It’s been more than a year since EMV adoption became the law of the land.
Well, not the law, but since Oct. 1, 2015, retailers that haven’t adopted EMV-chip card readers risk liability for any fraud that occurs during point-of-sale transactions in their stores. Since that deadline, EMV adoption in businesses around the world has grown exponentially, but there are still many stores that do not use the technology. EMV adoption has been slower than expected – particularly in the U.S. – for a variety of reasons such as lack of knowledge about the technology and the benefits it can provide to small businesses.
Here is a brief look at EMV adoption and what its future looks like in 2017 and beyond:
Since the deadline
Beginning Oct. 1, 2015, fraud liability shifted from banks and other financial institutions to merchants for any credit cards that were hacked during point-of-sale purchases at their store. Despite this harsh deadline, many retailers took a while before adopting EMV technology, and some businesses still do not use the updated card readers. But the slow adoption of EMV isn’t solely the responsibility of business owners.
Many consumers didn’t even have EMV-enabled credit and debit cards by the time the deadline had passed. A mere 25 percent of cards were enabled with EMV technology by the end of 2015, according to Pulse’s 2015 Debit Issuer Study. Throughout 2016, EMV adoption slowly picked up steam, but the U.S. still lags significantly behind other countries when it comes to widespread EMV implementation and usage.
Approximately 1.75 million Visa merchants now use EMV-enabled card readers in the U.S., according to Business Insider. While this might seem like an impressive number, it only accounts for 38 percent of retailers nationwide. Globally, the rates of EMV usage are much higher.
In Northern, Southern, and Western Europe, EMV cards accounted for more than 97 percent of all card-present transactions between July 2015 and July 2016, the Credit Union Times reported. Similarly, EMV cards made up nearly 90 percent of transactions in Africa and the Middle East, not quite 90 percent in Canada, Latin America, and the Caribbean, 75 percent in Eastern Europe, and nearly 58 percent in Asia.
Despite the slow movement to adopt EMV in the U.S., many merchants who have made the transition have noticed a substantial decline in fraudulent point-of-sale transactions, according to USA Today. Among the 25 retailers that were experiencing some of the highest rates of fraud at the end of 2014, those that implemented EMV card readers into their stores saw a decrease in fraud of more than 18 percent by the end of 2015. In contrast, some of the retailers that did not upgrade their systems saw an increase in fraud of more than 11 percent over that same time frame.
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What is the future of EMV?
Despite the relatively slow adoption so far, some experts expect 2017 to be a banner year for EMV technology. Professionals point to a variety of factors as signs that EMV cards have yet to reach their heyday.
One of the biggest indicators of EMV’s growing popularity is that there were 800 million chip-on-chip transactions in November 2016 alone, which is a 359 percent increase from the same period in 2015, according to Business Insider. Consumers also seem to be warming up to EMV cards because of the increased security they have over cards with a magnetic strip. According to a Visa survey, 35 percent of shoppers now think EMV cards are the safest way to make in-store purchases, Business Insider reported.
Fraudulent purchases also seem to be costing retailers more with each passing year. Credit card hacks cost retailers $32 billion in 2014, up from $23 billion the year before, Business Insider reported. Experts believe the spike in fraud might motivate retailers to make the upgrade to EMV card readers.
As EMV becomes more popular among brick-and-mortar institutions, some experts expect identity thieves to move online to continue their illegal activities. This will mean even as small business owners begin to feel more secure about their in-store transactions, they will have become more diligent to ensure that their online sales are protected as well.
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