By now we’ve all heard of Apple Pay, Samsung Pay, Google Wallet and mobile payments, in general. These are the latest and greatest POS technologies on the market, and very significant for the merchants and retailers that need to actually understand and use this technology. Unfortunately, many businesses have choose to ignore the noise and haven’t made any steps toward future proofing their POS solutions, and further, becoming EMV compatible.
This isn’t a new concept or POS trend, EMV POS systems and chip and pin card readers have been around for years, but the U.S. just happens to be one of the last countries in the world to move away from traditional magnetic stripe credit cards.
First, let’s take a step back; what is EMV? As many know, the name comes from its creators (EuroPay, MasterCard and Visa) and it serves as the global standard for cards embedded with micro-computer chips. This small, metallic square located on the front of the card is used to authenticate transactions – or in other words, more secure transactions. Instead of running the same numbers from the magnetic stripe every time you swipe your card, the chip creates a different encrypted transaction code for every purchase.
A wave of widely publicised, large-scale data breaches and credit card fraud in the U.S. reinforced the need for more security at point of sale for many retailers around the country. According to research report from Aite Group, credit card fraud has been on the rise, accounting for nearly 10 cents out of every $100 transacted. The uptick is due in part to the slow migration to EMV, in fact, the U.S. has seen a 70 percent increase in credit card fraud since 2007, compared to the U.K., which has seen an 80 percent decrease after its migration.
Now, we all can agree that credit card fraud and data breaches are scary but if I’m a business owner, isn’t that the card issuer or bank’s problem? It used to be, but now, U.S. merchants must accept EMV or assume liability for any and all fraudulent purchases. Can you imagine being responsible for compensating the 56 million compromised credit cards during a card breach? Whether you’re a giant retailer or local coffee shop, it’s a huge financial gamble that most businesses around the world aren’t willing to take.
While U.S. businesses have a little bit of time to make the transition, card issuers are already rolling out EMV cards to their customers. Aite Group estimates that nearly 70 percent of credit cards and 40 percent of debit cards in the U.S. will support EMV by the end of 2015. If those numbers hold up and we continue to see the same shift in public opinion and behaviour around payment methods in the U.S. as we’ve seen in the UK and rest of Europe, I’d wager that merchants will be more inclined to update their POS systems and support EMV.