EMV Merchant Adoption Slower Than Expected

TSG survey estimates 37% of U.S. card-accepting merchants are EMV-ready four months after the liability shift.

February 18, 2016

OMAHA, Neb. – The Strawhecker Group (TSG) released survey results that estimate 37% of U.S. merchant locations are EMV-ready four months after the October 1, 2015, liability shift. TSG’s previous survey of payment processors and other payment providers completed in September 2015 estimated that more than 40% would be EMV ready by this time, showing a slower pace of implementation than expected before the shift.

“It appeared that some merchants delayed EMV migration completely until the holiday season ended to prevent friction and confusion at the checkout line,” said Jared Drieling, business intelligence manager at TSG. “I suspect that many merchants that have delayed, especially merchants in higher risk categories, felt the impact of the liability shift last year and we’ll see them aggressively ramp up plans to migrate.”

By June 2016, it is estimated that consumers will be able to use their EMV credit and debit cards at 50% of U.S. merchant locations, according to TSG, adding that EMV-readiness is not expected to reach a threshold of at least 90% of merchant locations until 2017.

EMV is a globally accepted card specification that uses an embedded microchip to provide dynamically unique data protection when the card is inserted into a chip-card reader. EMV is an acronym for Europay, MasterCard and Visa, and is a payment specification created by EMVCo (a special entity owned by Visa, MasterCard, American Express, Discover, JCB and UnionPay). After the October 2015 liability shift, U.S. card-accepting merchants without the ability to accept EMV cards may be liable for fraudulent transactions. A similar liability shift also occurs for fuel island payment terminals after October 2017.

TSG found that the three biggest hurdles slowing EMV implementation are payment processor readiness, gateway readiness and technical staff resource availability.

Nearly 40% of respondents to the TSG survey felt that media coverage had a negative impact on their EMV implementation efforts. One survey respondent said, “[It] confused the merchants more than it helped,” while another added, “It was a Y2K kind of scare thing; the world is going to end if you don't take care of EMV.”

TSG’s sample included 92 payment service providers that service more than 3.9 million merchants, or approximately 50% of the U.S. card-accepting market. TSG created an infographic to express the findings.