While around 70% of U.S. merchant locations still aren’t ready to handle EMV card transactions, Atlanta-based merchant acquirer Elavon, a unit of U.S. Bank, can tell the opposite story: 70% of its merchant clients will be EMV-enabled by the end of this year.
Elavon expects to cross the 80% mark in 2017, but after that its momentum will diminish as it works to convince the smaller merchants who see no benefit in EMV — and are right to hold that opinion.
The merchants unlikely to adopt EMV in the foreseeable future are typically small, local stores with unique situations, dealing in highly specialized merchandise or a narrow and well-known customer base for whom counterfeit card fraud is almost unheard of. Thus, these stores don't foresee any value to investing the cost and time of upgrading to chip cards, said Guy Harris, Elavon's president of North America.
“A small shoe-repair shop, for example, has little need to invest in EMV,” he said. “You’ll never get to 100% compliance in EMV; we know that from other markets."
Elavon serves 675,000 U.S. merchants, all of which faced an Oct. 1, 2015 fraud liability shift if they chose not to support EMV-chip cards, which are designed to deter counterfeiting.
Like most involved in the EMV scramble, Elavon had to refocus company resources and improvise to meet the challenges of orchestrating the massive upgrade in the face of limited resources and tight timelines for getting merchants' terminals certified, tested and successfully processing chip transactions, Harris said.
But Elavon had a couple of advantages over other merchant acquirers in getting most of its merchants' terminals certified in a relatively timely fashion, he said.
“For one thing, we took the liability shift very seriously when it was announced (in 2011) and started work right away, realizing that EMV presented a great opportunity for us to help customers achieve security and be at the forefront of the movement,” Harris said.
Another big advantage was Elavon’s business does not focus on midsize merchants, which have the complexities of large merchants but not the resources.
“We have merchants of all sizes, but we have a big group of small merchants whose path to EMV is relatively simple and another big group of larger merchants, particularly in the hospitality and travel arenas with hotels and airlines, which tend to be big operations with big internal tech departments,” he said.
One example is Hilton Hotels, an Elavon client that’s about halfway through the conversion process for thousands of U.S. Hilton-branded hotel locations, each with multiple payment terminals.
“EMV demands a major re-engineering of their payment processes,” Harris said, noting that Hilton’s EMV conversion is “moving right along.” Elavon also gained volume from the scale of some of its merchant clients; in addition to multi-location hotels, EMV payment terminal and processing support to several major sports stadiums, Harris said.