By now, many merchants should be wondering if they made the right decision by failing to act before last fall’s EMV liability shift.

Only about 22% of all U.S. merchants are EMV-active, and of those taking action so far, it’s the largest and the smallest who get credit for driving progress in EMV’s advancement since the Oct. 1, 2015 liability shift took effect.

The trouble lies in the middle, with retailers saddled with far-flung and complex integrated payment systems, including many large department store and supermarket chains.

The U.S. Postal Service, for example, which operates 31,662 retail outlets nationwide, isn’t accepting chip cards yet. A spokesperson said the postal service is “in the process” of updating its system to enable EMV, but could not say when it will happen.

Estimated losses from counterfeit card fraud this year will reach $3.1 billion, down from $3.6 billion last year, according to Aite Group. But what’s different is that this year for the first time, merchants that haven’t upgraded to EMV will be on the hook to bear the cost of counterfeit card fraud, not issuers, for any fraud on EMV cards.

Though the EMV migration struggled at first with merchant education, many more merchants should at least be aware of the change in technology. But that doesn't mean they've come to terms with the consequences of ignoring it.

“Many retailers don’t completely understand how EMV ties into their overall fraud risk, and they don’t have a great feel for measuring how much fraud may have occurred,” said Lori Haakmeester, Elavon’s senior vice president for North America for new product innovation.

For Elavon, a U.S. Bancorp subsidiary that primarily serves small and midsize retailers, 38% of its merchant locations currently are accepting chip transactions, up from single digits a year ago. While this is noteworthy progress, it still leaves the majority of these clients at risk for shouldering the cost of payment card fraud.

This could be devastating for small and midsize merchants, Haakmeester said. “If the biggest retailers are protected from liability with EMV, counterfeit card fraud has no place to go but to unprotected areas, and it only takes one or two big fraud cases to deplete the resources of a smaller retailer,” she said.

Big-box retailers Walmart, Target Corp., Home Depot and Best Buy have been processing chip card transactions for some months, which—combined with the fact that an estimated 70% of U.S. customers have at least one EMV card in their wallet now—is helping drive higher volumes of chip-card transactions. Visa said the total transaction volume of chip transactions rose more than 30% in December 2015 to $15.8 billion from $12.1 billion in November.

Despite these early signs of progress, there may not be a clear enough picture yet of how much risk small and midsize merchants take by postponing their own EMV implementations.

For one thing, it’s still too soon to know which of all the transactions merchants may have disputed in December—retail’s busiest season—are counterfeit. By March, some of that information will be available and merchants without EMV may be liable for those transactions for the first time.

But even during the first half of this year, it will be difficult to get clarity on exactly how EMV is affecting counterfeit card fraud trends, because of the slow progress of the chip-card migration, suggested Rick Oglesby, research director at Double Diamond Group.

“It’s too early at this point to have seen much of an effect, because there are so many non-EMV merchants that any fraud blips that have occurred so far will be small, spread out over time, and spread across a wide variety of non-EMV merchants,” Oglesby said.

But that, too, could be changing as EMV gradually takes hold, the liability shift deepens and awareness builds. According to Visa’s latest data, 93% of consumers and 98% of small and midsize businesses are “aware” of the U.S. move to chip cards.

And EMV card-carrying consumers are taking their business to small and midsize merchants. At its chip-active merchant locations, Elavon said 30% to 40% of all transaction volume is conducted with chip cards, up from 20% last September.

“We’ve seen a pretty steady increase month over month of credit and debit chip cards,” Haakmeester said, noting that Elavon’s reach includes a “good concentration” of small businesses with many restaurants and general-merchandise retailers, as well as some large companies and hotel chains.

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