Short for Europay, MasterCard and Visa, chip-enabled EMV credit cards have become the standard for most retail shopping around the world. Everywhere, that is, except in the United States.
There are a few reasons why EMVs haven't become truly mainstream in the States. Chief among these, however, are:
- The new compliance rules that retail merchants must follow
- The setup costs involved (stores must purchase EMV-ready credit card terminals)
In most markets where EMV credit cards and terminals have become mandatory, the above hurdles aren't optional. But in the U.S., merchants remain reluctant about abandoning swipe & sign credit card technology in favor of more expensive (but more secure) EMV alternatives.
This desire not to upgrade makes sense in a way. Many retailers prefer waiting until technologies emerge that can combine mobile, online and retail payment options under one unified system. The extra security features that come standard with EMV credit cards aren’t truly applicable to smartphones or e-commerce stores. According to the associate director at TSYS Acquiring Solutions, Allen Friedman:
“There are millions of mobile transactions taking place daily, but many of them are not what we consider retail card present transactions. Of the mobile payment solutions that are in the retail space, many are cumbersome, and many others can’t be sustained because they aren’t widely supported or applicable to multiple merchant environments.”
“Large-scale adoption of many of the mobile payment solutions on the market today would require an even bigger change at the POS than EMV, with some solutions adding seconds to transaction and wait times.”
Are EMV and Mobile Payments Incompatible?
Fair enough. It seems that although not completely at odds, there still exist serious hurdles preventing the successful union of EMVs and mobile payment options.
But merchants’ continued reluctance to embrace EMV technology comes at a price. Because most of the world already uses EMV payment options, the U.S. is relatively easy pickings for thieves and hackers. America represents 25 percent of global credit and debit card use — but nearly 50 percent of total credit card fraud.
According to Friedman, “The incredible financial toll that fraudulent card-present transactions exact on all parties in U.S. commerce, from consumers to merchants to card issuers, is one of the biggest problems the industry faces.” He adds, “It requires an immediate solution.”
The lesson in all of this?
As a stateside retail merchant, you should invest in EMV-ready credit card terminals ASAP. This move should happen with or without any accompanying developments in EMV-enabled mobile payment options. In the absence of a perfect, unified system, it doesn't make sense to throw the baby out with the bathwater.
When exploring mobile payment options, you should select whatever platform offers the best security.
As of right now, EMV credit cards and mobile payment options still exist in separate silos. This will change in the future as regulations and technology continue to improve. In fact, the union has a lot of potential. EMVs could soon enable both online and e-commerce payment security by offering greater PCI protection for consumers (and fewer audits for merchants). And as near field communication (NFC) becomes mainstream, payments via smartphones could merge seamlessly with contactless EMV technology.
But in the meantime, the best strategy is to shore up all of your payment options to reduce fraud — both for you and your customers.
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