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Insider’s report do not apply to "regulated U.S. debit transactions." So much
on payments: for that problem, but it's not apt to open the floodgates to
merchant adoption of EMV.
Delays in EMV implementation
The travails of chip EMV is a globally accepted security protocol named for
and debit cards the companies that developed it: Europay, Mastercard and
Visa. It covers chips embedded in credit and debit cards
By Patti Murphy and POS devices that accept the cards. Under edicts handed
ProScribes Inc. down by Mastercard and Visa, most U.S. merchants were
expected to have EMV compliant terminals in place by
F ourteen months into life under EMV (Europay, October 2015. (Petroleum dealers with card-accepting fuel
Mastercard and Visa), and the security protocol pumps were given additional time to comply.)
is far from universal at merchant checkouts,
to the frustration of many. As a consumer, I'm Most consumers now have credit and debit cards with
frustrated. Some merchants I frequent have EMV readers embedded EMV chips. Visa reported in October 2016 that
installed, but still want me to swipe my card. Then there is 388.8 million Visa chip cards are in Americans' wallets:
the confusing messaging at EMV-enabled terminals. One 180.6 million credit cards and 208.3 million debit cards. Visa
especially perplexing message asks the cardholder if the also reported 1.72 million U.S. merchants were accepting
transaction should be treated as "Visa Debit" or "US Debit." EMV chip cards as of October.
Huh?
The top five states for merchant EMV adoption are New
I've been in the payments space for a long time, and I've Jersey (48 percent of merchants there accept chip cards),
spent at least half that time covering card payments, yet Pennsylvania (44 percent), Florida (43 percent), and New
I mentally stumble whenever I see that prompt. I'm not York and California (43 percent each). U.S. merchants
alone. Not long ago I overheard a harried shopper say to a handled 771 million payments using Visa-branded chip
cashier, "But my card is Mastercard." cards during October, Visa said. The card company also
reported that among EMV-compliant merchants losses to
Merchants and the folks running debit card networks counterfeit card fraud were down 43 percent, compared
are frustrated, too. They have complained the prompts, with 2014.
specified under the Visa Selection of Payment Rule, deny
merchant choice over processing networks and undermine Despite Visa's upbeat mood, merchant EMV compliance
competition in violation of Federal Reserve Regulation II, continues to lag. There are 27.6 million businesses operating
which implements the Durbin Amendment to the 2010 in the United States, according to the U.S. Census Bureau.
Dodd-Frank Act. Various estimates put the total of card-accepting merchants
in the United States at about 8 million. So using Visa's data,
Visa insisted it wasn't trying to force merchants to route fewer than one in four U.S. merchants accepts EMV cards.
debit card payments through its network, but several
merchants countered that the wording in their acceptance The Strawhecker Group reported in September 2016 that
contracts suggested otherwise. 44 percent of card-accepting merchants in the United
States have EMV terminals; but just 29 percent can accept
In November 2016, the Fed updated its commentary on chip-card payments. Jared Drieling, Business Intelligence
Reg II, clarifying that no payment network can directly Manager at TSG, blames device manufacturers for the slow
or indirectly inhibit merchant routing choices, including go.
through technical specifications. The Federal Trade
Commission also contacted Visa about its controversial "EMV terminal vendor supply and delays in the terminal
routing rule, and a group of trade associations representing activation/certification process are the bottlenecks in the
retailers wrote Visa's management demanding "immediate migration," Drieling said. "It is important to note that EMV
steps" to bring the rules into conformance with Reg II. adoption by merchant industry can vary drastically, for
example, quick service restaurants are suspected to be
Before the month was out, Visa published a public letter laggards in the transition." This could prove costly. Over 60
explaining that network routing provisions in its EMV rules percent of noncompliant merchants studied by TSG earlier
this year were experiencing increased chargebacks.
Lagging EMV adoption also has an impact on mobile
payments adoption, notably mobile payment schemes
that rely on near field communication (NFC) technology.
NFC is the technology used to support contactless tap-
and-go payments. It has been incorporated into all leading
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