EMV in the U.S.: Chip cards are here, but where is EMV at the POS?1
There’s no doubt that EMV credit cards are finally making their way to the United States. It’s almost become old news that all of the major credit card issuers in the U.S. have begun issuing EMV cards to a portion of their customers and are steadily working towards converting all of their cards to EMV. USA Today reported just last month that by 2016, 90 to 95 percent of all credit cards issued in America are expected to have an EMV chip. That’s great news for American consumers who want their privacy, credit, and payment accounts protected.
I have an EMV chip card, so now what?
As card issuers ramp up their investments in EMV, one common question is, “When are the merchants of America going to equip their POS equipment to accept EMV cards?”
It’s true that currently, if you own an EMV credit card, you’d be hard pressed to find a store in the U.S. where you can actually use it. Most stores are still using the old magnetic-stripe readers. What you may not see is that, behind the scenes, point of sale (POS) equipment is steadily being replaced with EMV-capable terminals. Many of the largest retailers, like McDonald’s and Walmart, have already invested in EMV terminals across their stores.
Merchants view EMV as a “critical requirement”
We asked Shan Ethridge, VP and general manager of NAFG for VeriFone, to describe the level of interest in EMV he has seen from his inside vantage point as a POS provider. According to Ethridge, merchants are well down the path of installing EMV terminals, even though consumers may not have noticed yet.
“We have seen a significant increase in demand for EMV capable devices over the past year, and it is becoming the standard for the majority of our customers today. This is why all of the terminals VeriFone provides are EMV-capable,” said Ethridge. “Customer discussions around POS and business strategy in every channel or vertical always include EMV as a critical requirement. Considering this and the upcoming October 2015 liability shift—processors, acquirers and ISO’s that have large bases of terminals that aren’t capable of supporting EMV should start planning now on how they will address that.”
Most consumers haven’t noticed the change because the EMV capability inside the POS terminals hasn’t been “switched on” yet. Retailers are currently in a preparation phase: installing terminals, the necessary software, and preparing training plans for checkout employees. After the groundwork has been laid, we may see a tidal wave of EMV terminals being activated over the next few years.
Marching to October 2015
As many in the payment industry suspect, many retailers will “switch on” their EMV capability as we approach the Fraud Liability Shift: October 1, 2015.
Research firm Aite Group confirmed this suspicion, reporting that the portion of active EMV terminals in the U.S. is set to rise from 14% in 2013 to 87% by 2017, and the bulk of that increase will occur between 2013 and 2015 as we gear up for the Fraud Liability Shift. Aite Group predicts that large merchants will drive this growth as they make upgrades across all of their stores and then the smaller merchants will follow in adopting the standard.
The Bottom Line
We’re seeing enough traction now to confidently say both the merchants and credit card issuers are fully entrenched in enabling EMV payments before the fraud liability shift date in 2015.