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/   Insights

This article by Stefanie O’Connell first appeared on stefanieoconnell.com in November 2015. Confession – I’ve made a major mistake in growing my business. Though my earnings have climbed exponentially over the past two years, I found...

The benefits and challenges of the Internet of Things

February 3, 2016
/   Insights

The convergence of operations technology and information technology presents new and expanding market opportunities. The “Internet of Things” is a center point of this convergence. IoT can bring remarkable benefits to today’s ever-changing business...

Mobile Banking Surprises Yet to Come

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Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

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Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

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Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

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December 18, 2013
/   Spotlight

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August 5, 2013
/   Insights

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Technology M&As: The Beats Go On

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/   Insights

The ongoing fascination with Apple’s $3 billion purchase of Beats Electronics is entirely understandable, because it’s a cool story. However, it also says a lot about what’s going on between finance and tech.

What We’re Reading

May 5, 2011
/   Spotlight

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November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

What We’re Reading: Thanksgiving Edition

November 22, 2012
/   Spotlight

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom. Mobile Thursday? Plans for Thanksgiving...

EMV in the US has come a long way as October at last witnessed the all-important liability shift.

But just how far have things really come since the introduction of chip cards and terminals?

Merchants

Judging by reports, merchants were not exactly ready for the shift on October 1st, and it’s doubtful if they will have progressed things a lot since then.

The National Federation of Independent Business (NIFB) reports that only about a third of smaller merchants are familiar with the new chip cards. Not only that, but almost half had not heard of the liability shift.

Four in ten of the NIFB’s small employers accepting electronic payments have chip enabled processing equipment. Of these, only 65 percent are equipped with a PIN pad. The chip-and-PIN versus chip-and-signature debate around issuers is moot when businesses are not equipped with a PIN-enabled point of sale terminal.

The positive is that more than half of those lacking the chip-enabled kit plan to replace theirs in the next six months. But the NFIB research on the whole points to the lack of preparedness among merchants that a separate Javelin Strategy and Research report showed ahead of the liability shift. This found that as many as three-quarters of merchants did not expect to be prepared for the deadline.

“The potential risk for some small businesses is that they could be liable for additional fraudulent purchases if they don’t have the new hardware,” said NFIB research director Holly Wade.

“Many owners have done their homework and the card payment industry has done a good job at educating their customers,” she added. “But we know based on this research that there’s more work to be done.”

Of course, more than half of transactions occur at the top 100 merchants in the US, while fraudsters will also target merchants who have goods or services that are valuable to them, such as electronic goods rather than groceries. Therefore these are the important merchants to get migrated to chip reading terminals.

Globally, the top 10 merchants accounted for more than five per cent of all retail sales in 2014, according to data from Deloitte and eMarketer, highlighting just how crucial it is to get the big players on board.

Consumers

Certainly merchants have been a little slow to move but it’s not the only barrier in front of universal EMV.

Issuers seem to have accelerated their activity. A poll from GfK Public Affairs and the Associated Press published in August showed that just one in ten Americans had received a chip-enabled card.

By the time Ingenico published the results of its survey on EMV in the US, this number had leapt to 60 percent. While not directly comparable surveys, it does indicate that issuers stepped up their EMV work in the run-up to the liability shift.

However, the latter report noted that of those consumers with both types of cards, more than half (54 percent) still prefer magstripe over EMV. One-third who had tried to use their new EMV card were not aware of the correct way to do so.

It’s early days but perhaps more needs to be done to educate and inform consumers about the benefits of EMV over mag stripe cards – particularly the security and fraud implications.

Issuers

While issuers do appear to have distributed chip cards to more customers, there is an ongoing conflict around chip-and-PIN cards versus chip-and-signature.

Essentially US issuers are not going for chip-and-PIN, and that decision is raising a few hackles. Not least among retailers, who have according to various reports voiced concerns that the EMV-lite approach being followed in the US is just not that secure.

So we recently had the FBI amend its public service announcement on EMV because it had initially directed people to use the PIN, which in many cases they simply cannot. Meanwhile, Reuters has reported that some retailers are actively pushing banks to enable PIN authorization

Apart from what seems like confusion, all this points to a lack of consensus in the US about what how we should be approaching EMV, even after the liability shift.

The problem here is perception – the more consumers feel that their chip-and-signature cards are no more secure than mag stripe cards, the less buy-in. Even with a signature for authorization, chip cards are still more secure. Hopefully, PIN authorization will follow suit once consumers and merchants are ready – but it’s not an absolute certainty.

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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.