This week, The Strawhecker Group (TSG) released a guide to help industry participants and new players understand what EMV is, who is impacted by the EMV migration, and how the shift to EMV will impact the payments environment.
This 86-page guide cites over 200 sources that were analyzed and reviewed to provide readers with a comprehensive view of the state of EMV in the U.S. See below for some highlighted findings from TSG’s guide. Want the whole story? See the content preview here and order here.
There’s a great deal of uncertainty over which variant of chip card transaction will catch on in the U.S. market. Banks that issue cards will be able to decide between “chip-and-sig,” in which consumers plug their chip cards into special terminals, but still sign receipts, or “chip-and-PIN,” which will require people to enter a PIN number instead of a signature. Did you know that:
All 10 of the largest credit card issuers are in the process of issuing chip-based credit and debit cards and expect the majority of their portfolios to be updated by the end of 2015.
All of the major banks are issuing chip-and-Sig cards, with 40% also supporting PIN capabilities.
All chip-based cards issued by major banks will continue to have magnetic stripes – enhancing usability while also mitigating certain fraud protection benefits.
Will CNP fraud increase with EMV? CNP fraud will likely increase with or without EMV. With eCommerce growing steadily, it’s natural to see a corresponding increase in CNP fraud levels. For this reason, merchants should always be vigilant in seeking out additional tools and innovations to take out more fraud – regardless of the shift to EMV. Solutions exist today to help mitigate fraud in online transactions, like tokenization and encryption. But those solutions need to be more widely implemented, which won’t likely happen unless retailers are incentivized to deploy them.
Did you know EMV is much more about fraud prevention? EMV also helps usher in the new technology and capability for contactless transactions. EMV is the stepping stone to the future of payments due to its dynamic data authentication (i.e. contactless, mobile). The shift towards a new ecosystem is dependent on enabling dynamic authentication with an enhanced contactless environment. This is essential for providing a robust, reliable and rapid infrastructure that is needed for delivering innovations such as advanced, seamless mobile payments. The sooner the investment in deployment, the sooner all players benefit.
What Is the Cost Associated with the EMV migration for all payment players? The EMV migration will no doubt be costly. EMV migration will create $11 billion in spending on new terminals and related systems, new chip-bearing plastic cards, and ATMs.
What is stalling EMV at small merchants: Three key impediments that are stalling EMV at small merchants:
Limited awareness: While improving, EMV awareness among small merchants remains low, with many unfamiliar with the technology, the upcoming liability shift, or both.
Absence of a clear ROI: Many small merchants are unconvinced by the business case for the rollout of EMV. This is particularly true for merchants whose transactions are dominated by low-ticket items, such as quick-service restaurants. Here, the fraud and chargeback risk is so minimal that many argue any losses brought on by the liability shift would still dwarf the cost of an investment in EMV technology.
A story they’ve heard before: Small-business owners are incessantly hounded by vendors to upgrade to the next greatest technology. To many, the EMV story seems all too similar to many told in the past, causing it to fall on deaf ears.
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