Patience, it seems, will be the watchword when it comes to merchant adoption of EMV chip card technology, while the number of cards issued bearing a chip continues to grow.
A new report from The Strawhecker Group, a payments consultancy, finds that 37% of U.S. merchant locations are EMV-ready, falling short of a Strawhecker forecast in September that said the merchant-compliance rate would be 40% by now.
For its latest report, Strawhecker surveyed 92 payment-service providers that represent more than 3.9 million merchants.
The shortfall stems from a number of hurdles merchants continue to face, says Jared Drieling, business intelligence manager at Omaha, Neb.-based Strawhecker. Timing is one. Oct. 1, 2015, marked both the liability shift—the date by which merchants had to accept EMV cards or bear responsibility for counterfeit and, in some cases lost-and-stolen, fraud—and the onset of the holiday shopping season. “A lot of merchants, if they weren’t already EMV-ready, held off until January,” Drieling tells Digital Transactions News. The last thing many merchants wanted to do during the fourth quarter was to confuse consumers at the checkout, he says.
Another issue has been the supply of point-of-sale terminals and the certified apps they need to properly process EMV transactions made with credit and debit cards, Drieling says. That’s been a “pretty big hurdle,” he says, adding that some merchants that made the decision to adopt EMV POS technology found themselves unable to use the required technology because the certifications hadn’t been approved.
Other issues surround processor and gateway readiness and technical-staff availability, the report found.
But merchants should soon catch up. Consumers should be able to use their credit and debit cards at 50% of merchants by June and at 72% of them by the end of 2016, Strawhecker says. EMV readiness should top 90% in 2017.
“We’re hearing that some of the terminal manufacturers are catching up,” Drieling says. “The processors and gateways are getting ready. 2016 will be a big uptick in EMV migration.”
On the consumer side of the EMV migration, Visa Inc. says that as of Dec. 31 more than 212 million Visa credit and debit cards had been issued, a 644% increase from the end of 2014. Visa estimates 70% of U.S. consumers have at least one chip card, and 93% are aware of the transition. There are now more chip cards in the United States than in any other nation, Visa says.
The volume of chip transactions also increased in December from November, topping $15.8 billion compared with $12.1 billion. There were 230.7 million Visa transactions made with EMV credit cards in December.
Visa also says that 766,000 merchant locations are chip-enabled, a total that tripled in the second half of 2015. This suggests that approximately half of the 37% of merchants said to be EMV-ready in the Strawhecker survey actually have activated terminals, says Drieling. “In our survey, we don’t quite know if the EMV terminals are activated and turned on,” he says, while Visa can see actual EMV transactions, but may not know which merchants are EMV-ready but haven’t activated the devices yet.