For many retailers and for consumers, EMV cards are seen as being more trouble than they’re worth. Named after the original developers of the system—Europay, MasterCard, and Visa—EMV cards have embedded chips that work after being dipped into a terminal for a short time. Although these EMV cards are more secure and not as easily counterfeited as their predecessors, people are still hesitant to embrace them.
Since October 2015, in the United States liability for fraudulent charges has shifted to whichever party isn’t using EMV technology, which means that a business that hasn’t installed an EMV terminal must cover any reported fraudulent charges. In an effort to curb costs, credit card providers are pointing a finger at retailers—accusing them of waiting until the last minute to install their EMV terminals. Meanwhile, retailers are blaming banks for not certifying their EMV terminals quickly enough. But although larger corporations and businesses can afford to cover these costs until they upgrade to EMV terminals, smaller businesses don’t have that same luxury, and fraudulent charges and chargeback fees can put a serious dent in their profits.
Credit card companies have already sent out EMV replacement cards to many of their customers, but some customers haven’t even been able to use their new chip-embedded cards. More than 70% of American consumers now have EMV cards, but only 40% of retailers are ready to support them. And of the roughly 5 million EMV-ready terminals at U.S. stores right now, only 1 million have actually started accepting chips. That’s not just because of lawsuits and banks. It’s because retailers don’t want to bother with the time it takes to teach customers and employees about EMV terminals. Slower transactions can seem like an eternity, and not knowing whether to slide or dip can be a huge annoyance for a customer. But credit card companies are listening and are already developing and deploying solutions to help tackle these problems. Even a slight reduction in transaction times can help alleviate some of the growing pains that come with upgrading to EMV terminals and encourage more retailers to make the switch.
Although America is seen as a leader in innovation and a pioneer for new ideas and technology, the country is surprisingly behind the rest of the world when it comes to credit card security. The UK switched to EMV cards in 2003, and fraud went down by almost 70% between 2005 and 2013. When Canada switched to EMV, fraud went down 49%. The United States is still currently a world leader in fraud, and is one of the last western nations to switch to EMV. Naysayers claim that switching to EMV won’t eradicate all fraud—and that’s true. It’s impossible to stop fraud completely, but EMV cards virtually put a stop to card counterfeiting because of how expensive it is to clone the EMV chip. Counterfeit fraud in the United States dropped 18% in the first quarter of this year, hitting its lowest level since 2013, thanks to the EMV card migration.
Magnetic strip cards simply aren’t secure enough to defend against today’s highly advanced fraudsters. Although their alternative might be inconvenient, consumers and retailers can rest easy knowing that EMV cards are getting improvements. Software is already in development that reduces the EMV process into a simple dip, rather than the current dip-and-wait process that many of us have already had the displeasure of dealing with. For now, it’s better to wait—both in the checkout line and for the launch of improved EMV features—than to pay the price for being a victim of fraud.