EMV update: 75% of retailers to miss October deadline

New research is out that shows 75 percent of retailers will not be in compliance with EMV chip cards by the October liability shift deadline, which is now three months away. This percentage is higher than in previous studies and comes shortly after the publication of a white paper from the EMV Migration Forum that explains the liability shift.

At the same time, Federal Reserve Governor Jerome Powell has urged the credit card industry to rethink the chip-and-signature verification it is pushing in favor of the more secure chip-and-PIN, which many retailers prefer, American Banker reported.

"The deployment of EMV chip cards in the United States represents an important step forward. But we should not stop there," he told a Federal Reserve Bank of Kansas City conference in Missouri. "New approaches to authentication increasingly offer greater assurance and protection. Given the current technologies that we have at our disposal, we should assess the continued use of signatures as a means of authenticating card transactions."

A report from Javelin Strategy & Research shows that only 25 percent of merchants will be ready for the October fraud liability shift deadline, a lower number than other research has shown, PaymentsSource reported. Lightspeed POS reported a month ago that 44 percent of retailers will be ready for the deadline. Many banks won't be fully prepared for the deadline either.

"This will skew very, very heavily to the largest retailers. The smaller merchants are clearly not ready, not by a long shot," said Nick Holland, Javelin's payments director.

The Javelin study also revealed a gap in EMV knowledge among cardholders, noting that consumers who received an EMV card did not necessarily understand its benefits and how to use it. "Neglecting cardholder education on EMV is a squandered opportunity for banks to shine," Holland said.

The EMV Migration Forum has produced a white paper, "Understanding the 2015 Fraud Liability Shifts," which provides information from certain payment networks that will help merchants, processors and others understand the October deadline.

"Fraud liability is an important milestone in chip migration since it's intended to synchronize the efforts of issuers and merchants to move to chip card payments to help drive fraud out of the payments system," Randy Vanderhoof, director of the EMV Migration Forum.

However, this is a topic that many retailers are unsure about. "They want to know who's liable for what, and when. This document compiles information contributed by multiple payment networks, and makes that information more digestible and easier to understand, so that retailers can meet the liability shift dates and streamline their migrations to chip technology.

"Some of the common scenarios that affect retailer liability that are included in the white paper are counterfeit, lost or stolen, and cross-border fraud. This detail will help retailers assess how each fraud scenario will impact their business in the event that fraud occurs, and how implementing chip technology can protect them from fraud costs," Vanderhoof said.

Changes in the October deadline are unlikely, he said. "These policies were established as an incentive for issuers and merchants to migrate to chip at the same time; it's only when we start to see chip-on-chip transactions that we'll start to see the benefit of counterfeit card fraud reduction."

The EMV Migration Forum recently launched a website to provide easy-to-understand information regarding chip for consumers, merchants and issuers: GoChipCard.com, and GoChipCard.com/merchant for retailers. "For merchants specifically, it simply explains the fraud liability shifts and also has free downloadable resources and training tools to help merchants train their employees and customers about the transition to chip," Vanderhoof said.

For more:
-See this American Banker article
-See this PaymentsSource article
-See this Javelin press release
-See this EMV Migration Forum white paper
-See this EMV Migration Forum website for merchants

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