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Merchants continue to resist migration to EMV

June 4, 2013 by Terry Dooley — SVP & CIO, ITS, Inc

Although networks, issuers, and acquirers are making strides in the switch to EMV, a significant number of retailers are resistant to making the required upgrades to their point-of-sale hardware. During a recent RAMP Mobile Retail Services conference, a panel of major retailers, a processor acquirer, and a merchant association executive collectively criticized EMV mandates.

Visa, MasterCard, American Express, and Discover Financial Services continue to hold fast to the October 2015 deadline for merchants to have the technology in place to handle EMV payments (fuel merchants have an additional two years). Failure to upgrade their hardware will result in an increased fraud liability burden for merchants.

Although it’s well known that the U.S. EMV migration is coming about much later than other countries, many do not see this as a negative. In fact, they see it as quite the opposite, as it allows us in the U.S. to learn from the experiences of other countries, potentially easing the transition here.

One of the biggest complaints merchants make is in regard to the technology itself. Many are concerned that by the time they complete the switch to EMV, a new upgrade will be required, leaving them constantly behind the curve.

For example, Murphy Oil has 16,000 gas pumps to convert for EMV compliance. An upgrade of that magnitude is anticipated to cost the company millions of dollars. That, combined with the potential risk of the technology becoming obsolete by the time the switch is completed, has led Murphy Oil to indicate they may not make the switch to EMV at all.

According to the panel, another merchant concern centers on the ongoing chip-and-PIN vs. chip-and-signature debate. With a number of card issuers choosing not to require the use of a PIN to add security to EMV-chip card payments, some merchants are concerned about the level of fraud protection the switch will actually offer. There is also some merchant unease about EMV’s failure to address the shift in fraud to card-not-present transactions.

Also discussed at the conference is the general lack of awareness about EMV among smaller merchants and the potential challenges this will pose to the success of the U.S. migration. The panel also broached the subject of EMV terminals and security. The group agreed that a security standard must be established for the entire merchant community, not only for card networks and financial institutions.

Members of the panel conceded that although a number of merchants are unlikely to fully adopt EMV until the last minute, many merchants are taking the necessary steps toward meeting the requirements.

Have you discussed EMV migration with your merchant clients? If so, I’d be interested to hear of their plans for making the switch. Drop a comment below or get in touch with me via email.

About Terry Dooley

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