Wed, Nov 4, 2015
In the coming months, EMV security technology will begin appearing at many of the nation’s checkout counters as merchants work diligently to meet U.S. EMV liability shift set by Visa, MasterCard, American Express and Discover.
While full U.S conversion to EMV technology may take years to achieve, many of the country’s big-box merchants have already implemented EMV-enabled payment terminals, and a long list of others promises to follow suit by the end of the year.
“For the most part, consumers today are carrying around at least one card with an EMV chip embedded in it,” said Michelle Thornton, director of product development for CO-OP Financial Services. “And now that merchant adoption of the technology is moving forward, we are beginning to see how EMV is working in the marketplace and what consumers can expect going forward at the point of sale.”
Early Adoption at High-Volume Merchants
Industry experts predict that around 50 percent of U.S. payment terminals will be EMV-capable by year-end, and approximately 19 percent will be EMV-enabled. However, Thornton emphasizes that these numbers don’t tell the whole story.
“For example, if Walmart has all its EMV terminals up and running at a certain point, this alone can skew the data,” she said. “What is trending now is early adoption among high-volume merchants that have the most to lose in the event of a security breach, and that represents a large portion of the market. Interestingly, we are also seeing a segment of small merchants up and running with EMV due to their processors’ ‘EMV packaging’ and readiness.”
Consumers can also expect payment terminals to be upgraded in phases, with adoption of EMV debit lagging behind credit because of regulatory complexities surrounding EMV debit transactions.
“While we expect the majority of merchants to implement EMV technology much sooner for credit than for debit, we are seeing some instances where merchants are enabling both credit and debit transactions in the early stages of EMV deployment,” said Thornton. “The fact that PIN debit transactions are generally more profitable for merchants may be prompting this move. However, regardless of why it is happening, large retailers are adopting EMV technology for debit as quickly as they can.”
Another market dynamic consumers may notice is a delay in EMV adoption at the gas pump. “The EMV liability shift for gas stations doesn’t go into effect until 2017,” said Thornton. “So consumers can expect to continue swiping cards when they purchase gas in the near term.”
EMV Terminals Come in Many Flavors
While EMV technology is regarded globally as the universal security standard for card-present payments, Thornton notes that EMV payment terminals come in a wide range of configurations. “There are different manufacturers of EMV terminals, and different types of EMV terminals from each manufacturer,” she said. “Plus, each payment terminal has to tie into the back-end processing systems of the merchant implementing it, and this can involve a fair amount of software customization.”
Consider also that many organizations are phasing in EMV technology incrementally. “This means that consumers may have to wait for some common payment options to be enabled,” she said. “For example, although you were able to check the ‘cash back’ box at your local grocery store’s mag stripe terminal last week, this feature may not be available yet on the new EMV terminal,” she said. “But it may be operational a few weeks from now. So consumers can expect a certain degree of inconsistency in the way EMV terminals function, especially at first.”
What is consistent about EMV technology is that transactions take a bit longer than mag stripe transactions. “It can be just a few seconds longer in many cases, but people will notice it,” said Thornton. “These are all things consumers should know, and as a credit union you can show your industry expertise and commitment to members by educating them. We recommend impressing upon members the added security benefits of EMV technology and advising them to expect a learning curve when first using their new EMV cards. Ultimately, the benefits of EMV technology extend to all of us and are well worth the inconvenience initially.”