Back in 2012, card providers like MasterCard and Visa provided a roadmap to EMV transition, agreeing that by October 1, 2015, all of the retailers throughout the United States would have card terminals that accept chip-and-PIN cards. Countries like Australia, Brazil, and others abandoned traditional magnetic stripe cards years ago as a method of mitigating credit card fraud and providing safer transactions for customers.
Now that October 1, 2015 has come and gone, the changeover to chip-and-PIN cards has been patchy at best. Estimates suggest that around 59% of consumers have not yet received their chip-enabled cards. What’s more, the patrons who have received their cards are unsure of their purpose or value; around 68% of Americans don’t understand what the EMV deadline is all about or why they would even need new cards as a result.
Merchants and Retailers Were Not Prepared
As poor as the statistics might be for consumers in the EMV transition, merchants have also been performing poorly. According to the Strawhecker Group, a service provider which works with more than 25% of the merchants throughout the U.S., only 27% of the merchants they work with had a plan to transition to EMV terminals. Similar studies have also uncovered information that approximately 58% of merchants claim to be on track to accept EMV transactions, whereas the other 42% had no intention to adhere to the deadline with little understanding of why they would need new terminals in the first place.
Despite the significant number of articles and updates released regarding the EMV update, many retailers throughout the country have been sluggish in accepting the idea of chip-and-pin terminals. It seems as though they are waiting for vendor partners to start providing the software they need to make the transition easier. For the previous year and a half, reports have informed businesses of the impending deadline and issued warnings of what could happen if they failed to adopt EMV technology. Indeed, the primary push for the transition was based on the fact that merchants without EMV technology could end up being responsible for the cost of credit card fraud.
Unfortunately, the number of participants that met the deadline suggests that most retailers were either unaware of the warnings or ignored them completely, as recent estimates indicate that the number of merchants without EMV-compliant payment terminals range between 50% and 75%.
How to Protect Yourself If You Missed the Deadline
Although many sources claim that businesses within the U.S. can still survive if they choose not to transition to EMV transactions, it’s important to recognize that such a decision is dangerous. Although magnetic stripes will continue to exist now that the October 1 deadline has passed, the shift in liability ensures that merchants and card providers could suffer if they fail to catch up. After all, retailers that do not embrace the EMV transition will be held liable for the costs of credit card fraud that may arise, and in 2015, the estimated cost of credit card fraud liability is estimated to be somewhere in the region of over $10 billion.
If you haven’t obtained the right technology for the EMV transition yet, then you’ll be taking on responsibility for certain types of credit card fraud whenever a magnetic stripe card is swiped in your store. To become compliant, you will need to install a reader that can handle both magnetic stripes and EMV chips, and most organizations will find that the manufacturer of their current reader already provides something capable of this. To get back on pace, consult your IT professionals and finance departments about the device you will need for your specific requirements.
For those still waiting to update to chip-and-PIN transactions, protection programs exist that can support small and medium sized businesses that could be lagging behind. Some companies offer payment technologies that cover fraudulent charges of $2,000 for clients that are working towards compliance with the EMV update.
Don’t Put It Off Any Longer
While EMV is not a 100% solution against credit card fraud, it’s worth recognizing that the new form of chip-and-PIN payment is a far more secure way to conduct transactions. Perhaps the biggest selling point for EMV cards is the fact that they offer better security to all parties involved during the payment process, including merchants, card providers, and consumers. While traditional magnetic-stripe cards store all their information on a single stripe (meaning that skimmers can interpret information), EMV cards store information on smart microprocessor chips which are encrypted for extra protection. It’s far more difficult to acquire data from EMV cards – and harder to create fraudulent cards – because of the technology that is required to duplicate the chip contained within.
Despite the fact that EMV transition may seem costly and complicated, retailers who have missed the deadline should start migration as soon as possible, as consumers may soon start to trust retailers with protected EMV solutions for transactions over those who still accept magnetic stripes.