Small to medium sized businesses are often cast as unprepared for the card network's October deadline for EMV-chip card migration. But how bad can it really be?
"It will be a disaster on Oct. 1", said Mansour Karimzadeh, CTO and Managing Director of SCIL-EMV Academy. "Most of these people don't know what EMV is and what EMV cannot be."
The SCIL-EMV Academy, an independent consultancy, is partnering with software developer Cardtek for an EMV workshop tour, which kicked off Sept. 21 and will run through Oct. 2. It includes ten stops in cities such as Minneapolis, Omaha, New York, Dallas and Los Angeles.
"These small sized companies are either in denial, they don't know or don't want to know about EMV…but many of them aren't doing anything," said Karimzadeh. "Perhaps it's their ISOs or acquirers not telling them what to do, but it's a problem."
The events will include presentations, demonstrations and free access to EMV Analyzer, a Cardtek tool that tests the EMV readiness of payment systems. With Cardtek on board, the events aren't vendor neutral, though the claim that small businesses are dangerously behind the curve in adopting EMV—or even knowing what it is—is hardly an embellished sales pitch.
Study after study after study reveals staggering level of unreadiness, mostly among small merchants—though even larger big box chains are barely completing their migration in time. In some studies, such as a new release from The Strawhecker Group , EMV readiness is actually moving backward from earlier estimates.
"The lack of knowledge is just huge, I found it surprising," said Gregg Smith, Cardtek North America Sales Director. "Not only do a lot of these businesses not plan on buying equipment, most didn't even understand what EMV is."
EMV cards improve security by making payment cards resistant to counterfeiting. After Oct. 1, any company unable to handle EMV payments faces a shift in fraud liability (gas stations have until October 2017).
What's puzzling about the lack of chip card knowledge is the amount of educational materials on EMV being made available in the run-up to the liability shift date. The EMV Migration Forum and Payments Security Task Force,Visa and Mercury Payment Systems, have each launched EMV education programs. And in some cases, such as the credit union service organization COOP Financial Services, EMV education programs have been in place for years.
The knowledge gap stems in part from the lack of centralized government involvement in the U.S. migration, and the tendency for EMV education to be too technical and reliant on digital or print content, , Smith said.
"In the U.K., the government had an education program, and you don't have that in the U.S.," Smith said. "And in the U.K., which is much smaller, it took eight or nine years to do the EMV migration. So even at that market size, the merchants were being incentivized to upgrade to EMV terminals and it took nine years."
And since merchants don't face liability risk at this particular moment in the U.S., the tangible pressure to make a move isn't as great, Smith said.
"The merchants aren't liable for anything right now, and they're being forced to pay for upgrades and are reluctant to do that," Smith said.
Smith plans to improve merchants' awareness of EMV through the use of software that enables merchants to see the chip cards in action, along with a view into the payment process and how EMV changes the payments workflow.
"You can see how the chip cards work, and can find out what can go wrong," he said. "The technology tells you what happens if you enter a wrong number, or make some other execution mistake. Or what happens if the card is beyond its limit. Or what has to happen for the equipment to work properly. These are a lot of the things that retailers often don't know about EMV or how it works."