Does Everyone Need EMV?

3 August, 2017

EMV.jpgThe U.S. has seen nearly two years pass since the EMV liability deadline in October 2015, yet many businesses still have not installed card readers that accept the chip-embedded credit cards. For some businesses, such as those that handle large volume or high-cost transactions, which makes them more susceptible to card-present fraud, switching to an EMV-compliant POS system immediately is critical. These high-risk businesses would include stores like electronics and jewelry retailers, high-end and designer clothing shops, and firearms retailers. However, some businesses – mostly service-related businesses like doctor’s offices, dental offices and accounting firms, are typically at less risk, so upgrading to EMV isn’t as crucial for them.

But is upgrading to EMV compliant POS terminals ever not necessary? There are certainly situations in which accepting EMV cards may not make sense. Owners of businesses that typically handle small transactions, like a dry cleaner, laundromat or coffee shop, may find the costs of upgrading outweigh any potential security benefit accepting EMV cards may provide. The goal of a fraudster is to get cash, something that can be converted to cash, or merchandise. There really isn’t much at a dry cleaner’s that can convert to one of those three things, so it is likely dry cleaning businesses are not high on a fraudster’s list.

Many small local niche businesses are postponing the upgrade to EMV, as well. For example, the owner of a local yarn shop, which sells premium yarns, needles and other knitting and crochet supplies, feels like upgrading to EMV would not be a cost-effective option. Sure, some of the high-end yarns can be quite pricey, but with a slightly older demographic and decidedly niche product, the owner decided that the cost of implementing EMV would currently outweigh any potential benefit. Instead, she will wait until she is forced to make the change, when existing magstripe cards and card readers stop working or become obsolete. Some experts believe certain businesses, like the yarn shop, are at low-risk for fraud, because the owners have extensive knowledge about their customer base and the average ticket item is of fairly low value. It is acceptable for businesses like these to wait on implementing EMV without much concern of chargebacks.

However, even for owners of low-risk businesses like the yarn shop, there may come a time when they will want to install EMV POS systems before they are forced to do so, particularly if their customers begin to prefer – and request – the newer ways to pay. With so many merchants making the switch to EMV, particularly the larger, big-box retailers, customers may just become used to the convenience of dipping their cards in the terminal instead of swiping. Plus there is the feeling of greater security EMV cards offer to customers.

As mentioned above, there will likely come a day when magstripe cards and card readers no longer work, and everyone will be forced to use either the EMV chip cards or contactless/NFC payment methods. As magstripe alternatives continue to become more widely adopted, magstripe use will steadily decline until it is completely phased out. Until then – and due in part to the lag of EMV compliance with some retailers – consumers and merchants still need the ability to use magstripe cards, in addition to other payment options. As it will take quite some time to get all payment terminals EMV-enabled, magstripe will still be around for the foreseeable future, so merchants who do not want to upgrade and customers who prefer swiping to dipping will be fine. But it is best to keep in the back of your mind as an inevitability the fact that credit card issuers will abandon magstripes entirely one day in the not-too-distant future, and upgrading – whether to EMV, NFC or some other security innovation – will be necessary. The end goal is to keep everyone involved in a transaction secure, and the best way to do that is to continue innovating to keep pace with – or even slightly ahead of – what fraudsters and data thieves are doing.


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