Credit: Kevin Lamarque/Reuters
Confused. That’s the best word to describe retailers more than a month after the October 1 deadline passed for businesses to become EMV-compliant – by installing new EMV-capable credit card readers and acquiring certifications from various payment networks, among other requirements. The resulting liability shift means business owners are now on the hook for any fraud problems that arise from credit card transactions in their stores if they don’t migrate to the technology.
But, in a twist, Time recently reported that only about a third of merchants have actually completed the migration, according to analyst estimates. For many small businesses, the cost of EMV migration is steep, and there are questions regarding the technology setup and compliance requirements. Some retailers may find the EMV transition is as simple as replacing or upgrading existing hardware and software. But other merchants use sophisticated point-of-sale (POS) systems to manage not only payments, but also critical business functions like inventory, scheduling and promotions, so figuring out the right path to EMV compliance is a challenge.
At the same time, several large, high-profile retailers say the new EMV standard doesn’t go far enough. For example, some big U.S. retailers, such as Target and Walmart, are stepping up efforts to require PINs to be used with chip-embedded cards to even more forcefully prevent fraud. Banks, however, are resisting any effort to invest further in PIN technology, as is already used with debit cards.
Finally, even businesses with EMV-enabled terminals are dealing with confusion on the consumer side, as shoppers get used to having their cards inserted into terminals – EMV transactions take several seconds longer to process than traditional credit card swipes.
EMV confusion no surprise, say experts
The number of perplexed retailers who have yet to make the switch to EMV is no surprise, says Gary Staub, chief marketing and sales officer for Sterling Payment Technologies. “It’s been clear for a while that many merchants wouldn’t be able to make the switch to EMV technology in time,” he says.
Small and medium-sized businesses will be slower to adopt EMV because of the costs associated with the transition, says Jay Townsend, senior associate in Booz Allen’s retail business. Some also harbor a negative perception that EMV won’t offer any additional protections. “There is also a standing misperception that smaller retailers are flying under the radar of cyberthreat actors,” he says.
Still, this is just the beginning of a lengthy migration process, says Jared Drieling, business intelligence manager at The Strawhecker Group, a management consulting company focused on the global electronic payments industry. “There are pluses and minuses associated with EMV but all in all, we need to view this as the starting line versus a deadline,” he says. “I don’t think that this confusion is a bad omen for EMV’s future – this is a large and complicated migration, so it will take time.”