EMV Cards: Where We Are Today

The transition to chip card issuance and acceptance is well underway. Take a look at where things stand today and what lies ahead.

Money & Credit

EMV Cards: Where We Are Today

Throughout most of 2015, the mainstream media closely followed the October conversion deadline for financial institutions and merchants to move from the traditional magnetic stripe credit and debit cards to the new EMV chip cards. You may have noticed that not all merchants have moved to accepting chip cards and not all consumers have chip cards.

How Did We Get to This Point?

This is a massive change to an industry that has relied on a specific technology for decades—magnetic stripes and 16-digit card numbers. Over the years, it became clear that this technology was not enough to protect cardholders from fraud. 

EMV (Europay, MasterCard and Visa) chip technology was developed, placing electronic chips into the familiar plastic card.  The chips encrypt each transaction, making it less susceptible to fraud. Because this new technology is vastly different, merchants must be equipped with new systems and hardware to accept chip cards.

The Transition …

In addition to the complexity of equipping each merchant with new technology, the software required to program the acceptance of chip cards was also delayed prior to this. This resulted in confusion and additional testing required by both the merchant equipment vendors and the merchant processing companies. 

Thankfully, most of the software for the multiple payment platforms has now been certified and approved, and merchant processors have now begun reprogramming existing equipment or replacing older equipment with the ability to accept chip credit cards.

It is estimated that 1.1 million U.S. merchant locations that accept major credit cards now have the ability to accept chip cards. At NCMIC, nearly 50 percent of our merchant customer base has answered our calls to transition into EMV-compatible equipment and more are taking action every day.

The Chip Cards Themselves and Where the Industry is Today …

Now, shift to the physical chip cards. According to a survey in September 2015 by creditcards.com, only 14 percent of cardholders had a chip card. Now, an estimated 70 percent of consumers are carrying chip credit cards.

Debit cards and business cards are slowly being transitioned to chip cards. For example, 33 percent of Visa-branded debit cards contain chips. As more people begin to carry various types of cards with a chip included, the challenge becomes educating both cardholders and merchants on EMV usage.

As cardholders’ comfort levels with using chip cards continue to increase, the dialogue between merchants and customers will help to increase the adoption of EMV usage and acceptance. Unfortunately, the overall industry did not do a good job in timing the issuing of the credit cards and allowing merchant processors enough time to equip them with the technology to accept them.

Another Industry Challenge …

In addition to getting all the card types moved into chip technology, complaints from merchants and consumers will continue to be addressed. During the 2015 holiday shopping season, a major complaint was the length of time it took to process a chip card transaction—it wasn’t as quick as the traditional swipe. This is now being addressed with new software to speed up the sale for both the merchant and the consumer.

What Lies Ahead with EMV Technology?

The road ahead will likely continue to be bumpy as merchants, consumers and the industry as a whole adapt. As for consumers, patience in using chip technology will be important.  For merchants, continuing to transition to be able to accept them will ultimately protect consumers.

Merchants, including D.C.s, are still under the liability shift mandate that went into effect in October 2015. Thus, it’s important to fully transition to chip credit card acceptance in your business. In the end, as the bugs are worked out and the technology grows and adapts, all parties will be better protected against fraud and compromise.

Sources include: https://www.chasepaymentech.com/faq_emv_chip_card_technology.html

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