EMV Switch: Are We there Yet?

Things are really looking up for EMV migration in the US. According to recent Visa statistics, 39% of US merchants now utilize EMV capable terminals, representing 49% of in-store Visa transactions1.  So while we’re not quite over the tipping point with EMV terminals, we are quickly heading in that direction. Momentum is building, and we can expect steady adoption in 2017.

The great news about EMV in the US is that we’re seeing the results in fraud reduction that we needed so badly. When the European Union completed its migration to EMV several years ago, card-present fraud was slashed by 80%2. While we’re not quite at that level yet, we are seeing massive reductions. Counterfeit fraud has decreased by 52% at EMV-compliant merchants3. That’s an amazing savings in both chargebacks and hassle.

However, the fraud picture looks entirely different for retailers that have not made the switch. Fraudsters have turned their focus non-EMV merchants, with counterfeit fraud increasing a whopping 77% in this segment4. Clearly, criminals are hitting what they can before the mag stripe loophole vanishes. Fortunately, as the rate of EMV migration increases in 2017, this stream should soon dry up.

Things are settling down on the consumer front as well. When the EMV switch first began, consumers objected strongly. Old habits die hard, and people didn’t understand why chip cards were of any benefit to them. They balked at the sluggish transaction speeds and awkward physical maneuver of chip insertion. However, as a result of industry education and gradual familiarity, 78% of consumers now report a positive attitude about EMV cards5. And what’s more, they’re using them frequently. 9 out of 10 consumers6 regularly use their chip cards for transactions at retailers with EMV capability. Happily, the challenge of consumer acceptance has largely been won.

It’s helped that payment networks have listened to consumer complaints, and worked on improving their transaction times. What used to take 15 seconds can now be accomplished in as little as 2.5 seconds, with merchants utilizing new Visa Quick Chip and MasterCard M/Chip Fast applications.

However, one major pain point remains for consumers: dealing with hit-or-miss merchants who may or may not have chip terminals. Since less than half of retailers currently utilize EMV technology, it’s anyone’s guess what payment method to expect at checkout. 32% of consumers report frustration at this situation7, as many of us can personally attest. On the positive side, this should be a temporary bump in the road, as the migration continues.

A trend we’ll expect to see in the next few years is the elimination of the mag stripe from payment cards entirely. This transition can’t take place until 100% of cards are EMV chip enabled, estimated to hit around the year 2020. But before we know it, the mag stripe, venerable citizen of the electronic transactions industry, will go the way of the rotary dial. It’s exciting to consider the new payment technologies that are evolving to take its place.



2. https://www.discover.com/credit-cards/resources/what-are-emv-chip-cards

3. https://usa.visa.com/visa-everywhere/security/visa-chip-card-stats-december.html

4. https://newsroom.mastercard.com/press-releases/mastercard-chip-momentum-reducing-fraud-one-year-in/

5. https://www.nerdwallet.com/blog/credit-cards/emv-survey/?trk=nw-wire_305_0_25574

6. https://newsroom.mastercard.com/press-releases/mastercard-chip-momentum-reducing-fraud-one-year-in/

7. http://www.marketwatch.com/story/how-cranky-are-consumers-about-using-chip-cards-2016-12-2

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