A new survey of U.S. payment service providers revealed that approximately 37 percent of retailers were ready to process EMV payments by Feb. 1, 2016 — four months after the official deadline for merchants to implement the smart card processing technology.
The Strawhecker Group (TSG), the payment industry consultancy firm behind the survey and corresponding infographic, explained in a news release that the 37 percent figure falls short of expectations set forth in an earlier September 2015 survey, which estimated more than 40 percent of retailers would be EMV-ready by this time. EMV-ready means that the technology to process microchip-embedded cards has been implemented at the point of sale, but it does not have to be activated yet.
On average, survey-takers believed that 50 percent of merchants would be EMV-ready by June 2016, but that it would take until 2017 for at least 90 percent of retail locations to have the technology for processing chip and PIN payments. TSG is basing these results on responses from 92 payment service providers — primarily merchant acquirers (the financial institutions that process card payments on behalf of merchants) — that work with more than 3.9 million merchants, or approximately half of the payment card-enabled market.
The retail industry's failure to meet previous expectations appears to be in keeping with what National Federal Federation VP of Government Affairs Craig Shearman told SCMagazine.com in January. “It is not going as smoothly as retailers would like. Retailers spent millions of dollars installing equipment and training staff, but the card industry did not provide certification personnel,” he said in that earlier interview.
As of Oct. 1, 2015, merchants that do not actively accept chip and PIN will be liable for certain kinds of fraudulent card transactions, rather than the payment card issuer. Jared Drieling, business intelligence manager at Strawhecker, told SCMagazine.com that some retailers probably waited strategically until after the holiday shopping season so they wouldn't “cause more friction in checkout lines” and disrupt business.
On the other hand, “If you did make the economic choice to migrate to EMV over the holiday season, chances are you were probably put on a backlog due to the overwhelming need for EMV terminals,” he continued.
TSG identified the three biggest impediments to widespread EMV implementation as payment processor readiness, gateway readiness (aka lack of middle-man acting as a conduit between the merchant and acquirer), and technical staff resource availability.
The payment card industry is scheduled to release version 3.2 of its Data Security Standard (PCI DSS) in the first half of 2016, likely in March or April, SCMagazine.com reported last week.
Drieling noted that the larger big-box retailers are generally ahead of the EMV game, while small-to-medium-size retailers in lower-risk fraud categories are “still weighing the economic decision” of investing in EMV terminal technology. SMBs in higher risk categories, however, such as electronics and jewelry retailers, should now be highly motivated, he noted. “I think we're going to see them aggressively put those plans in place,” especially as the new liability policies “hit the bottom line.”
