Slideshow 7 Troubling EMV Predictions

  • September 30 2016, 8:42am EDT
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A year after the U.S. EMV liability shift kicked the country's migration into high gear, there are still major hurdles to widespread adoption. The shift took effect Oct. 1, 2015, placing liability on the party unable to handle EMV security, but even this incentive wasn't enough to get everyone on board at the same time.

Speed Still Lags

Following complaints from consumers and merchants, each card brand has come out with its own version of a faster EMV payment process. But a number of Independent Sales Organizations remain unclear on the details. "I would definitely say that there's a missing educational component. Both at the ISO level and at the merchant level," said Jeffrey Akeson, managing partner of Great Point Technologies LLC, an ISO in Alpharetta, Ga.

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Gas Stations Stall

Gas stations have one year left before they face their own liability shift for EMV acceptance at the pump, but replacing this hardware is a big and costly process that might require ripping older pumps out of the concrete. Vendors are making headway by developing less disruptive options, but experts say it will still be a drawn-out migration for the entire fuel industry.

Prepaid Opts Out

Prepaid cards have different security concerns than open-loop credit cards do, so many prepaid card issuers view the EMV shift as pointless to their market. "The business case for prepaid and for private label really are pretty poor, honestly," said Bret Berta, product manager for global retail payments at FIS, at SourceMedia's annual PayThink conference. "We get a lot of questions [from issuers], then we don't hear anything back for a while."

Chargebacks Persist

As expected, last year's liability shift led to a rise in chargebacks at non-EMV merchants. But the volume of chargebacks was higher than expected and for many merchants it has not abated, according to the U.S. Payments Forum.

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Merchant Demand Slips

When the card networks attempted to alleviate some of EMV's pain points by easing chargeback policies, demand for new hardware fell enough to prompt Verifone to cut its earnings and revenue forecast for the year. Around the same time, Ingenico cut its sales forecast for the remainder of 2016.

Vendor Bottleneck

Even the most ambitious pro-EMV merchant may run into bottlenecks with getting approved. Some companies are offering a faster certification option - but for a price.

Issuers Face Supply Issues

On the issuer side, the bottleneck is in obtaining the EMV-chip cards to distribute to customers, particularly as some banks choose to accelerate their EMV migration. Oberthur is adapting to this by providing an option to receive as many as 25,000 cards in five days, rather than the standard three to four weeks.