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Education
Happy first birthday EMV:
the safe, the slow and the numbers
EMV Were the merchants victims of rules that were beyond
their powers? Or were the merchants to blame for not
By Evi Triantafyllides applying for certified terminals in good time?
PAAY
Irrespective of finger pointing, the extent of EMV's current
I'm sure most of you recall last year's EMV (Europay, adoption is still debatable. While Mastercard quoted a 468
Mastercard and Visa) frenzy: Are you EMV ready? Get percent increase in updated terminals from October 2015
EMV ready for the October 1st deadline! EMV compliance to July 2016, and Visa Inc. reported a total of 1.3 million
– everything you need to know. And so on and so forth. chip-enabled locations reached by June (three-fourths
Now, exactly a year in, payment professionals and of which were small to midsize businesses), when you
merchants, alike, cannot help but wonder the following: compare their figures to the total market, the results aren't
What actually happened over the past year? How effective impressive. Mastercard's most recent report indicated a
has EMV been? What were the consequences? Have we mere 30 percent retail adoption.
become EMV ready? And looking back, what did this
readiness bring about? Costs versus benefits
Reasons for slow adoption
Inevitably, when considering adoption, a cost-benefit
The rules were clear. Be a good merchant. Apply before the analysis is vital for every retailer. Do the costs match up
deadline. Update to EMV-capable POS terminals, certified to the returns, or is it a futile investment leading toward
and enabled by your acquirers. And you'll be off the hook. a drained budget? The IHL Group estimated that retailers
Liability for fraudulent charges will continue to fall on the have spent $35 billion to solve an $8.6 billion annual
card issuers and have no impact on your profits. problem. However, when the investment is evaluated over
the long run (say, a 10-year period), the investment can
And supposedly, a good chunk of merchants did just make more sense.
that. A considerable number of them applied for certified
terminals and considered their work done. But, of course, Nonetheless, distinctions exist among individual retail
filing an application is only half the story, with acceptance segments. On the one hand, enterprise-level merchants
being the other, equally important half – an acceptance and retailers such as jewelry shops or stores that experience
that never came. high amounts of fraud, can clearly see the return on
investment. On the other hand, smaller convenience
While big giants such as Target Corp. were EMV ready stores struggle to justify the shift. Indeed, USA Today
almost on the dot, smaller merchants encountered a pile reported that Jared Scheeler of the National Association of
of backlogged, lengthy applications that proved way more Convenience Stores estimated that an average of $26,000
complex than initially planned. The result? Liability costs was spent on EMV reforms. This is out of an annual
for merchants that culminated in a lawsuit from a group $47,000 profit budget.
of smaller retailers alleging the card brands' certification
delays were deliberate attempts to save money by avoiding An incomplete version
paying for chargebacks. Were the accusations valid?
The comparison of the U.S. EMV implementation to its
counterparts in other world regions, where the mandatory
rollout of chip cards was also coupled with a PIN,
making updated POSs in those regions a true two-factor
authorization solution, caused commotion around the
fact that the U.S. EMV initiative was a lagging, outdated
measure that came a little too late.
By commotion, I mean outright accusations that translated
into yet more lawsuits. With Wal-Mart Stores Inc. as the
pioneer, followed soon thereafter by The Home Depot Inc.,
the card networks were faced with allegations that they
introduced chip-and-signature technologies, instead of
the safer, up-to-date chip-and-PIN technologies, to benefit
from the higher rates for which the former qualified.
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