Why Retailers Still Aren’t Accepting EMV (And Why EMV continues to be Problematic)

EMV merchants

We spent considerable time speaking concerning the October 2015 EMV liability shift, even lengthy before it also happened. We did our very best to inspire retailers to teach themselves and then suggest the transition. So we&#8217re still speaking about this.

To all of us, there&#8217s no doubt that adopting EMV may be the right factor. It&#8217s an important tool to assist prevent charge card fraud, particularly cloned or counterfeit charge cards.

Visa learned that among retailers who’ve implemented nick cards, fraud has decreased. Searching in the rates of 25 retailers who’d the greatest rates of fraud in Q4 of 2014, five of these that implemented EMV saw fraud rates visit an astonishing 18.3% in the finish of 2015. That&#8217s what’s promising.

Unhealthy news isn’t that applying EMV correlates with greater fraud. Five companies in the list that chose to not implement EMV experienced greater fraud rates — towards the tune of 11.4%. That&#8217s a substantial rise.

It&#8217s not EMV itself that&#8217s resulting in the increase. Shady clients are just exploiting a perceived weakness within the system before it&#8217s eliminated altogether. Fraud rates continuously drop overall as increasing numbers of retailers result in the transition, because they have far away which have adopted the EMV standard.

However is just like time just like any to speak about the way forward for EMV, why you need to switch, and the way to get EMV should you don&#8217t get it already. (Plus, what&#8217s holding EMV adoption back?)

Tracking the Progress of EMV

October 1, 2015 may have appeared just like a rather finite deadline — &#8220accept EMV otherwise!&#8221 — however it really was more the start of a period. The only real factor that actually altered was that all of a sudden retailers were responsible for costs suffered by processing fraudulent cards (observe that EMV doesn&#8217t affect card-not-present transactions or lost/stolen cards). The U.S. is within a condition of transition, making up ground with other international locations (particularly individuals in Europe) where nick cards have lengthy been standard, where charge card fraud (a minimum of from card-present transactions) has declined.

Market research in The month of january through the Strawhecker Group discovered that EMV adoption what food was in 37%. Exactly the same survey estimates that people&#8217ll have 50% saturation by June 2016, but we won&#8217t see 90% adoption until 2017, at least a year following the initial deadline, and it may be many years before we have seen complete adoption.

But allowing for retailers to simply accept EMV is just area of the fight. Not everybody comes with an EMV nick card at this time. Market research by CreditCards.com discovered that 70% of shoppers have been issued nick cards by April 2016 (admittedly, that survey took it’s origin from responses from 932 credit cardholders, without any margin of error given). Visa claims it&#8217s now issued 265 million nick cards, making the U.S. an innovator in circulation by overall volume, however that&#8217s still merely a part of cards in circulation, and it’ll take some time before standard magstripe cards are eliminated entirely.

Large retailers are more inclined to have started the EMV transition than small companies, partly simply because they have greater sources to devote (but a few of the largest retailers only have partly transitioned to EMV). What plays a role in a business&#8217s decision to apply EMV, and just what&#8217s slowing lower the procedure?

What&#8217s Holding EMV Back?

In some instances, the main reason why stores still aren&#8217t accepting nick cards happens because business proprietors just don&#8217t know about EMV or what it really entails. Charge card processors happen to be trying to educate retailers and obtain them ready for that liability shift, however that&#8217s just one part of a giant picture. Other factors lead towards the difficulty in switching to EMV over the entire country, including:

&#8220That Couldn&#8217t Occur to Me&#8221 Mentality

Even when retailers can say for certain about EMV, they might begin to see the possible effects like a small risk, especially when compared with a problem like a hacked POS. Compounding this problem may be the buzz all around the EMV shift, which might seem to be something similar to Y2K for merchant. (Actually, the TSG survey discovered that attention might have were built with a negative impact on merchant opinions about EMV.) However, this may be an extremely pricey assumption for retailers left footing the balance following a fraudulent card transaction.

Cost to Upgrade

Then, there&#8217s the price (and perceived cost) of applying EMV. Estimates prior to the liability shift put the price of EMV at $1,000 to apply, that was much greater compared to $450 as reported by retailers within the TSG survey. Time scared away small companies, especially individuals who only process a small amount of debit or credit transactions.

Not just that, but terminals will have a comparatively lengthy lifespan so far as technologies are concerned (something like many years), and companies that lately bought terminals which were not EMV-capable might not be prepared to upgrade just quite yet.

To be certain, &#8220future-proof&#8221 terminals (the word frequently accustomed to describe EMV-capable devices) tend to be more costly than your standard magstripe terminals. Most terminals with EMV include NFC outfitted too, to ensure that retailers can accept contactless payments (Apple Pay, Android Pay, Samsung Pay). But similar to their predecessors, they’ll last many years and with the help of NFC, happen to be outfitted for potential alterations in the instalments industry.

For many retailers, there might be additional fees connected using the change to EMV, for example staff training, or applying a brand new POS system&#8230 which raises the following point:

The Terminals are prepared, however the Software Isn&#8217t

Compounding this problem is always that many retailers have EMV-capable terminals….that haven&#8217t been activated yet. It is because coding EMV into POS systems along with other software is a lot more complicated compared to previous magstripe technology. After the code is presented, still it must be certified, which is yet another time-consuming process.

Terminals and software require level 1 or level 2 certification. The certification process (handled by EMVco) includes security tests in addition to compatibility tests (because each card brand uses slightly different standards).

If you’re a small merchant having a easy setup, all that you should be worried about is your software or hardware is EMV certified. You won&#8217t want to get EMV certification in many situations.

For those who have a sizable, custom setup, you&#8217re searching in a possible level 3 certification, which might require you, because the business proprietor, to become more on the job along the way. Level 3 is really a complete, finish-to-finish procedure that tests every possible transaction type, that could add up to hundreds of tests run before getting your application.

Software developers, terminal manufacturers, and other people active in the payments space must get certification before they are able to deploy their goods to retailers. And did we mention there&#8217s a backlog of certification demands? Best estimates at this time for that time that it requires to obtain certification are three to six months…. But it may be longer.

A lot of retailers who wish to accept EMV, who’ve committed to the terminals, are actually just awaiting their POS system to obtain the necessary upgrades, that they can&#8217t do until they&#8217re certified. Meanwhile, retailers remain footing the balance for just about any potential fraud.

Slower Checkout Occasions

A typical complaint by many people consumers who’re now utilizing their nick cards it’s time it requires to dip their card versus swiping it. Transactions take several seconds more than they are doing to simply swipe (or make use of a contactless payment application for example Apple Pay), which could endure lines and frustrate customers. There&#8217s even the issue of getting to depart your card placed as the transaction qualifies, which results in possible of failing to remember your card within the readers. For a lot of companies and consumers, that&#8217s headaches they simply don&#8217t want.

Visa and MasterCard will work about this issue. Visa announced it&#8217s focusing on an answer known as QuickPay, that could reduce transaction occasions to two seconds or fewer. It intentions of causeing this to be open to everybody (including other card associations). It&#8217s not a bit of technology, some software, which can make simple to use (and affordable) to unveil. MasterCard has its own M/Nick Fast equivalent, so it states is &#8220designed for select environments where fast transaction occasions, additionally to security, are confined,&#8221 based on the official pr release.

Finally, there&#8217s a learning curve that is included with applying EMV. Consumers should try to learn working their new nick cards, and thus do cashiers. It may frequently fall around the cashiers to show for purchasers how EMV works, which could once more endure a line. This really is likely the reasons companies chose to not implement EMV throughout the 2015 holidays, and rather are simply now making board using the technology. They&#8217d rather let another person handle the customer education and didn&#8217t wish to lose potential sales by looking into making customers wait or forcing these to adopt a brand new technology they don&#8217t understand how to use.

An Answer that Doesn&#8217t Go Far Enough?

Finally, one problem is that lots of charge card issuers are opting to make use of nick-and-signature cards, instead of nick and PIN. While any kind of nick card is definitely an improvement over magstripe technology, nick-and-PIN transactions tend to be safer than nick-and-signature cards, because signatures could be forged and therefore are rarely checked.

However, they’re also more costly, and much more difficult to utilize. PINs should be assigned prior to the card is disseminated, and consumers need to go to a bank branch to reset them. Not just that, although not all EMV terminals are outfitted for entering PINs, however they do support signature capture, either around the terminal or around the receipt.

Actually, on May 11, news broke that Wal-Mart has filed a suit against Visa because of its option to implement nick-and-signature cards rather of nick-and-pin cards. Partly, Wal-Mart claims that PIN-based transactions could be more efficient to lessen fraud (a well known fact documented elsewhere), and that Visa charges more for individuals signature-based transactions.

Can There Be an alternative choice to EMV? Well… Maybe.

EMV is clearly not without its issues, for retailers and consumers. While retailers don’t have any choice but either to adopt EMV or swallow the higher risk and potentially devastating costs connected with charge card fraud, consumers have one method to opt out: mobile wallets.


For tech-savvy, security-minded consumers, this appears such as the apparent solution. It’s simple enough to include a card to some mobile wallet for example Apple Pay, Android Pay, or Samsung Pay. These tap-to-pay apps use tokenization to process transactions, and therefore rather of transmitting your card number the way in which swiped transactions do, they cook a 1-time use card number (the token). When the token can be used, it may&#8217t be re-used, so even when a terminal or POS were compromised, your card would be safe. While you should use tokenization with EMV, EMV typically depends on file encryption, which functions differently.

Tap-to-pay is presently quicker than EMV (though with Visa&#8217s Quick Pay, they might finish on more equal footing). No dipping is needed there&#8217s absolutely no way of failing to remember a card (or, you realize, phone). And Samsung Pay uses magnetic secure transmission, or MST, which enables it to emulate a magstripe transaction, therefore it works together with fundamental terminals which are only setup for magstripes, in addition to individuals with NFC.

The issue remains, will NFC payments become preferred over EMV? Can be. Contactless payments and mobile wallets are seeing elevated use, however their overall market shares continue to be quite small. However, their potential userbase is big, given the number of smartphone proprietors are available. Apple, Samsung, and Android&#8217s particular apps are for sale to an enormous subscriber base, with PayPal poised to begin applying NFC payments in the own application, that subscriber base will simply grow. The secret is going to be convincing individuals to switch — not to mention getting retailers outfitted to consider mobile payments.

The Quickest Road to EMV, should you Don&#8217t Get It

Should you&#8217ve already switched to accepting EMV, have a pat around the back. Should you haven&#8217t yet, I’ve two very wise words for you personally, thanks to Douglas Adams: Don&#8217t panic.

With respect to the nature of the business, the chance of landing yourself responsible for charge card fraud might be slim. Just keep in mind that applying EMV might be a one-time expense that’s much less pricey than the usual fraudulent charge card transaction. It&#8217s similar to an insurance plan: you might not need to have it, but when something ever happens, you&#8217re likely to be very glad you need to do.

For those who have no choice but to hold back to change your system for an EMV-compliant solution, you are able to mitigate your risk by checking IDs for just about any magstripe or keyed transactions and becoming the client&#8217s signature.

How do we start accepting EMV should you don&#8217t already? There’s a couple of options, based on your circumstances.

Credit Card Merchant Account Holders

The simplest way would be to speak to your credit card merchant account provider and get about applying EMV, should you haven&#8217t already. They&#8217ll let you know what software and hardware you’ll need and just how much it’ll cost you.

In case your payment processor doesn&#8217t have any kind of EMV solution yet, it&#8217s time for you to look elsewhere. As well as when they do, we encourage you to definitely take this chance to look around a little, particularly if you therefore are far unhappy together with your credit card merchant account. Acquire some quotes using their company merchant providers (have you ever examined our top-rated processors?) and find out regardless of whether you can decrease your processing rates in addition to applying EMV.

For those who have EMV terminals however your current POS isn&#8217t compatible, take a look at the most popular EMV-ready POS systems here and don&#8217t forget to look at our reviews! Keep in mind that the semi-integrated solution may be cheaper and quicker than a completely integrated one.

You might like to check whether your potential new terminal is outfitted with NFC too. Most &#8220future-proof&#8221 terminals which are on offer have this selection, but a few of the entry-level EMV terminals don&#8217t. They&#8217re less expensive, however, you could unintentionally drive away customers preferring tap-to-pay transactions over EMV, and finish up having to pay more to upgrade a terminal again lower the road. In case your primary subscriber base is youthful and tech-savvy, you&#8217re best spending the additional cash in advance to obtain NFC in addition to EMV.

Should you also require a mobile-ready EMV solution, you need to ask your provider if their mPOS application posseses an EMV readers. Whether it doesn&#8217t, it&#8217s time to check out another options (unless of course your processor is since the risk until it may deploy its EMV readers).

Mobile (mPOS) Users

Using the certification backlog, mPOS providers — including Square, PayPal Here, Intuit, and Spark Pay, have experienced more trouble moving out their solutions, much more than the others. The good thing is, the large names have got their readers to consumers.

Square provides an EMV readers for $29, as well as an EMV/NFC-outfitted readers for $50. They are nick-and-signature readers.

PayPal Here, however, comes with an EMV/NFC readers with PIN pad, for $150. Observe that additionally, it accepts nick-and-signature transactions, too.

Intuit GoPayment&#8216s EMV readers can be obtained to pre-order for $30 (again, nick-and-signature only). Spark Pay doesn&#8217t yet come with an EMV-enabled mobile readers, however it has EMV charge card terminals for iPad setups.


The road to EMV is nowhere near its finish, so we&#8217re certain to encounter a couple of more bumps within the road prior to getting there. Nick cards are in no way perfect, and nor could they be made to eliminate all sorts of fraud. But there&#8217s no doubt that retailers need to find away out to apply EMV for his or her companies, and at some point. It&#8217s important that you should become knowledgeable, after which take action that meets your requirements.

Got questions regarding EMV retailers? Need assistance selecting something? We’re always here to assist. Just achieve out — we’re always pleased to know what you think!

The publish Why Retailers Still Aren&#8217t Accepting EMV (And Why EMV continues to be Problematic) made an appearance first on Merchant Maverick.