By this point in time, it's likely that business owners are at least aware of the upcoming EMV (Europay, MasterCard and Visa) liability shift-taking place in October. If they have heard about EMV technology, they've likely done enough research to know how it may impact their business too. Since October isn't that far away, some may have already developed an implementation strategy.
Many merchants are not EMV-compliant just yet, though. According to the EMVCo's website, just 0.3 percent of card-present transactions in the U.S. were EMV transactions in the fourth quarter last year. Even still, a growing number of business owners are migrating toward EMV-compliant terminals as the deadline looms. Citing EMV Migration Forum statistics, PYMNTS reported that nearly 10 percent of of credit and debit cards in U.S. circulation were EMV-compliant by the end of 2014, while close to 38 percent - or 4.5 million - point-of-sale terminals were EMV-ready by the end of last year.
Mitigating risks one payment at a time
There's a lot to be said about EMV technology's potential for reducing fraud in the payment space when a card is present. While cyberattacks are almost impossible to prevent, the upcoming liability shift does in fact help mitigate fraud through peer-to-peer encryption. Customers will have the option to enter the card's embedded chip into a slot on the terminal itself. The chip then uniquely encrypts the payment information for that individual transaction, making it much more difficult for hackers to obtain the sensitive information.
"Card-dipping," as it's known, is not the only option consumers have to make a transaction, though. EMV-capable terminals also come equipped with Near-Field Communication (NFC) technology, meaning customers can make mobile contactless payments like Apple Pay™. NFC-based payments encrypt and tokenize customer data each time a transaction is made, also often requiring a PIN number or fingerprint identification on the user's mobile phone to complete the transaction.
From a merchant standpoint, this is positive news. The improved security that EMV terminals bring in the form of chip-card payments and mobile contactless transactions is a great selling point for businesses making the upgrade. A primary concern among the U.S. consumer base is payment security today, especially in wake of the recent high-profile data breaches at major domestic retailers.
But merchants shouldn't fear. Citing a Gemalto and Kelton Research study, industry website Bank Tech reported that three-quarters of consumer respondents said they'd be willing to use cash less often. However, 69 and 62 percent of respondents added they were concerned about the security of mobile and contactless card payments, respectively.
Businesses making the upgrade to EMV must educate their customers on EMV, ensuring clientele that the new and alternative forms of payments are more secure than past payment options. If they can manage that, they'll likely see a dramatic upswing in the amount of these types of payments they process. In fact, two-thirds of Gemalto and Kelton Research respondents said they'd consider making mobile or contactless payments more often if they were proven to be secure. That said, it's on merchants to upgrade their payment infrastructure and begin securely processing customer transactions.