Last year on October 1st, EMV was introduced in the United States as a way to counter credit and debit card fraud in retail and to protect issuing banks against the liability shift. On its 1-year anniversary, we decided that it was time to check up on the implementation and share our findings with you. A quick reminder: EMV is a technical authentication standard (chip technology) for payment cards and the terminals and ATMs that accept them, and was originally created by Europay, MasterCard and VISA.
Even though we wish that we could give you nothing but good news on EMV’s American dream, it seems that the introduction has been quite messy. PaymentsSource reports that merchant penetration is still below 35% and that customers don’t know if they should dip or swipe their card when making a transaction, let alone adapt to entering a PIN instead of signing a receipt. It’s easy to blame the customer for not being able to remember a PIN, or the merchant for being slow to adopt this new standard, but the real problem lies with EMVco not taking enough time to properly prepare the American market and the local merchants. Even though the US are notorious for being the most complicated payment market in the world, little, if any, formal or official education accompanied the introduction and both merchants and consumers are lost. Besides that, the timing of the introduction was a bit off too, right before the holidays. Merchants were hesitant to adopt a new payment process right before The Most Lucrative Time Of The Year and by the time EMV launched in the US, only 150 million Americans were given a new card with the EMV chip technology. Also, EMVco should have taken into account that in contrast to Europe, which only deals with two small handfuls of payment service providers and issuing banks, America literally has hundreds of financial entities to consider, which makes the process of getting terminals and ATMs evaluated and approved lengthy and tedious.
Luckily, there is also good news to share. For those merchants that are EMV compliant, it is already working! According to MasterCard, counterfeit fraud has dropped 60% among the company’s top-5 EMV-enabled merchants since EMV’s introduction in October 2015. Furthermore, in June of this year MasterCard and VISA both announced that they would be deploying a series of initiatives to help accelerate the implementation for merchants and all other stakeholders in the payment chain. In August, the card schemes announced that 80% of consumer cards are now outfitted with chip technology. So even though EMV’s first year was rough, we are confident that its second year will be worthy of a proper celebration at the end of it.