37% of U.S. Merchant Locations EMV Compliant, CNP Fraud Spike Delayed?

Feb. 18, 2016

37% of U.S. Merchant Locations EMV Compliant, CNP Fraud Spike Delayed? Four months past the deadline set by the major card brands for EMV readiness, only 37 percent of U.S. merchant locations are prepared to accept EMV-compliant chip cards at the point of sale. Even though liability for fraudulent transactions shifted on Oct. 1 from issuers to merchants if they were not EMV-ready, the implementation of EMV-compliant POS systems has lagged behind expectations, according to The Strawhecker Group (TSG). Yesterday, the Omaha-based consultancy attributed the lower-than-expected numbers to merchants unwilling to inconvenience their holiday customers.

“It appeared that some merchants delayed EMV migration completely until the holiday season ended to prevent friction and confusion at the checkout line,” said Jared Drieling, business intelligence manager at TSG. “I suspect that many merchants that have delayed, especially merchants in higher risk categories, felt the impact of the liability shift last year and we’ll see them aggressively ramp up plans to migrate.”

Lynn Holland, vice president and product line manager for payments processor ACI confirmed Drieling’s feelings in a recent interview with CardNotPresent.com. Since the liability shift, Holland said, merchants are “starting to see their [in-store] chargeback rates go up. They’re finding their actuals are running significantly higher than the numbers they modeled. They are now asking, ‘how fast can I get [EMV compliant]?’.”

The card-not-present world has been waiting for EMV implementation in the U.S. and the possible spike in CNP fraud that could result. TSG said the rush to compliance Holland expects will still take some time. Drieling predicted consumers will be able to use chip cards at 50 percent of U.S. merchant locations by June 2016 and adoption won’t reach 90 percent until 2017.