In October of this year, any merchant in the US who does not demonstrate the ability to accept EMV transactions can be deemed liable for the fraud associated with counterfeit cards.
That’s only 7 months from now.
Most people in the EU can’t really understand the confusion this has generated – we’ve had chip & PIN for well over a decade – but for the population of the US swipe & signature is as natural as handing over cash. Retailers are rightly concerned that adoption will be a slow and painful process. However, that may not be their biggest concern.
Estimates of the cost of transition from magnetic stripe to chip range from $8 – $12 Billion, and the lion’s share of the burden will fall to the retailers who must replace their existing payment entry devices (PEDs) with chip compatible ones. The chances are good that this expense was not in their long-term costings, and bringing forward the end-of-life of their PED infrastructure is simply not an option in an industry where profit margins are razor thin.
But the thing that few people realise is that while the chip alone is a positive factor in fraud reduction (anti-counterfeit), the greatest benefit of the roll-out of EMV is only achieved when deployed in conjunction with the use of a 4 digit Personal Identification Number (PIN). This effectively adds a second factor of authentication (the card is something you have, your PIN is something you know) making card present transactions significantly more secure. PIN alone would have significant positive impact as well.