7 Problems Vexing EMV in the U.S.
August 12, 2016 10:14 AM
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The U.S. EMV migration is slowly progressing, but there are significant hurdles to full adoption of the secure payment card technology. Here are a few of forces working against EMV.
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Security Under Fire
EMV has withstood the test of time outside the U.S., but no technology is perfect. At the recent Black Hat conference, researchers from NCR demonstrated a way to rewrite the magnetic stripe of an EMV payment card to make it appear as though it lacked EMV security.
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Merchants and Issuers Out of Sync
Issuers are racing to get EMV cards into consumers' hands, but merchants are moving at a much slower pace. Discover's Pulse debit network found that 33% of debit cards had EMV chips at the end of 2015, but merchant support was not as far along. Just 4% of debit transactions were made with chip cards at chip terminals at the start of this year.
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Supply and Demand
On the issuer side, demand for EMV-enabled cards is so high that card manufacturer Oberthur Technologies is creating a special option for those facing shortages. It allows issuers to restock up to 25,000 cards in five days, compared to the standard three to four weeks.
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Chargebacks
After last year's EMV liability shift took effect, merchants saw a sharp rise in chargebacks. They were skeptical that the surge was entirely due to post-EMV fraud liability; regardless, nearly a year after the deadline passed, many merchants say the chargebacks have not abated .
Equipment Cost
Merchants of all sizes must decide whether the security benefit of EMV outweighs the cost of putting in new terminals. Even Square , which has traditionally offered its hardware for free, attached a price tag to the EMV version.
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Time
Consumers and merchants perceive EMV cards to be slower because they must be kept in the reader for about 10 seconds. The card networks came out with software upgrades that speed this process along , but have only just begun deploying the upgrades to merchants.
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Keeping It Simple
EMV was meant to be a stepping stone to more robust technologies such as NFC mobile wallets, but many companies are coming to market with simpler offerings. Starbucks, Walmart and CVS each offer mobile wallets that use bar codes rather than EMV and NFC.
