EMV… Are You Ready?

October 1, 2015 marked the liability shift of credit card fraud from the Financial Institution (FI) or credit card company to the retailer in cases of non-EMV compliance.

I first learned about the October 1, 2015 deadline from John Schweikert (January 2015) during a panel discussion at the Wireless Technology Forum.

Effective October 1, 2015:

  • Retailers are liable for credit card fraud on transactions completed with a magnetic bar swipe if the card is equipped with EMV (aka chip cards).
  • Retailers are NOT liable for credit card fraud if the credit card in question is only equipped with a magnetic bar.

From these "rules" I would conclude that the credit card companies and FIs would put their resources into issuing chip cards to all of their customers to reduce their liability / shift their liability to retailers.

As October 1st approached, I checked my mail to see how many new credit cards/debit cards would arrive with EMV. I received exactly 1 chip and magnetic strip card from BB&T, but I think that was because my previous card expired September 2015.

On October 2nd, I took stock of my wallet and found:

  • My 2 AMEX cards already were chip and magnetic strip
  • My Bank of America debit card is magnetic strip with an expiration in 2018
  • My CapitalOne MasterCard is magnetic strip only with an expiration in 2016

Over the weekend I visited a few stores to perform a non-scientific study of EMV adoption. I found most stores had upgraded their terminals, but few chip readers were actually working.

Barnes & Noble - swiped my chip card at the POS terminal. There was a small piece of paper taped over the EMV slot.

Sports Authority - Paid by Apple Pay. Did not attempt EMV. POS had an EMV slot. This was early in my research and I assumed that if the POS had an EMV slot, that EMV was enabled. I later found out that I was wrong.

Macy's- paid by Apple Pay. Although Macy's has been accepting Apple Pay for about a year, the associates in the men's shoe department had never processed an Apple Pay transaction. Surprising given the demographics for Apple Pay leans to the affluent male demographic with disposable income.

Random food court vendor - Another swipe of my chip Amex. POS without EMV capabilities.

Larger food vendors such as Chick-fil-A have upgraded their terminals.

Zumiez - All about EMV. POS worked. Associates trained in the new process. Swipe reader taped over. Not sure what the process is for cards without chips.

Walmart - Implemented EMV months ago.

Costco - Upgraded terminals with EMV slot. I swiped my chip card. Associate mentioned the chip card reader was not working yet.

Publix - Upgraded terminals, swiped my card. EMV not working.

Prior to my un-scientific research these were my assumptions:

  • Retailer's biggest challenge to EMV would be POS hardware upgrade. Physically replacing thousands of POS terminals requires physical store installation during off-hours.
  • EMV transactions would take at least 4 times longer than swipe and/or mobile payments.
  • Retailers with big ticket items and/or high average transaction values (i.e. Costco) would definitely have EMV fully implemented by October 1st.

Bottom Line: All of my assumptions were WRONG!

  • All retailers (with the exception of the random food court vendor) had new POS systems installed with EMV capabilities. Only Zumiez and Walmart had EMV actually working on their POS terminals.
  • I timed each transaction, Apple Pay, Android Pay, and EMV. EMV took 10-30 seconds. Mobile payments (Apple & Android Pay) averaged 6 seconds.
  • From an unscientific study of my Costco purchasing habits vs. Zumiez, Costco definitely has higher average transaction amounts. I was very impressed that Zumiez was EMV ready in both systems and associate training.

More to come on this topic. What about retailers that only take Square? Perhaps I'll check out a festival next weekend and interview smaller scale retailers.