It’s pretty clear that within the past year, retailers of all sizes have experienced a handful of payment challenges. A study by the “State of Retail Payments 2016” revealed that 76% of retailers felt that their top challenge within the past 12 months was EMV integration. The other two main challenges? – Chargebacks, which took the second spot at 46%, and payment security (tokenization and encryption), in third at 37%.


After the October 1, 2015, liability shift, retailers were strongly encouraged to integrate EMV technology within their payment solutions or be held fully responsible for any instances of card present fraud. Adding EMV can be a costly and complex task for retailers, as integration can take anywhere from a few weeks to a few months. To help secure EMV transactions, tokenization and encryption are also recommended in conjunction with EMV technology. Tokenization protects transactions by replacing payment data with a non-sensitive data consisting of numbers, letters, and symbols. Encryption safeguards the sensitive data while it is processed.


“EMV is important, but chip cards alone won’t do the job of making data secure, especially if they’re only chip-and-signature rather than more-secure chip-and-PIN. That’s why retailers are working hard on technology like point-to-point encryption and tokenization that will ultimately do more to achieve the goal of putting hackers out of business. And the sooner security issues can be resolved, the sooner retailers can bring innovations to the way shoppers pay for their purchases like mobile and digital wallets,” said NRF Vice President for Retail Technology, Tom Litchford.


In fact, by the end of 2017, 93% of retailers expect to have point-to-point encryption integrated with 61% anticipating to have multichannel tokenization added. On top of this, 86% of retailers planned to have be EMV-ready by late 2016.


The emergence of EMV has also caused a significant increase of chargebacks within the past year. According to one study that surveyed 250,000 merchants, chargebacks linked to card-present transactions grew 50% since October 2015.


Handling chargebacks can be difficult, as they require a retailer to provide evidence that the consumer was fairly charged. Chargebacks occur when a consumer disputes certain charges from their account. The bad news for retailers is if the credit card issuer finds the dispute to be a valid claim, the retailer is the one that is penalized, even though the charge had previously been approved.


Retailers who experience a chargeback should immediately begin the claim process. Those who delay or do nothing could end up being issued the chargeback and lose money on the product that was sold.


Retailers have been faced with several challenges regarding payments over the past year. EMV integration has proven to be the top concern, as the liability shift has pressured retailers to become compliant or face responsibility for instances of card present fraud. Following EMV is the rise of chargebacks, thanks in part to the arrival of EMV technology. Payment security, specifically tokenization and encryption, comes in as the final challenge as retailers continue to try and combat fraud.