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The good news for companies that accept credit cards is that some clarity is beginning to emerge about the transition to a more secure card payment system in the United States.
The latest developments include an increasingly growing universe of secure payment cards making their way to customers throughout the country. Other good news may also include the growing ability of businesses to begin accepting secure payment cards, but exactly how much progress has been made in this area remains a bit uncertain.
A press briefing held Feb. 3 during the 2015 Smart Card Alliance Payments Summit in Salt Lake City provided hope in the form of an announcement that about half of all credit cards will have embedded EMV chips by the time merchants are supposed to start accepting them on Oct. 1, 2015. Likewise, about half of all credit card terminals that accept those EMV chips are expected to be up and running at the same time.
This estimate is somewhat different from when the same group estimated more 70 percent penetration last year. The Smart Card Alliance, which works with EMVCo to set standards and foster adoption of EMV chip-based cards, sponsored the briefing.
It was conducted by representatives of American Express, MasterCard and Visa. EMV stands for Europay, MasterCard and Visa, which are three of the card issuers that use the chips to help combat fraud.
The folks at the briefing spoke happily about the level of adoption, which they say is growing. In fact, there are some efforts afoot to encourage this adoption. American Express announced that it would provide a $100 gift card to any business that converts its card terminals to accept EMV by April 30. Costco announced that it will offer EMV terminals to its customers for $100. So by using the $100 gift card from American Express to buy a $100 EMV terminal from Costco, merchants could effectively get started processing secure payments for free.
A major point of the press briefing was to explain how hard card issuers and banks are working to get the word out about the importance of EMV cards and to tell customers how to get the terminals required to use them. This, of course, meant that it was incumbent on me as a journalist to call some small businesses to see if anyone had actually heard of them.
So, in a totally unscientific survey, I called all of the small businesses I could think of. One of those businesses, a very upscale restaurant near my office, actually had heard of EMV chip cards and the owner had actually seen some.
The owner of that business had recently been to Austria and had noticed everyone using those cards. Unfortunately, he had no idea how to get that more secure capability for his business, although when I asked him about it, he really wanted to find out.
EMV Proponents Claim Progress in Payment Card Upgrades
Of the other businesses I called, none had actually heard of EMV; they also hadn’t heard of chip cards and had never been approached by their card processors about more secure methods of payment. One of those businesses didn’t really care (that would be my barber) because the owner doesn’t take credit cards at all.
In desperation, I called a large business to ask about chip card acceptance. Unfortunately, the staff at my local Walmart had no idea what I was talking about. I explained to the head cashier what I meant about chip cards and showed her one, and she was mystified.
Mind you, this Walmart has been accepting chip cards, including chip and PIN cards, since the middle of 2014. I’d actually used the first chip and PIN card I’d received last summer at the same store.
At least I know that my chip cards actually work. When I was at the CeBIT Press Preview in Hannover, Germany, at the end of January, they worked fine when I had to get my German SIM card refilled and again when I made the obligatory stop in the duty free store at the Frankfurt airport.
So the news for me is that my cards work, both in Europe and in the United States. But what’s adding to the mystery is that few businesses in the United States, even those that accept cards with chips, seem to know anything about them.
What this means is that despite the stated efforts of card issuers to educate merchants and the public about the security of cards with chips, whatever they’re doing isn’t working. This lack of knowledge is puzzling because a number of studies discussed at the briefing said that U.S. consumers are strongly in favor of a more secure card payment system.
But if U.S. consumers are so strongly in favor of secure cards, why is it that nobody seems to know what they are? The answer, of course, is that the education campaign needed to get the word out about payment systems in the United States doesn’t seem to be working yet. In fact, it hardly seems to be making a dent in the collective consciousness of American businesses.
Of course, this would all change if card processing companies actually started talking to their customers about the issue, but there’s relatively little incentive. All that happens if their customers fail to switch to cards with chips is that those customers take the hit on fraudulent cards.
This means that it’s up to individual retailers and businesses of all kinds to insist on a more secure payment system and insist that their processors level with them. But it appears that in most cases, it’s the merchant that needs to make the necessary effort.