never make sense for operators to replace their readers," said Kehoe. He reminds the industry that the October 2015 deadline from Master Card and Visa that affects operators is simply a liability shift, not a dead- line to have EMV readers installed on machines. Additionally, Kehoe sees banks including mag stripes even on EMV-capable cards for the foresee- able future, until EMV readers are everywhere, which won't happen any time soon. He also suggests that there are other industries that won't be changing their card readers such as municipal parking, which accepts credit at parking meters. "They are not changing those," said Kehoe. "It's the same as vending — a low value transaction amount coupled with a low fraud risk with a large number of readers." EMV is the future Other industry members warn that the industry must be thinking ahead. Apriva's Spinella talks about EMV as a long term investment. "Over time mag stripes won't be supported," Spinella said this year. "Operators like their technology to last many years, therefore they will want it to be EMV capable." He wouldn't encourage vendors to go into the feld and replace mag stripe What happens if I do nothing? The short answer is nothing — for now. Vending operators will likely experience business as usual for the next fve years at their card readers. Why? Because there are no current plans to eliminate mag stripes on credit and debit cards even once they also have an EMV chip. That means the cards will still work at all cashless payment readers, both contact and contactless. The one unknown is the consumer. If consumers become more wary of security measures taken at the point of sale, they might choose to only use credit where EMV is taken. Research shows that U.S. consumers are increasingly concerned about data breaches. In a recent AP-GfK Poll of more than 1,000 adults, only about one third would use alternative payment methods. This means that it is unlikely consumers will demand vendors add EMV compliant readers to machines. '' With the fraud risk that low, there would be no justifcation for replacing an existing reader. '' – Brendan Kehoe, vice president of Streamware at Crane Merchandising Systems 56 Automatic Merchandiser VendingMarketWatch.com April 2014 E M V T E C H N O L O G Y autm_54-61_0414EMV_F.indd 56 3/24/14 4:46 PM