PRINCETON, N.J. – While there has been much coverage of the looming October 1 deadline for EMV implementation in order for retailers to avoid a shift in liability for fraud occurrences — including an article in yesterday’s NACS Daily — the reality is, the October deadline is a largely arbitrary one established by the credit card companies to pass even more liability for fraud onto merchants. Further, according to many industry forecasters, it’s not likely that a majority of merchants or card-issuing banks will have implemented chip-/EMV-compatible cards or readers by that date. 

According to an article this week on the Bank Info Security (BIS) website, some security experts question whether the U.S. will ever complete its adoption of chip cards and POS terminals that conform to the Europay, MasterCard, Visa standard — better known as EMV.

The card brands' October liability shift date is an incentive, not a mandate. So, missing the liability shift date won't result in fines or an inability to conduct transactions. It simply means that as of October, a card issuer or merchant that does not support EMV assumes liability for fraud that results from compromised magnetic-stripe card transactions. Further, since the deadline is dictated entirely by the card companies it essentially represents a moving target — since at any point, the card companies can again change their policy for fraud liability regardless of merchant EMV implementation.

Meanwhile, smaller merchants with relatively low card transaction volumes may find that the expenses associated with EMV upgrades are greater than simply accepting liability for the low levels of fraud they might experience from mag-stripe transactions. This is particularly true for fuel retailers, who carry a much higher cost to upgrade pump terminals compared to in-store POS terminals. According to Conexxus Executive Director Gray Taylor, the cost can be "about $35,000 per location when you add in fuel dispenser terminals ... The [EMV] functionality in a gas pump is much more expensive, so [fuel marketers] will have to go out and rip out all of the pumps. And the data load requirements are higher, too, which means there may be a need to add ethernet." (Outside fueling terminals do not need to be EMV compliant until 2017.)

Further, many payments experts point out that EMV only partly addresses the real security issues at stake today. While “chip” cards represent a first step toward more secure payment methods compared to the current magnetic swipe cards, they are only partially effective without use of a PIN instead of a signature.

For NACS Magazine coverage of the facts behind EMV adoption, read “Half Covered” (May 2014) and “A Chip on Their Shoulder” (September 2012).