EMV trends on the horizon

As 2016 progresses, there is much promise ahead for increased EMV chip card adoption. Already, merchants accepting EMV have noted a distinct shift in their usage among consumers. About 70 percent of Walmart’s and Target’s transactions per day are made with chip cards. The Home Depot has experienced similar growth with over 50 percent of its transactions made with chip cards. Other larger merchants, including Target, anticipate similar numbers down the line.

Although more merchants are accepting EMV chip cards, many have not yet adapted to the new technology. A recent survey found only 41 percent of merchants are ready to accept EMV payments. Merchants resisting the change may be trying to avoid implementation costs. Others may be apprehensive about perceived implementation pains, or their acquiring vendors have not yet secured EMV solutions.

While some merchants, like Walmart, are experiencing rapid success with their chip card transactions, others have noted a few hiccups. McDonald’s has begun testing EMV technology at the point-of-sale (POS) and noticed a perceived increase in the length of time it takes for EMV transactions to process. As a fast food operation that focuses on speed, McDonald’s values quick payment transactions. In 2016, McDonald’s will continue to revisit its transaction flow to minimize transaction times. As McDonald’s does this, it will be interesting to see how quick service restaurants will verify payments as time goes on.

In the year ahead, merchants and financial institution (FI) issuers may also notice the following EMV trends:

• American Express and other national brands moving to dual-interface: Dual-interface cards are contact cards that also enable contactless payments. This gives cardholders the added security of EMV, while allowing them to make tap and go payments. Credit unions issuing these dual-interface cards have an extra arrow in their quiver, giving cardholders the ability to conduct transactions at any terminal.

• The sun setting on MSD technology: MSD refers to magnetic strip data, an older method of reading contactless payment transactions. Merchants trying to read current contactless EMV transactions using MSD technology have experienced frequent card declines. Visa and MasterCard are pushing to complete a shift away from this technology by 2017. They are also currently looking for strategies to steer merchants away from MSD technology.

• Quick service restaurants migrating to EMV acceptance: As noted earlier, McDonald’s has already begun migrating to EMV. Once McDonald’s streamlines its transaction flow to align with its emphasis on speed, other restaurants may follow suit. EMV terminals may even be implemented right at dining tables, enabling fast and easy bill payments at sit-down restaurants.

• ATM and fuel dispenser migration in 2017: The next big step following the October 2015 liability shift is for ATMs and fuel dispensers to migrate to EMV. The migration process for these terminals will be slower than merchants as the implementation costs are much higher. Visa and MasterCard propose that credit unions, fuel retailers and other locations with ATMs should make the shift by 2017.

• Merchant unification for POS activity: There has not yet been a standard established for how EMV chip cards are processed or how the transaction flows through each application. As a result, cardholders making a transaction at one merchant’s terminal may not have the same transaction experience somewhere else. Once a standard procedure is established across all EMV terminals, there will be a more consistent, efficient transaction flow for cardholders.

EMV continues to gain momentum in the marketplace. FIs, merchants and cardholders alike may need to embrace the latest trends in EMV technology as they emerge.