Who Is (And Who Is Not) Ready For The Transition To EMV
By Christine Kern, contributing writer
October 1 marked the shift in liability for fraudulent credit card transactions from issuing banks to the party with the least compliant EMV technology. As of this date, most card-accepting U.S. merchants face liability for fraudulent transactions if they are not EMV-ready.
The Strawhecker Group (TSG) released data ahead of the October 1 liability shift that represents EMV-readiness by merchant type, and found that among merchants in 30 retail categories, 69 percent of shoe stores and 59 percent of department stores have EMV-ready terminals while stationary stores (23 percent) and book stores (24 percent) fell on the lower end of the spectrum.
“It makes sense that certain retail merchant types are more ready than others for the liability shift, as some are much more likely to potentially see fraudulent transactions,” says Mike Strawhecker, principal at TSG. “While many retailers have not yet upgraded their terminals, big-box merchants such as Walmart and Target are ready for October 1st.”
“Unprepared merchants may be in for a rude awakening as they realize they are now liable for fraudulent transactions that occur at the point of sale. Many merchants, especially those that are more prone to counterfeit and lost and stolen card fraud, will be scrambling after the liability shift for the next 12 to 18 months to upgrade terminal equipment and software,” added Jared Drieling, TSG’s business intelligence manager.
The sample for the TSG study was based on a minimum of 75 current credit and debit card-accepting merchants in the U.S. per retail category. These results follow TSG's previous research of all merchant-types that showed 27 percent of all merchants would be EMV-ready by October 1st. The full data for 30 retail merchant types and their respective EMV-readiness may be accessed here.
According to American Banker, the size of the merchant is also a predictor of EMV-readiness: only somewhere between 20 percent and 30 percent (depending on the study) of small merchants are capable of EMV transactions.
“A big portion is because the merchants don’t understand the risk associated with this,” said Wade Barnes, director of retail banking at 1st Mariner Bank in Baltimore. “Target, Walmart, they get it, they’ve been involved with enough card issues that they understand the risk it presents,” Barnes said.