The U.S. Payments Forum on Monday reported that the vast majority of large U.S. merchants now accept EMV chip cards. With the conversion to chip from the old magnetic-stripe payment technology at the point of sale now over the hump, though still far from complete, advocates are looking at fuel pumps and contactless cards as the next payment frontiers to be crossed.
The Forum, an affiliate of the Princeton Junction, N.J.-based Secure Technology Alliance trade group, says in a report that 96% of the top 200 U.S. merchants take chip cards. A year ago, only about one-third of merchants did so, the group says.
In addition, so-called chip-on-chip payments—an EMV chip card being read by an EMV-activated terminal—now account for more than 50% of U.S. credit card transactions and over 60% of credit card purchase value, according to the report. The report’s data came from information presented by Visa Inc., Mastercard Inc., American Express Co., and Discover Financial Services at the U.S. Payments Forum’s December meeting.
Visa recently reported that 55% of all U.S. storefronts, more than 2.5 million locations, were accepting EMV chip cards. The holdouts are mostly small merchants, a group some observers believe might be more inclined to install EMV terminals now that all four major card networks have said they will remove their requirements for signatures this spring.
The heavy lifting in EMV has moved to gas stations, where only a small fraction of unattended fuel pumps accept chip cards today. That’s despite the fact that the networks in late 2016 postponed their October 2017 EMV liability shifts for a full three years. Under those liability shifts, gas stations with pumps that can’t process an EMV transaction will bear responsibility for any resulting counterfeit fraud; issuers bear most fraud-related costs today.
In its report, the U.S. Payments Forum said its members have seen “a slight increase in chip transaction volumes at retail petroleum pumps.” Forum director Randy Vanderhoof tells Digital Transactions News by email that he doesn’t have numbers, but says “a small number of retail petroleum stores have completed their EMV upgrades at the pump, so those transactions are starting to register when earlier in 2017 there were none.”
Meanwhile, the group is continuing to encourage the payments industry to adopt security technologies such as tokenization and the recently upgraded 3-D Secure system for protecting online transactions.
The group also believes that contactless credit and debit cards eventually will come to the U.S. That’s despite the fact that so-called dual-interface cards, which have an EMV chip for insertion into the terminal and a near-field communication antenna for contactless transactions, have cost about twice as much as a contact-only chip card, at least until recently. The report noted that contactless cards have taken off in some countries, including the United Kingdom, where they have been embraced by riders on the vast Transport for London subway and bus system.
“It will start slowly and gain momentum over the next few years, because costs for dual interface have dropped and the number of contactless-enabled merchants [is] increasing,” says Vanderhoof. He notes that Visa says about 40% of its transactions are coming from contactless-enabled terminals.
So far, most contactless payments in the U.S. are originating from smart phones.