Report: Despite Debit Routing Thaw, EMV Ubiquity in U.S. Is Four Years out (May 8, 2014)
While the logjam over EMV debit routing may finally be breaking up, it remains unlikely that EMV will reach the mainstream ahead of the liability shifts the payment networks plan to implement in October 2015. By the end of that year, 29 percent of credit cards issued in the U.S. are expected to be equipped with EMV, according to a new report by Javelin Strategy & Research. Debit and prepaid cards will lag even further behind, at 17 percent. It won’t be until the end of 2018—more than three years after the liability shifts—that EMV finally achieves ubiquity, reaching 96 percent of credit cards and 98 percent of debit and prepaid cards, the report projects.
The delay can be attributed largely to the uncertainty over routing EMV debit transactions in compliance with the Durbin Amendment’s requirement that merchants be given the choice of at least two unaffiliated debit networks. Recent months have seen a spate of debit networks—including First Data, Fiserv, PULSE and Shazam—solving the issue by choosing a common application identifier from MasterCard or Visa. While other debit networks are expected to follow suit, nearly two years of delays have put the industry behind the eight ball.
Beyond the technical and regulatory issues, card issuers also still have plenty of work to do in educating consumers and merchants about EMV. While there are some EMV-equipped cards already on the market, most are targeted toward international travelers and high net worth cardholders rather than mainstream users, the report noted.
Recent developments, however, suggest that momentum may be on the upswing when it comes to EMV migration. Target announced—with the addition of its new technology leader Bob DeRodes, who began work this week—that beginning in early 2015, its entire REDcard portfolio, including all Target-branded credit and debit cards, will be enabled with MasterCard’s chip-and-PIN solution.
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