While the EMV fraud liability shift for most companies passed nearly two years ago, there are still pockets of stores that haven't switched over — and they can be particularly prone to the kind of fraud chip cards are designed to thwart.
EMV is designed to be resistant to counterfeiting, and the October 2015 liability shift is a consequence the card networks imposed on companies that did not make the switch. Some companies considered the fraud risk to be less than the cost of upgrading; others had to wait on certain vendors to support the technology; and certain categories such as restaurants and gas stations had issues that worked against simple upgrades (the card networks even gave gas stations an extension).
Thus, two years after the EMV card standard should have gone into effect in the U.S., the country is still very much resisting the change.
"There are still a lot of stores out there that don't have EMV," said Ken Paull, CRO at Boston-based acquirer Cayan.
Cayan recently received chip card certification from the payment processor Worldpay, which can help Cayan reach small businesses through its Genius cloud-based payment gateway. While EMV certification announcements come frequently from across the payment industry, Worldpay, which is in the midst of being acquired by Vantiv, has a number of programs in sectors where EMV use still lags.
"The EMV conversions are moving down the pyramid so to speak," Paull said, adding the stragglers include small to medium-sized businesses and some restaurant segments. "Full-service restaurants in particular haven't converted due to the slow growth of pay-at-table solutions. There hasn't been a wholesale adoption of pay-at-table tech."
The Worldpay pact will also allow Cayan to reach merchants that are looking for faster EMV payments execution, which would give Cayan a chance to sell its Genius ChipIQ service that processes chip card transactions in 4 seconds. Worldpay recently added support for faster EMV execution products from Mastercard and Visa, contending a "traditional" EMV checkout can take as long as 20 seconds, a process that can hinder overall chip card use in the market segments that Worldpay serves
"Worldpay is very well positioned in some of these verticals," Paull said. "They have been very successful in creating a market segment and we have had strong demand for Genius in these segments."
The Worldpay certification is the latest in a series of moves Cayan has made on the frontier of digital payments, to reach industries that are either not using chip cards or don't accept cards at all.
Cayan recently acquired Card Payment Systems, a company that processes more than $700 million in Visa and Mastercard transactions, mostly in waste collection and disposal, an industry that has only recently started to support card payments.
Cayan also collaborated with Demandware, integrating the Genius Platform with Demandware's Commerce Cloud to add remote access to transaction technology along with cloud-based EMV payments.
"Small businesses are not typically technology-savvy and we suspect the logic goes like this: 'I accept the card with the chip, I swipe it, so yes I am EMV compliant,' " said Tim Sloane, vice president of payments innovation at Mercator Advisory Group, adding merchants that haven't upgraded will face the greatest risk as fraudsters look for locations where counterfeit cards can be used.
The more valuable and fungible the items sold the greater the risk for the merchant. When a counterfeit card is used for a purchase, not only will the merchant have lost the cost associated with the product or service, it is also obligated to return the funds to the issuer, so these merchants are facing "double jeopardy," according to Sloane.
"The risk to a dry cleaner or candy store is obviously relatively small, but a liquor store or department store could easily become targets," Sloane said. "One criminal could drive a significant loss for the merchant and a criminal organization could put that merchant out of business."