While the national transition to Europay, MasterCard and Visa, known as EMV or “Chip and PIN,” is well underway, a recent study found that as many as 42 percent of companies have either taken no steps or are unaware of any progress being made to meet the October 1, 2015, deadline.
The EMV readiness study conducted by Randstad Technologies, which surveyed IT decision makers and C-level executives, revealed that a majority of respondents indicated little concern for the magnitude of risk
associated with missing the looming deadline.
Furthermore, 58 percent of respondents stated that it would likely have little to no impact on their company’s bottom line.
“With time running out to meet the deadline, firms that have not acted by now, especially those with numerous and geographically scattered locations, have either decided the risks are worth taking, the deadline will be extended, or they can scramble and accomplish the transition,” read the report.
Nonetheless, missing the EMV “liability shift” could bring substantial costs to unprepared merchants, banks or credit card companies using the old magnetic strip technologies in the event of consumer fraud.
According to PaymentsSource
, once the liability shift ends:
- If a merchant is still using the ‘swipe and signature’ methodology and the customer has a smart card, the merchant will be held liable.
- If the merchant has implemented the new Chip and PIN technology but the bank has not issued the customer a Chip and PIN card, the bank will be held liable.
- If the merchant uses Chip and PIN technology on a customer’s smartcard and fraud still occurs, the credit card company will be held liable (as is the case today).
Additional findings from the study disclosed that 66 percent of respondents believe that Chip and Signature does not offer credit card holders sufficient security, and that Chip and PIN should in fact be required.
“I’m surprised there’s such a disconnect between companies’ seriousness about the EMV transition and their actions to make it happen, said Dick Mitchell, Randstad Technologies Solutions Director.
“I’m even more surprised that there is anyone – let alone 28 percent of respondents – who believe Chip and Signature is more secure than the technically superior Chip and PIN.”
Survey respondents also stated their biggest obstacles for implementing the new system, with lack of time (19 percent) and access to technology expertise (17 percent) being their main concerns.
"Because fraud liability has traditionally fallen to credit card companies and banks, consumers have never borne the brunt, and thus aren't demanding more secure payment technology," said Mitchell.
"While businesses understand the importance of more secure payment technology, without this push from consumers, many merchants aren't feeling the pressure to get all their affairs in order to meet the October deadline."
Yet, the technology transition is expected to impact small businesses the most.
A separate study conducted by Intuit
found that just one-in-five small business owners claimed they were aware of the October 2015 deadline for adopting an EMV-compatible POS system. Meanwhile, the majority of small business owners surveyed said they had not yet committed to migrating to EMV technology compatible systems.
Among those not planning to make the system upgrade, 57 percent cited the cost of the new terminal as the main reason not to comply; 32 percent noted the lack of time and/or resources to research the terminals; while educating consumers (27 percent) and employees (20 percent) were also common concerns.
For many years now, EMV has been the standard credit card processing method for several countries around the world, making the U.S. the last major market to replace the outdated mag strip technology.
Reports show EMV has proven effective at considerably reducing face-to-face credit card fraud.
The U.K. reported a 70 percent decrease
since its EMV implementation in 2004, while France says its seen an 80 percent reduction as a result of Chip and PIN.
Title image courtesy of ShutterStock