Eight months following the liability shift date for EMV cards, many U.S. retailers and merchants are still not processing EMV chip transactions, even though they have the machines that are equipped to do so.
Indeed, only 37% of card-accepting merchants are EMV-ready, according to a survey released earlier this year by the Strawhecker Group, a management consulting firm.
Considering the still low EMV implementation rates combined with the fact that new software is now available to improve EMV transaction-processing speed – when will the vast majority of U.S. retailers get up to speed?
Indeed, speed has been an issue for many consumers who are used to quickly swiping and do not like waiting while their cards are stuck in EMV slots.
To fix that glitch, MasterCard's M/Chip Fast builds on the principles of contactless payments, or "tap and go."
Visa, which offers a similar technology called Quick Chip, speeds payment times by allowing the merchants to skip several steps in the process that are less important in the U.S. than they are overseas.
National Retail Federation's spokesman Craig Shearman noted that merchants are required to acquire EMV compatible machines, which can range anywhere from $500 to $1000. Then, the card industry must certify every compatible EMV system.
And while the majority of major retailers are up and running with EMV, many small-to-mid-size ones are waiting for their machines to be approved, according to Shearman.
"They installed their equipment by October but are waiting for the card industry to certify their systems," Shearman said, "A lot of the card companies did not prepare properly for the certification process they themselves instituted."
For Quick chip or M/Chip technology, the EMV compatible machines can be upgraded through a software update.
Chole Casber, EMV product manager at TMG, said that the consumer saves "roughly 3 to 5 seconds" when using the quicker processes. "Getting it down does help dramatically," Casber said, "As a cardholder, leaving your card in the terminal feels like an eternity."
When asked if the consumer's checkout woes are a problem of perception of a new technology or a reality in the checkout process, Casber said, "It's a little bit of both…anything to ease the cardholder experience is fantastic."
Art Harper, Director of Solutions Consulting for PSCU, said that consumers are just not used to the new payment process and have not adapted to the change in habits at the register.
"In the past we had a mag stripe card in our hand and a process of approval and denial…so we had something to occupy ourselves as a consumer – the same process is going on behind the scenes and now you do not have something to occupy yourself during those few seconds," Harper said.
The credit card industry has advertised the new EMV quick technology as having no extra cost associated with the upgrade. Merchants are reliant on the payment processor's ability to support the tech once it's released.
"I do know that some merchant processors are getting coded for the download," Casber said, "most major processors are still working on it."
But some issues remain. For instance, many merchants have yet to upgrade their point-of-sale machines to accept even standard EMV transactions and concurrently, credit card companies have not been able to efficiently certify all of the systems waiting to be used.
And some industry insiders are concerned that card companies are prioritizing saving consumers a few seconds instead of ensuring full implementation of the EMV system; even suggesting the software was not working properly when it was first introduced.
"It is unbelievable that Visa and MasterCard would knowingly introduce a flawed product and come back six months later for a fix for it," Shearman said, referring to EMV's initial roll-out in an interview, "We think they should fix this."
Stephanie Ericksen, vice president of risk products at Visa, said the card company has been working for the past five years making sure U.S. merchants are prepared for the planned switch to EMV.
The new quick chip technology is completely optional, according to Ericksen, as well free for merchants and processors. She noted that the technology was a response to merchant concerns that the EMV system would slow down the checkout process.
"From a Visa perspective, we have done a lot to simplify the requirements – and to also help the industry streamline the process," Ericksen said, "We have been trying to minimize the cost and complexity…since we started talking about chip in the U.S."
The CU Front
On the credit union front, EMV card issuance can be complicated, say industry insiders. And the price of a new EMV enabled card can be as high as $4. Credit unions can invest in systems like EMV instant issue to provide new chip-enabled cards to members at branches, but this process can be costly with multiple printing machines and security measures require.
"The majority of fraud that exists pertains to counterfeit cards," said Jamie Topolski, director of alternative payment strategies at Fiserv, "EMV solves a majority of that problem."
The situation can be boiled down to a cost vs. member satisfaction balance, which has always been a challenge for CUs. Some in the industry see this as less of a cost and more of an investment in saving costs due to fraud – which is still marginally present, even with EMV.
The United States' primary method of EMV differs from most European countries. In Europe a "chip-and-pin" method is most commonly used with credit and debit, wherein the US a "chip-and-signature" method has been adopted by most for credit transactions – the "chip-and-signature" method still has to mitigate the issue of stolen cards that only rely on a signature to finalize a transaction.
Credit card companies have been hesitant to institute another pin verification method for consumers, claiming that the onset of an additional passcode is burdensome to consumers.
"The big problem is that these are chip and signature cards and the rest of the world uses EMV as chip-and-pin," Shearman said, "[chip-and-pin] is the gold standard for security with credit cards…anyone who signs a receipt knows a signature is worthless."
In addition, credit union members have faced a large amount of inconsistency with retailers and their checkout processes, according to Fiserv's Topolski, suggesting that confusion amongst members may add additional difficulty to the conversion process.
He suggested CUs create educational materials for members to help them understand what the switch is about and how it will impact them. "We have worked with a lot of our CU partners to develop materials – whether it is email campaigns, letter campaigns or digital instruction," Topolski said.
