OMAHA, Neb.—Less than 40% of retailers can currently process chip cards, according to new reports.
A new study by The Strawhecker Group indicates that 37% of U.S. retailers can process chip cards.
According to the industry group EMV Migration Forum, there are roughly five million EMV-ready terminals at U.S. stores right now, but only one million have started accepting chips. In other words, when consumers see a chip reader, odds are four out of five that they won't be able to use it.
Most analysts assumed what would be the big slowdown in the U.S. EMV migration was the large investment stores had to make in new point of sale terminals, which run about $500 for each checkout line.
But the real issue is not the terminal; the problem is that in many stores the switch hasn't been flipped yet, the analysis found.It turns out that getting new hardware into stores was just the first step in the conversion process, and in many cases, the easier step. New software comes next, and that's been causing holdups, experts say.
"Just because you see an EMV slot on a terminal, doesn't mean it works," Michael Moeser, director of payments at Javelin Strategy and Research, told CBS News. "Getting the terminal to accept EMV cards is a two-part process. First, the merchant either needs to load newly developed software or integrate new software from a third party into its back office systems to allow the terminal to accept EMV. Second, then the new terminals and the merchant need to undergo a certification process with each of the card networks, typically done in combination with its merchant acquiring bank. The certification queue is currently very long as you can imagine that there are a number of merchants seeking to roll out EMV at the same time."
While many merchants wait to activate their card readers they face increased fraud risk, note Bill Hardekopf, CEO at LowCards.com in Birmingham, Ala., who also pointed out the matter has led to merchant lawsuits against Visa and MasterCard for fraud costs.