The number of U.S. merchants that accept EMV chip cards at the point of sale is increasing rapidly, according to recent figures from Visa Inc., but it’s going to take some work by merchant acquirers and payment card networks to convince the holdouts to convert.
Executives from two of those holdouts on Wednesday explained their EMV skepticism at the Electronic Transactions Association’s Strategic Leadership Forum in Dana Point, Calif. One came from Aaron’s Inc., an Atlanta-based furniture retailer. Aaron’s stores have EMV-capable POS equipment, according to Seth Pelletier, senior manager of payment technology at the 1,100-store chain, but the company has yet to turn on chip card acceptance.
“That business case doesn’t work out in our favor,” Pelletier told the conference attendees.
The risk Aaron’s is taking is that under the card networks’ October 2015 liability shifts, it will be responsible for counterfeit fraud on any transaction in which the cardholder presented an EMV chip card but the store’s POS equipment couldn’t read it, forcing its system to use the card’s more vulnerable back-up magnetic stripe. Some retailers that did not have chip card readers at the ready after the liability shifts took effect complained of massive increases in chargebacks.
But the costs to train staff in EMV procedures and related operational expenses far outweigh the chargebacks Aaron’s is incurring by not taking EMV cards, according to Pelletier.
“I have a very drastically different chargeback profile than most retailers,” he said. “The amount of money that I’ve seen in EMV-related chargebacks wouldn’t even cover the learning and development effort to roll it out with you for even two days.”
Aaron’s would rather spend money that would otherwise go to EMV on technology that “increases my top-line revenue” or helps it operate more efficiently, Pelletier said.
The second executive, Hubert Williams, chief information officer of Maverik Inc., a 300-location convenience-store and petroleum retailer operating in 10 Western states, said the company is taking a very deliberate approach to upgrading its unattended fuel pumps for EMV acceptance. New stores and remodeled ones are getting EMV-capable pumps, but upgrades at existing, un-remodeled locations are going much slower.
The reason is that an EMV retrofit costs about $2,000 per pump, and the typical Maverik location has 16 pumps. Plus, while pumps that accept only mag-stripe credit and debit cards can be targets for fraud, including when criminals place skimmers on them to capture cardholder data, Williams said actual fraud losses at pumps are quite low.
“EMV solves one problem, it solves the problem of okay, it’s a secure transaction, but it doesn’t solve the bigger problem, which is theft, and most of it’s online,” he said.
The bank card networks late last year postponed their October 2017 unattended fuel-pump EMV liability shifts for three years in recognition of the problems c-stores and gas stations were having in converting. Even so, Williams predicts that many gasoline retailers will not make the 2020 date because there are, according to him, only 3,000 certified technicians available to perform EMV upgrades at the nation’s 150,000-plus gas stations.
One attendee from a gateway company questioned Williams about the risks of not implementing EMV, but Williams responded that “the cost just does not win … it’s not even close right now.”
EMV might be more attractive, according to Williams, if the card networks and payment-services providers could figure out ways to make it work smoothly with retailers’ loyalty and target-marketing programs. Maverik’s Adventure Club rewards program includes an automated clearing house debit card that gives the customer 6 cents off per gallon on gasoline purchases. Deals like that are possible with low-cost ACH payments, but not with EMV cards on the major networks, according to Williams.