How Well Has America’s Transition to EMV Really Gone?

chip card.jpgNo one expected the transition to EMV technology in the U.S. to be easy. Those expectations have largely been met, as the full change to EMV-only terminals and cards, has occurred much more slowly than analysts predicted.

Currently, roughly 80 percent of consumers have chip and pin cards that are EMV ready, while only 30 to 40 percent of U.S. merchants have active EMV devices that are capable of processing them. On the plus side, however, is that Mastercard has already reported a 60 percent drop in counterfeit fraud since the liability shift last year—which means millions of consumers enjoyed a fraud-free year instead of the alternative.

The liability shift occurred in October of 2015, when merchants all across the U.S. were given an ultimatum: either update your payment card processing system for EMV chip and pin cards, or take full responsibility for any theft or fraud that occurs in the course of your business. As you might expect, businesses everywhere have worked hard to transition to the new system, which has effectively limited fraud in Europe for more than a decade.

Unfortunately, despite some results, the biggest problem experienced by many merchants who did update their systems for chip and pin technology is that they cannot use it. According to a report published by the Natonal Retail Federation(NRF), of the 86 percent of retailers who expected to have EMV terminals installed by the end of 2016, 57 percent succeeded in getting the equipment in place, but they can’t use the equipment until it is certified by credit card companies.

While Visa and Mastercard are working diligently to streamline the certification process, a lack of qualified testing staff and other ongoing barriers are limiting their effectiveness. Merchants who find themselves stuck in the middle of this process are growing more and more frustrated as a large number of chargebacks have occurred due to EMV systems that are not enabled.

In the coming year, EMV terminal and chip and pin card use will most likely increase substantially as the lingering issues are resolved. But there are more changes related to payment systems and fraud prevention that consumers and businesses can expect in 2017. Be on the lookout for the following trends:

  • Point-of-sale (POS) systems that have been integrated or semi-integrated with the gateway or processor, as well as internal management systems, will have the advantage in problem-solving and implementing solutions. With this integration, businesses can offload sensitive information directly from the POS to the gateway or processor.
  • While many businesses will continue to upgrade to EMV systems, many small businesses, 70 percent of them according to a CAN Capital study, have no plans to embrace the chip and pin technology. The upfront costs are too great, while the chance of fraud, in their minds, is too low. Time will tell if their decisions pay off.
  • While payment processing using near field communications (NFC), known as contactless payments and other mobile payment options have proven both faster and, with several layers of encryption, sometimes safer than EMV, the demand hasn’t taken hold of the population just yet. One might predict that is the next step for U.S. payment systems, but no one knows for certain.

If your business is awaiting certification for your EMV system, stay vigilant.   If you’re a small business owner who thinks the cost to transition to chip and pin is too expensive, reconsider, the risk far outweighs the cost.  The more layers of defense in place to protect your customers, the better—and the less money you end up paying out of pocket later if you or your client becomes a victim.

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Ashley.jpgAbout the Author – Ashley Choate is a native of Jacksonville, FL where she lives with her son, dog, and three cats. She graduated Magna Cum Laude from Jacksonville University with a BA in English and holds an MAED in Adult Education and Training. She lives for reading and writing, learning and teaching, and figuring out the day-to-day traumas and joys of mommyhood. .

 Top Photo Courtesy of Google CC.