In our last blog, we looked at the recently-released Hype Cycle Research Report from Gartner and the outlook for NFC technology. Next we will turn to another important technology that was included in Gartner’s Hype Cycle for Payment Innovation: EMV, and the U.S. migration.
EMV has been gaining a lot of attention from payments experts as a proven security tool that can help combat the increasing rates of counterfeit card fraud stemming from brick-and-mortar retailers. While the U.S. movement to EMV has been gaining traction and support from payment card issuers and merchants alike, there are still questions around how long it will take for the payment technology to reach mass adoption.
In the recent Gartner report, which is published annually and provides education about the maturation and promise for emerging technologies, Gartner shows a relatively short trip through the Hype Cycle for EMV technology.
Right now, EMV sits between the second and third stages of the Hype Cycle. Gartner clearly sees the value in EMV, stating in the report that U.S. banks should expect more fraud and therefore “should develop an EMV-centric contingency plan that involves EMV deployment for their payment card businesses.” Gartner predicts the U.S. migration to EMV will only take 2-5 years to reach the final stage of the cycle, “Plateau of Productivity,” when EMV will become a commonly-used technology. This prediction makes sense, as already we are seeing evidence of the acceleration in EMV migration: according to Aite Group, 70% of U.S. credit cards and 41% of U.S. debit cards will be EMV enabled by the end of 2015.
Gartner also sees the implementation of EMV as complementary to NFC technology. NFC is essentially a contactless or mobile form of EMV payments. Because EMV and NFC are based on the same technology, most EMV-capable terminals shipped today are also NFC-capable, and Gartner says “EMV deployment is likely to be aligned with mobile NFC deployments at the POS in the U.S.” What’s happening is that the mass overhaul of payment terminals at American merchants is driven by the EMV shift, and because these terminals are NFC-enabled as well, contactless EMV cards and mobile NFC payments are gaining traction, too. As we said in our last blog, Gartner is also optimistic about NFC payments, estimating the tech to reach mass adoption in the next 5-10 years.
Overall, Gartner’s Payment Innovation Hype Cycle shows an extremely promising outlook for EMV in the U.S. The U.S. market is large and complex; reaching mainstream adoption within 5 years would be a major achievement. The continuing progress of the migration illustrates an industry that has stepped up and made significant investments in making sure that EMV becomes a permanent fixture in our payments ecosystem.
Together, EMV and NFC will usher in the preferred payment methods for a digital payments era.