Pressure Intensifies in U.S. EMV Migration (April 8, 2015)
As preparations for the U.S. EMV migration go into high gear, some payments industry participants are questioning whether merchants have enough time to make POS terminals chip-compliant by October 2015, when a liability shift goes into effect. Most large issuers and many large merchants are on track to be EMV-ready this fall, but it may take longer for some smaller and midsize merchants to comply. The Food Marketing Institute, a trade group representing thousands of merchants, last week reportedly raised the question of whether U.S. payments networks might consider postponing the liability shift date. The concept is not without precedent; Canada’s payments networks in September 2010 rolled back the country’s EMV liability shift—originally set for October of that year—by six months to give merchants more time to prepare.
But encouraging any delay at this point in the U.S. EMV migration “makes no sense,” Randy Vanderhoof, executive director of the Smart Card Alliance, tells Paybefore. “We just came through the two worst years for merchant and issuer data breaches in history. Retailers would be wise now to adopt the most aggressive security positions possible,” he says. Most experts, including Vanderhoof, agree that EMV is not a panacea for fraud but should be part of a three-pronged approach that also includes point-to-point encryption and tokenization.
Equity research firm Keefe, Bruyette & Woods analysts this week expressed doubt that the liability shift will be postponed. A delay seems unlikely, analysts wrote in a note to clients, adding that the October 2015 date set by the payment networks nearly four years ago is not a mandate but a liability shift. MasterCard tells Paybefore its liability shift remains October 2015. The total cost to upgrade all U.S. payment cards and terminals is estimated to reach $8.65 billion, according to Javelin Strategy & Research. But chip-card readiness is likely to vary widely based on specific factors.
For more details and statistics about how issuers and retailers are preparing for the U.S. EMV migration, look for the Spring 2015 issue of Pay Magazine, out in May.
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