The six-month anniversary of chipped credit cards – becoming the standard for retailers – is coming up on April 1 and the general consensus in the industry on the rollout is “so far so good,” with a touch of “these things take time” thrown in.
While there are hard numbers to examine concerning chip card adoption rates, it is still too early to see the impact they have had on security or credit card fraud.
All U.S. retailers were supposed to be prepared to accept chip cards, also known as EMV, (EuroPay, MasterCard, Visa) cards on Oct. 1, 2015. While only a fraction were actually ready on that day, the numbers have steadily increased with MasterCard now reporting that 1.2 million merchants are accepting the cards – with most of these being small to mid-sized companies, Catherine Murchie. MasterCard's senior vice president, North America processing, told SCMagazine.com. In October this figure hovered at 350,000.
The National Retail Federation states there are 3.8 million retail establishments operating in the country.
Chip card ownership has also increased. Murchie said 67 percent of all MasterCard consumer credit cards are chip enabled, up from 48 percent last October. This figure does not take into consideration MasterCard corporate cards or cards issued by other entities.
These figures are below the original projections made by the Payment Security Task Force, a consortium of banks, retailers and payment companies that looks to enhance payment security, which expected 60 percent of cards to have chips by the end of 2015 and 100 percent to be so equipped by the close of 2017.
However, despite not meeting these goals, MasterCard and the industry are content with the progress being made citing how long it takes for any new technology to firmly establish itself.
Murchie noted it took almost 10 years for Europe, Canada and Latin America to reach high levels of card penetration. About 97 percent of the cards in Europe and 87 percent in Canada and Latin America are now chip enabled, she said.
Jason Oxman, CEO of the Electronic Transfers Association, a payment card industry trade group, pointed out it took 13 years for the cell phone to reach 25 percent market penetration and the personal computer 16 years to reach the same level.
“We reached 25 percent adoption of chip cards in 90 days. Nearly 600 million chip cards are in U.S. consumers' wallets already. Almost one million merchants have already upgraded to chip readers. And this is without any mandate – legal or business – to upgrade. No bank is required to issue chip cards, and no merchant is required to upgrade to chip readers,” Oxman wrote in a blog.
Murchie said a penetration rate of around 60 percent is generally needed before the impact the cards have had on payment security can be seen. She did point out what could be expected once that level is reached by citing the effect chip cards have had in other markets.
“Hong Kong and Canada saw a 70 percent drop in credit card fraud,” she said.
Right now, 50 percent of all credit card fraud takes place in the United States, even though its residents are only responsible for about 25 percent of credit card transactions worldwide.