October can be a frightening month, and not just because of Halloween. In two years, the October deadline for EMV card acceptance will hit, leaving most merchants on the hook for fraud if they have not begun accepting smart-chip cards.
The liability shift "is going to be really scary for the merchants out there," says John Yarmy, senior vice president of partner programs at Vantiv.
Once big retailers such as Walmart and CVS start transitioning to EMV, independent sales organizations will have an easier time selling EMV products to smaller merchants, he says.
Yarmy and others discussed EMV adoption at the Western States Acquirers Association conference in San Francisco, Calif., last week.
ISOs must keep a simple sales pitch for EMV, focusing on the benefits for the merchant, says Andy Chau, president and CEO at PAX Technology Inc.
Countries that have switched to EMV chip-cards have seen decreased instances of card-present fraud, and have established EMV as a foundation for payments based on Near Field Communication technology.
Acquirers have already passed an April 1 deadline for accepting EMV smart-cards.
Since last year, more banks have started issuing EMV cards, says John Badovinac, senior manager of acquirer relations at Discover Financial Services. By 2015, there will be an estimated 255 million EMV cards issued in the U.S., he says.
Cardholder education will come later, says Badovinac.
Another issue is the implementation of the Durbin Amendment, says Badovinac. The Durbin rule allows merchants a choice of how to route debit transactions but the EMV standard was not originally built to accommodate that, he adds.
The U.S. has some advantages in that it can learn from other countries' experiences.
As EMV thwarted card-present fraud, many countries have seen an uptick in card-not-present (online or mobile commerce) fraud, Badovinac says.
But Badovinac says several companies are trying to keep fraudsters from hacking into e-commerce activities by creating card-present online transactions.
For example, a recent idea was using NFC to allow consumers to tap a card to the computer screen when shopping online. This turns the usual card-not-present transaction into a card-present payment which is protected by EMV technology.