EMV conversion the primary issue in payments next year
November 05, 2014

The one word that has been on everyone's mind in the payments processing industry lately, besides "mobile," is EMV. The smart chip, found in the majority of terminals around the world, is starting to greatly affect banks, stores and other businesses in the United States. Many businesses are being pushed to transition to the new chips as part of the greater trend in getting the country to match international standards. But many more are looking at the fraud liability deadline that both Visa and MasterCard, the creators of the standard, imposed on the nation to force the transition. Either way, it's clear that EMV is here to stay, and small-to-midsized businesses should definitely consider developing a plan to switch to terminals that support the updated credit and debit cards.

Aiming at a Target
While the EMV standard has been in place in businesses around the world for decades, with terminal adoption rates exceeding 70 percent according to reports from PYMNTS, the United States has only recently begun to add terminals with EMV. There was an attempt at mainstreaming contactless EMV cards back in early 2000s, but consumers were clearly uninterested in adopting the new standard, simply because they thought the old system was perfectly acceptable. They were resistant to any major changes because there was no reason to do them. This problem was also part of the reason that the EMV transition has been so slow.

However, something dramatic changed the landscape, and it wasn't Apple's introduction of a payments system. It was the data breach at Target. The damage to the retailer was incredible: Because of the magnitude of the breach and the fact that it occurred at the point of sale, customers abandoned the store in droves, and it is struggling to recover. Combined with another major breach at Home Depot, consumers suddenly saw the value in having a chip on a card and have been warming to the idea of EMV since then.

Retailers should be considering the switch to EMV at this time or have a plan in place. This is not only about making sure customer data is secure, but to give patrons a sense of confidence that they're purchased from a trusted store. At the same time, PCI compliance measures can be easily mitigated with the use of EMV, since it addresses many of the security concerns associated with payments automatically.

Nexus: G-WEBCD5