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Why have most merchants missed the EMV deadline?

Taylor Armerding | Oct. 9, 2015
The Oct. 1 deadline to shift from “swipe-and-signature” credit cards to EMV, or “chip and PIN” has been known for years. But merchants, and even some of the card brands, have been slow to respond. One major reason, according to merchant advocates: It’s too expensive and too complicated

emv chipandpin

Last Friday’s Oct. 1 deadline for so-called EMV or “chip-and-PIN” credit card technology to replace the 1960s-vintage “swipe-and-signature” magnetic stripe card system should not have been a surprise to any of the major players in the payment card industry (PCI) – merchants, card issuers and banks.

Visa, one of the three developers of the EMV standard (along with Europay and MasterCard) announced in August 2011 – more than four years ago – that it would be moving to EMV in the U.S. (it has been in use in Europe for more than a decade). The EMV Migration Forum was created by the Smart Card Alliance in July 2012.

For the past year and a half there have been regular, increasing reports of the impending deadline, along with warnings that if merchants or card issuers did not have EMV technology, they could be on the hook for the cost of fraudulent use of cards.

But, based on how many of the participants met that deadline, it looks like a lot of them were unaware of it or ignored it. Estimates last week of the percentage of merchants that lack the new payment terminals ranged from 50 percent to as high as 75 percent.

Gilles Ubaghs, ‎senior analyst of financial services technology at Ovum, an independent analyst and consultancy, noted that his firm found, “30.2% of merchants reported that they had never heard of EMV at the beginning of this year, and a further 36.8% report they have no interest in launching EMV in the future.”

Another survey, by Randstad Technologies, found that, “as late as this summer, 42% of businesses had either taken no steps or were unaware of any progress toward the transition.”

Jason Oxman, CEO of the Electronic Transactions Association, cited a survey by The Strawhecker Group that found only 27 percent of U.S. merchants were EMV-ready by last week’s deadline. That is expected to increase to 44 percent by December, but not get to 90 percent until 2017.

He said the survey showed the card issuers doing better – that 70 percent will have issued EMV-enabled cards by the end of the year.

And Joram Borenstein, a vice president at NICE Actimize, reported last April on a less scientific but more entertaining personal survey in greater Boston, where he tried to use the chip portion of his credit card at more than a dozen brand-name chains and independent retailers.

“In the majority of cases, the clerk behind the counter had no clue what I was doing … They almost always looked annoyed and instructed me to swipe; I think they thought I had gone mad,” he wrote, adding that he thinks Boston is typical and that, “hardly anyone is ready for chip-and-PIN. Merchants certainly aren’t …”


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