Report: Issuers Controlling Pace of EMV Card Rollout, as Acceptance Remains ‘Patchy’ (March 25, 2015)
Gaps in merchant readiness for the U.S. EMV migration may cause banks to move more slowly in issuing new credit and debit cards equipped with EMV chips, a new study from Auriemma Consulting Group suggests. Not even one in 10 credit cards in circulation in the U.S. was EMV-equipped in mid-January, according to an Auriemma survey of 20 U.S. issuers. “Banks are hesitant to put chip cards in customers’ hands if retailers haven’t upgraded their terminals to process them, [because gaps in acceptance] could confuse cardholders and weaken their perceptions of chip card security,” Anita Solaman, an Auriemma director, wrote in a report this week.
More than half of all credit and debit cards are forecast to be EMV-compliant by Oct. 1, 2015, when liability for counterfeit card transactions at the POS shifts to parties that haven’t adopted the chip card standard, Auriemma notes. But for millions of merchants, EMV readiness is “patchy,” the report suggests. As a result, many issuers are holding back on mass re-issuance of EMV credit and debit cards, Auriemma suggests.
The Smart Card Alliance predicts that 50 percent to 70 percent of all credit and debit cards will be EMV-compliant by the end of 2015, with 90 percent compliance expected by 2016. Issuers began shipping millions of EMV credit cards to consumers last year, and major debit card issuers including Chase, Bank of America and Wells Fargo this year began mailing out millions of EMV debit cards. The majority of large U.S. merchants, representing 80 percent of all daily payments card transaction volume, are expected to turn on EMV acceptance by the end of this year, the Smart Card Alliance forecasts, and Walmart has been processing EMV transactions at most U.S. stores since last year.
Auriemma notes that issuers may adjust their EMV card-issuing pace based on market conditions. “In the event of more substantial shifts [in merchant EMV hardware upgrades], some issuers have developed contingency plans to accelerate mass reissuance of remaining cards,” Solaman wrote.
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