How is the EMV Transition Coming Along?

November 11, 2016

Business Insider recently shared a feature on the “Gap Between EMV Adoption and Usage in the US” and how we have been stacking up against other countries around the globe.

First off, let’s define exactly what EMV is and why it’s here.

EMV stands for Europay, MasterCard and Visa — the organizations that developed the specifications of this card-present security solution. EMV technology is centered around the usage of 'chip cards', which contain embedded microprocessors with encrypted data that are accessed by EMV-enabled terminals. After ‘dipping’ a chip card, an EMV-enabled terminal will transmit a code to validate the card and its cardholder. This code changes with every transaction and once it has been used, it is no longer valid; therefore thwarting would-be hackers from stealing sensitive data. In other words, thieves are unable to turn stolen data into fake credit cards, which they have found great success in doing with the static data found on standard magnetic stripe cards.

Believe it or not, this technology has been around for a while; the US is just one of its later adopters. To expedite our transition, a liability deadline was set for October 2015, meaning if a fraudulent chip card is used to make a purchase with a non-EMV enabled device, the business will be held liable for the lost revenue.

According to Business Insider’s Jaime Toplin, just over a quarter of US cards were chip-enabled in 2015, which is a significantly smaller number than the 84% in many parts of Europe. The below chart demonstrates the percentage of EMV-enable cards and transactions by region. As you will see, the US usage rate is not only the lowest, but is even lower than its deployment and adoption rates. It turns out that many consumers who do have chip cards, aren’t actually using them.

There are other hurdles that contribute to these small numbers in the US, which Toplin outlines:

  • Card re-issuance is expensive and time consuming
  • Debit card regulations are a bit more challenging, so many don’t have chip debit cards yet
  • Business owners have been somewhat hesitant to upgrade to EMV because they think it might not be worth it
  • Slow certification processes are slowing down businesses’ ability to switch to EMV

With all this being said, we have to keep in mind that the last year has been a year of transition. Toplin notes that these hurdles are likely to be overcome this year, which will help ramp up EMV-acceptance and usage.

While EMV adoption is certainly an important step in improving payments security, it is not the only solution; it’s really just a small piece of the puzzle. To ensure a robust line of defense, it is imperative to employ a point-to-point encryption (P2PE) solution that instantly encrypts sensitive data, providing protection while a transaction is being processed and at rest within a business system.

Submitted by Taylor Havlisch, Product Marketing Manager, CardConnect

Through the Michigan Chamber’s partnership with CardConnect, you have the opportunity to accept credit, debit and other electronically based transactions at just 0.2% above cost. Email CardConnect or call 877.948.9733 to learn more.