Blog

The Walmartization of EMV

America's largest retailer will bulldoze the remaining barriers to EMV adoption, which might have ramifications at the ATM.

July 4, 2014 by atm Atom — blogger, atmatom

Walmart will almost single-handedly usher in U.S. EMV. Apologies to Target and other early EMV adopters but the sheer size and diverse customer base of America’s largest retailer will bulldoze the remaining barriers to EMV adoption in the U.S. Expect the following in the next 12 months:

Walmart’s early adoption of EMV technology at the cash register will hasten consumer education. One of the main objections to the current liability shift timelines is the lack of a coordinated consumer education program. What better way to train American consumers to “dip and hold” EMV cards than through an estimated $279 billion in annual U.S. sales at nearly 5,000 Walmart stores? Once exposed to the nuances of the EMV transaction at Walmart, these same customers will go on to frequent EMV terminals at restaurants, gas pumps and other retailers nationwide. As a result, many consumers will prefer and even insist on the more secure EMV transaction. No more disappearing cards, two-step tip processes or other fraud enabling practices. Customer preference for EMV might have ramifications at the ATM, where banks will be largely EMV-ready by 2016.

Walmart’s early issuance of EMV credit cards will blaze a trail for most other card issuers. Another EMV objection has been the cost of chip card issuance and an overall lack of EMV cards. By coming out of the gate early and reissuing all of its branded credit cards, Walmart effectively defuses this argument. In addition, Walmart’s planned use of customer payment data and EMV secure transactions as marketing advantages will have its card competition playing catch-up. Although all issuers will probably not meet the 2015 POS liability shift deadline, it appears that most card issuers will be EMV compliant by the end of 2016. It looks like there will soon be a chip card in every wallet.

Walmart’s full embrace of EMV technology should put a bullet in the 'let’s delay and find a more robust solution' argument. Already late to the party, the U.S. is now paying the price, absorbing an estimated $6 billion in annual card fraud — and growing. MasterCard and VISA are deadly serious about offloading these mounting fraud costs. Walmart has put the financial and retail communities on notice that they don’t intend to be stuck with the bill. After witnessing the public execution of Target’s CEO and now Walmart’s stated move to EMV, the challenge for U.S. retailers is not if, but when and how for EMV.

With no regulatory body in the U.S. to mandate EMV adoption, a $6 billion “Sword of Damocles” hangs over the collective head of the entire payment chain. As both an issuer and acquirer, Walmart is doing its part to adopt, educate and avoid. By doing so, Walmart will hasten the U.S. adoption of EMV.