The EMV fraud liability shift that commenced in October 2015 has brought about interesting changes for merchant processing and customer data security. If you need a refresher, know that:
- EMV chip cards, including both credit cards and debit cards, use dynamic digital data to create unique encryption for each sale
- Instead of a swiping motion, card dipping occurs with the EMV card reader machine to conduct the transaction
- EMV chip cards are more difficult to counterfeit compared to magnetic stripe cards
- Businesses that don't accept EMV chip cards but that are breached incur liability
- If you've upgraded your equipment to accept EMV chip cards and are breached, the liability is lifted
In the United States, it is not a requirement for businesses to have EMV chip card-enabled equipment yet. However, many businesses have adopted this type of equipment to protect their customers and their businesses. Let's take a look at the latest trends regarding EMV chip card use and dipping, EMV card reader adoption by businesses, and how EMV chip cards are affecting security.
EMV Adoption by Consumers
The number of EMV chip card transactions for card-present transactions in the United States has drastically increased from 2016 to 2017, more than doubling from 19 percent to 41 percent, EMVCo reports. Compared to the rest of the world, EMV use in the U.S. still lags, with most of Europe, Africa, the Middle East, Australia, and the rest of North America nearly fully adopting it.
A November 2017 report by consumer payments consulting group Auriemma found nearly 90 percent of credit cards in the United States today are chip enabled. Still, the discrepancy between the number of these types of cards and the number of EMV chip transactions shows consumers and businesses are not always utilizing the chips.
For example, consumers who are checking out at places like the grocery store may choose to swipe their EMV chip card instead of using dipping because swiping is slightly quicker. Businesses that haven't upgraded their credit card processing equipment may swipe a chip card because there is no other option. Or, an employee who is checking someone out and is not familiar with dipping may swipe a card on an EMV-enabled reader. Customers who are concerned about security can ask the merchant before the transaction whether or not they have an EMV reader before using their credit card.
EMV Adoption by Businesses
Acknowledging the liability shift and wanting to better protect customers, the number of merchants accepting EMV chip cards has also drastically increased in the past two years. A December 2017 report by Visa (the company that stands for the “V” in EMV) found that the number of business with EMV card readers was 392,000 in September 2015, compared to 2.7 million merchants in December 2017. That accounts for nearly 60 percent of American storefronts.
The switch has helped those merchants who upgraded their equipment for EMV chip cards, where counterfeit fraud dollars dropped 70 percent in September 2017 compared to December 2015, Visa reports. Auriemma states that counterfeit fraud claims have decreased for five consecutive quarters and are down 34 percent from 2016.
Protect Your Business With EMV Card Readers
In order for businesses to accept EMV chip transactions, EMV card readers must be certified as EMV compliant by the card networks and companies processing transactions. Working with a merchant services partner that provides EMV-compliant equipment helps make the EMV chip adoption process quicker and simpler for businesses.
It's ultimately still up to individual businesses whether or not they want to make the move to EMV card readers. It's important for businesses to remember:
- Customers prefer paying with cards, as credit cards are the most trusted and convenient form of payment. If your business wants to improve customer satisfaction by accepting credit cards, you should make the process the safest as possible.
- A lack of protection can damage a business reputation. There may be customers who are wary of doing business with companies that don't offer EMV card readers. If your business does experience fraud and the liability that comes with it because you don't have EMV card readers, your business reputation and the trust customers have in you will suffer.
- Having to pay for fraud can hurt your business finances. Depending on the severity of chargeback amounts, your business may greatly suffer because of how much you owe customers who have experienced fraud because of your lack of security.
Moving to a mandate for EMV cards may very well be in the future for the U.S. anyway, considering the rapid global adoption rate and enhanced security other countries have experienced in card-present transactions. Being a business that is slow to adopt more secure transaction methods may hurt credibility.