The adoption of chip-enabled or EMV cards by retailers has been painfully sluggish despite the ability of the technology to provide more secure transactions.
While 70% of U.S. credit cardholders have a chip credit card, estimates demonstrate that only 22% to 37% of retailers have implemented the technology to accept these cards, said CreditCards.com, the Austin-based online credit card marketplace. The deadline set by the credit card industry was October 1, 2015 for converting to these new cards, which are intended to thwart hackers from accessing consumer accounts and personal details.
Merchants who missed the deadline and have not converted to using these new EMV cards are now financially responsible for any charges which are fraudulent. Boston Retail Partners, a retail consulting firm, estimates that only 22% of retailers have the software and card readers to accept the cards while Strawhecker Group, an Omaha, Neb.-based consulting firm, predicts a larger amount or 37% of retailers who made the switch.
“National retailers such as Target have adopted the technology, but other companies have failed to complete these upgrades even though it can expose them to a lot of fraud and liability,” said Matt Schulz, CreditCards.com’s senior industry analyst. “The retailers are willing to take the risk to avoid spending money.”Many retailers do not understand the threats they are accepting by not implementing the use of EMV cards, said Mark Parker, a senior product manager at iSheriff, a Redwood City, Calif.-based provider of enterprise cloud security solutions. Even a small data breach would make them liable for “tens, if not hundreds of thousands of dollars depending on its size,” he said. “ In many cases, the costs of a data breach like this would put a non-compliant small or medium-sized business out of business.”
A survey conducted by CardHub, a Washington, D.C.-based credit card comparison company, found similar alarming results, leaving consumers exposed to hackers. Among retailers who were the targets of data breaches in the past five years, 43% have not updated their terminals and 42% of retailers have not updated the terminals in any of their stores.
Retailers are facing other demands as consumers increasingly are seeking greater fraud protection and want the option to pay for purchases through mobile payment options such as Apple Pay, Android Pay or Samsung Pay.
“With all of these changes, retailers have remained hesitant to invest in a technology they may be obsolete very quickly and they are hoping that a payment standard is eventually settled upon,” said Parker.