Love it or hate it, EMV is here to stay. For many, EMV has triggered headaches, as the new regulations and guidelines have caused frustrations for consumers, merchants and financial institutions. Merchants, in particular, have voiced their strong disapproval for EMV and the burdens placed upon them to become compliant.
Prior to the liability shift, credit card issuers were held responsible for covering fraudulent charges. As of October 1, 2015, that role has reversed, as any merchant who does not have EMV-capable equipment must now pay all fines associated with an instance of fraud. Not only could an instance of fraud be detrimental to a smaller merchant, but could negatively affect the financial outcome of a larger merchant just as well.
“They [merchants] were basically cajoled into doing it. If you don’t do it, you run a substantial risk of loss,” said Rich Stuppy, chief operations officer at Kount Inc.
Cost has been another issue merchants have experienced with the incorporation of EMV technology. Merchants transitioning to EMV have had to replace not only their POS systems, but also their card readers and hardware that is used to process payments.
For some merchants, the price to upgrade to EMV technology was thousands of dollars, putting their business out a lot of money. Because of this, many merchants still have chosen not to upgrade their payment equipment and would rather take their chances of experiencing an instance of fraud than integrating EMV solutions.
What’s worse, most merchants have seen an increase of chargebacks since the liability shift, causing even more losses for their business. For example, merchants who do not have EMV-capable equipment and are swiping EMV cards have significantly experienced an increase of chargebacks. Part of this is due to the fact that if an EMV card is swiped at a non-compliant terminal, then the merchant is held fully responsible in the instance of a fraud chargeback.
Experts also feel chargebacks have risen because not all EMV-capable terminals have the applicable EMV certification ready and installed. There have been major delays regarding the certification process for EMV terminals, and even today not all merchants have terminals that are EMV-ready.
In fact, most merchants still have signs requesting consumers to swipe instead of dip their chip card. Because of this, a consumer can take advantage of the system and claim a “friendly fraud” chargeback against the merchant since their terminal did not process their chip card with the appropriate EMV software.
“The certification process, which is mandated by the card networks, has experienced a number of delays that range from the card networks’ late delivery of technical code to other complications slowing the certification process,” said Peter Larkin, President and CEO of the National Grocers Association (NGA), “None of these delays are the fault of merchants, yet it’s the merchant who is facing an onslaught in new chargebacks as well as confusion among consumers who don’t understand why they can’t use their chip cards at their local supermarket.”
All in all, the integration of EMV has been a challenge for merchants. The high price to upgrade equipment showed to be a setback, as many merchants even today have yet to make the switch to EMV-capable solutions due to costs. Increase of chargebacks also proved to be a major problem, specifically for those merchants lacking EMV-capable equipment or the appropriate necessary certification. Time will only tell if merchants continue to experience issues related to EMV or if the disadvantages of EMV begin to lessen.