With the EMV liability shift less than a month away, U.S. merchants have far more on their plates than merchants in other countries had when only weeks from migrating to chip-based payment cards.
When European countries shifted to EMV nearly a decade ago, or even Canada about five years ago, a correlating shift to contactless mobile payments through Near Field Communication or Host Card Emulation was not complicating matters.
There also were not three significant mobile wallet players in Apple Pay, Samsung Pay or Android Pay expected in the mix, as well as the major retailers' own CurrentC mobile wallet through the Merchant Customer Exchange.
"That's why it is so complex in the U.S., other countries did not have this underlying technology to deal with," said Xavier Giandominici, director of American markets for Fime, a payments consultancy and technology tester based in Antony, France. "Now, if a merchant chooses to implement NFC for mobile payments, you have to have EMV first."
It's those types of challenges that have industry observers feeling U.S. merchants may be overwhelmed with payment technology challenges, especially heading into the holiday season.
EMV is the stepping stone merchants need to move into mobile payments, said Gregory Burch, vice president of mobility, business development and ISV relationships for terminal maker Ingenico.
"We see these technologies as complements to each other," said Burch at a recent payments conference. "Ultimately, mobile payments run on the EMV rails."
Despite the challenges, Fime is seeing some positive trends in the U.S. as merchants and issuers move closer to the Oct. 1 liability shift timeline. As of that date, the party unable to accept EMV technology becomes liable for card-present fraudulent transactions at the point of sale.
"We have reached a good level of issuance and acceptance, so the major process is moving along and that's a big step," Giandominici said. Depending on what research or survey one reads, anywhere between 30% and 50% of merchants will be ready to accept chip cards, Giandominici added. "However, there is a long list of merchants who still have to migrate to EMV, and overall it could take another five years."
The large retailers will be ready for EMV, while small merchants with one or two POS terminals may take more time to learn about the chip migration. Mostly, the mid-size businesses have the most difficult task in getting educated about EMV and getting certified for the change, Giandominici added.
Three months ago, Fime joined the EMVCo board to provide feedback to the EMV standards body during global migrations and the development of mobile point of sale and tokenization. EMVCo is jointly owned by the six major card brands—American Express, Visa, MasterCard, Discover, JCB and Union Pay.
Fime has developed an EMV migration white paper for merchants, outlining the critical steps and considerations for the conversion. "The first thing for a small business is to go right away to a partner acquirer or processor and ask if they are ready for EMV and what needs to be done," Giandominici said.
All of the technology challenges could result in merchants not being able to set priorities properly while also trying to successfully run their businesses, Giandominici added.
"Because it is not a mandate that you convert to EMV, some merchants are possibly concentrating on PCI compliance or end-to-end encryption instead," Giandominici said. "Or they may work on what they need for mobile acceptance. But they still have to think about EMV."
Still, many U.S. merchants will let the EMV timeline pass without any upgrade to accept chip cards over a mag-stripe swipe.
"It's not about being tech savvy or not," Giandominici said. "The merchants are not to blame if they are not aware. It's more about how we can support them now."