It’s been a year now since the deadline instituted by all the major credit card brands for retailers to become EMV compliant has passed. To say that the “road to EMV” has been a rocky one could be the “retail understatement of the year”.
If you are still not EMV compliant, you’re not alone. A quick audit of retailers that use Celerant’s platforms shows that fewer than half are processing chip cards. The issue is not a software one – Celerant’s POS software solutions have been able to handle chip-enabled cards since the deadline. So why haven’t more retailers converted? More importantly, what do consumers think when they are asked to swipe their chip cards?
Do shoppers have peace of mind that your processing is secure?
Chargebacks from swiping counterfeit EMV cards hasn’t been as big of a problem as anticipated, so it’s easy to think there is no hurry to upgrade to the new standard. That’s a dangerous thought that could backfire in a couple of different ways.
The biggest problem is with public perception. Most shoppers believe that chip scanners enhance the security of their cards and have become accustomed to dipping; they have started to become wary of retailers that still swipe. Encryption and tokenization are the most important security measures any retailer can enable — but to consumers, these practices are invisible. To them, a chip scan seems much more secure than a magnetic swipe. Since perception is reality, it matters how you process credit cards in front of customers.
EMV devices also come standard with NFC readers, which makes them able to accept funds from Android Pay, Apple Pay, and other smart wallets. Not only are customers beginning to ask to use this form of payment, the ability to accept it implies the utilization of technologically advanced and secure payment processing. Even consumers that do not use smart wallets perceive retailers that can accept them as more secure and up-to-date. The bottom line is that retailers will likely to accept these growing forms of payment in the near future, and equipping EMV comes standard with that functionality.
Price hurdles and few chargebacks
The biggest reason retailers were urged to comply with EMV standards last year was so they would not have to shoulder the liability of processing fraudulent credit cards. As of October, 2015, any retailer that processed a chip-enabled card without scanning the chip bore the responsibility of any charge made using a counterfeit card. This opened them up to tremendous liability that could be crippling for small and mid-sized retailers.
Many retailers, whether aware of the liability shift or not, did not update to EMV-compliant hardware due to cost concerns. Purchasing new equipment was especially difficult for smaller retailers operating on thin margins. These challenges were lost on credit card brands, which eased their policies to limit the amount of chargebacks that could be sent to retailers. They also continued to absorb a portion of fraudulent charge liability instead of assigning it all to retailers.
Some Celerant retailers have instituted EMV in response to chargebacks — but not nearly as many as initially expected. But the threat of chargebacks has not diminished forever. The credit card brands are still dedicated to EMV, and the reprieve in the amount of chargeback liability they are passing onto retailers is designed strictly to allow more time for them to get onboard. It is not a free pass to ignore EMV altogether.
Because EMV wasn’t the “swift storm” that everybody feared shouldn’t put it out of mind. Customers expect their merchants to take advantage of the extra security their new cards have built-in, and although delayed, the liability shift is real and EMV is here to stay.
Ask us for the most cost efficient ways you can comply with the EMV standard today!