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Obama Pay

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Obama PayWhile largely ceremonial, President Obama today signed an executive order at the Consumer Financial Protection Bureau mandating the use of smart payment cards in the U.S. for government payments. The payment transistion in the U.S. from mag stripe/signature card payments to Chip/PIN (EMV) is already underway and will be in full steam in 2015.

But, the payment card industry in the U.S. is so far behind the ball to make card payments secure for Americans it is almost laughable. It took three major security breaches, e.g. Home Depot, Target and Chase, plus other smaller breaches to finally get card issuers, merchants and processors into high gear to overhaul an industry so far behind in the developed world.

What President Obama did today is to simply nudge the payments industry further along, bestow official blessing on its technology migration efforts and assure Americans these forthcoming major changes in the way payment cards are used in the U.S. will be for their long-term benefit. Furthermore, Obama’s Executive Order is perhaps three years overdue but what the U.S. payment card industry has not done in nearly 10 years is grossly delinquent.

Over the next three years payment cards and methods in the U.S. will change radically, more so than the1970s. Next week NFC payments, most notably Apple Pay, will finally begin to take hold to eliminate nuisance small payments. Next year EMV payments will finally take hold to eliminate nusiance data breaches for larger payments.

Fraud detection and risk management are also two major areas that need extensive tweaking as it was disclosed today that President Obama’s credit card was declined in New York during his recent U.N. visit. Algorithms out of control – You Bet!

The U.S. payment card industry, which remains highly lucrative despite recent substantial breach losses, is currently an infrastructure train wreck. Let’s hope by this time next year the industry is back on track and Americans can sleep better at night.

To read President Obama’s Executive Order Click Here: http://www.whitehouse.gov/the-press-office/2014/10/17/executive-order-improving-security-consumer-financial-transactions

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