Card issuers making rapid progress on EMV deployment

Two recent studies confirm that card issuers are making rapid progress in deploying EMV chip cards. One study issued by EMVCo reported that there are now 3.4 billion EMV cards in circulation, up 43 percent from last year's 2.37 billion, and the other, issued by The Strawhecker Group (TSG), said the majority of issuers' card portfolios will be updated by the end of the year.

The number of EMV payment cards in circulation has risen by 1 billion from 2.37 billion in the fourth quarter of 2013, according to EMVCo. EMVCo's members include American Express, Discover, JCB, MasterCard, UnionPay and Visa. These companies reported that EMV chip card adoption rates had increased in every region worldwide by the end of 2014.

For example, in Europe Zone 1, the EMV chip card adoption rate is 83.5 percent, up from 81.6 percent in 2013. In Canada, Latin America and the Caribbean, the EMV chip card adoption rate is 59.5 percent, up from 54.2 percent in 2013. Similar increases were seen in Africa, the Middle East, Europe Zone 2 and the Asia-Pacific region. However, the adoption rate was only 7.3 percent in the United States.

"With an additional 1 billion EMV chip cards issued in 2014 and cumulative transaction volumes climbing in every region last year, it is clear from the data released today (May 6) that the global rollout of EMV chip technology is progressing at a healthy pace," said Tac Watanabe, EMVCo executive committee chair, in a company statement.

"We are, however, pleased to note a significant acceleration of card issuance in the U.S. throughout the course of last year," added Sean Conroy, current chair of EMVCo's board of managers. "We are aware that the U.S. merchant and acquiring communities are actively enabling their acceptance environments and platforms to support EMV transactions and anticipate further advances will be made in this market throughout 2015."

Meanwhile, all 10 of the largest credit card providers are progressing in issuing chip-based credit and debit cards, and they expect the majority of their portfolios to be updated by the end of 2015, according to TSG's study. The study, titled "EMV in the U.S.: The Whole Story," noted that all 10 of the major banks are issuing chip-and-signature cards, while 40 percent are also supporting chip-and-PIN cards.

All of the chip-based cards issued by these banks will continue to include magnetic stripes. This will enhance usability but mitigate the EMV cards' fraud protection benefits, the study noted.

"A lot of merchants, primarily small- to medium-sized merchants, are unaware of what EMV means and how it impacts them," Jared Drieling, TSG's business intelligence manager, told FierceRetailIT.

A complete rollout of EMV across all participants will likely not be implemented fully by fall of this year. "This is not a mandate, and some merchants will simply not transition to EMV or at least take a 'wait-and-see' approach," Drieling said.

The majority of smartcards to be introduced in the United States are chip-and-signature cards, which also have magnetic stripes. "Card marketers are intentionally vague about the specific chip-based technology they use, but the truth is that chip-and-signature is generally viewed as a half measure that doesn't solve the biggest problems that international travelers have," Drieling said.

Drieling said full implementation of EMV in the United States is a long ways off, adding that "estimates vary, but it will be a relatively long process to turn over existing technology to the EMV standard, taking at least four years. The full rollout may near completion around 2018."

For more:
-See this EMVCo press release
-See this TSG report summary

Related stories:
Visa won't budge on fraud liability shift deadline
The importance of pushing back the EMV fraud liability shift deadline
Banks worried that retailers won't be ready for EMV
55% of retailers not prepared for EMV migration
Retailers, banks spar over chip-and-PIN cards