The EMV credit card is one of the best payment technologies that most Americans have never heard of. Because of their embedded security chips, these credit cards are very difficult to clone. Whether using chip & signature or chip & PIN EMVs, the cards must physically be present when customers are making a purchase.
Because of these extra security features, EMV credit cards are already standard in most major retail markets around the world. But the majority of American shoppers and merchants have yet to embrace this 20-year-old technology:
- Retailers must invest in new credit card readers to accept EMVs. Transforming America's payment infrastructure could cost $2.6 billion over the next several years.
- Very few credit card issuers have sent out EMVs to their customers (Chase was only the first major bank in the U.S. to begin making this payment option available).
But this trend is changing as new liability laws place greater pressure on stores and credit card companies that don't accept EMV technology. And adoption could speed up even more if Wal-Mart and Sam's Club have anything to do with it.
How Major U.S. Retailers Are Speeding Up the EMV Transition
Although the new liability laws won't go into effect until 2015, major retailers Sam's Club and Wal-Mart have already begun updating their payment systems and sending out branded EMV credit cards to their customers.
According to a survey by Digital Transaction News, these actions could have a profound effect on the U.S. credit card market. In the survey, 65 percent of retailers indicated that they would be more inclined to follow in the steps of Sam's Club and Wal-Mart.
And it’s not difficult to understand why.
As the world’s largest retail store, Wal-Mart’s decision is helping to set a powerful precedent that other retailers can’t ignore. In 2013 alone, the company enjoyed total sales of nearly $500 billion.
According to executive vice president and research director of mobile at Javelin Strategy & Research, Mary Monahan, “Wal-Mart is a heavyweight among the heavyweights…. [It] will now begin to push other retailers to move to EMV cards by touting the higher level of security that they offer their customers.”
In an age of rising credit card fraud, pioneering steps by Sam's Club and Wal-Mart create a competitive advantage that other retailers are eager to duplicate. Target, for example, has plans to roll out its own EMV payment options in the wake of its highly public (and costly) data breach.
Experts predict that EMV technology won’t become truly universal in the United States until 2018 — citing smaller businesses as the crucial bottleneck. But if Wal-Mart, Sam’s Club and Target help to create more awareness of and demand for EMV security features, these chip-enabled credit cards could reach 100 percent penetration earlier than expected.
For more information about EMVs, use the free resources below: