Friday, March 13, 2015
As EMVCo prepares for a June 2015 EMV User Meeting in Seattle, results from an independent survey indicate small to midsize merchants will not be EMV (Europay, MasterCard and Visa)-ready in time for the October 2015 liability shift.
The meeting is slated to address advances in technology and EMVCo’s expanding role in the payments ecosystem. EMVCo, owned by American Express Co., Discover Financial Services, JCB International Credit Card Co. Ltd., MasterCard Worldwide, China UnionPay and Visa Inc., is a technical body focused on managing the evolving global EMV specifications and related testing processes.
Payment card issuers, acquirers, merchants, processors, terminal vendors and third-party networks are invited to participate in EMVCo’s upcoming event. Delegates from EMVCo working groups will present updates on a variety of initiatives including standardized card brand testing procedures, host card emulation, consumer cardholder verification methods, and the online authentication method EMV 3D Secure Specification v2.0 (3DS 2.0).
The EMV User Meeting, designed to increase industry engagement in the ongoing development of EMV specifications, is held at a different location each year. Sean Conroy, Chair of the EMVCo Board of Managers, saw the U.S. venue as providential for EMVCo delegates. “It is the perfect time to host our User Meeting in North America, as delegates will receive an insight into EMV chip progress, as well as other areas in which EMVCo supports the payments community,” he said.
An independent study released by Newtek Business Services Corp.’s The Small Business Authority found 71 percent of 990 small merchants surveyed in February were not even aware of the impending October liability shift and its potential impact on their businesses. In fact, up to 81 percent of survey respondents had not installed EMV-compliant POS equipment in their businesses.
Barry Sloane, President and CEO of The Small Business Authority, has observed a slow march toward implementation of EMV solutions by its more than 100,000 merchants, as well as a general lack of urgency among small to midsize business owners. “With approximately six months to go, it is still apparent that business owners still do not have a full understanding of the importance and issues surrounding the EMV strategy to accept chip card processing,” he said.
Payments industry analyst Deborah Baxley, Principal at Capgemini, expects smaller merchants to gradually adopt EMV technologies in response to merchant service provider requests and customer demands. She said retailers should be more concerned with near-term EMV adoption than business owners in the hospitality sector.
“Many small merchants probably won’t experience much counterfeit fraud and needn’t be very worried about the liability shift,” Baxley said. “In some cases, like restaurants, they might be more concerned with customer demand for Apple Pay and other NFC wallets.” She added that it would be reasonable to expect a majority of small business owners to upgrade their existing systems to EMV and contactless ready terminals over the next few years.
Itai Sela is Chief Executive Officer of B2 USA, a UL Transaction Security trusted partner and exclusive distributor for Collis Payment Products in Canada and the United States. Sela and his team support U.S. acquirers and processors in testing, certifying and implementing EMV technologies.
Sela said retail merchants in the United States that sell consumer goods with high resale value need to focus on EMV because that’s where fraudsters will go first. And he advised acquirers and processors to focus on simple solutions that will help merchants become compliant. “Don’t look for the most robust solutions,” he said. “Do the minimum requirement at first. You can always upgrade later. The key is to get these retail merchants compliant.”
He went on to say the vast majority of the world’s fraud originates in the United States, and the liability shift will change everything. He noted that small merchants, who may have seen $1,000 of fraud over the last 10 years, may find themselves in a precarious position when they begin to accept international cards and different types of transactions. Without the protection of EMV-ready processing equipment, they may find themselves liable for fraudulent transactions, and as a result many of them may pay costly fines or even lose their businesses.
Sela credits the Target Corp. and The Home Depot Inc. breaches for raising awareness in the retail community about the need for secure payments systems. However, he agreed with other industry leaders that merchants of all sizes have been slow to adopt EMV. He cited the lack of a standardized method of debit card acceptance as an impasse for many retailers. Some have opted to install credit only and phase in debit down the road. Many are reluctant to implement credit without debit and would prefer to wait before making any changes. After all, retailers tend to be cautious about upgrading their infrastructures. “What’s lacking is a sense of urgency,” Sela said.
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