US EMV Adoption to Drive Market

While less than 10% of cards shipped in the US last year were contactless, a mere 185m compared with 1.5 billion worldwide, this is set to change as the only major market not to have previously adopted EMV-standard cards finally makes the switch. Meanwhile in Europe, the birthplace of Europay, MasterCard and Visa (EMV) standard, 25% of the cards in circulation are contactless and the old continent is equipped with over 1.5 million terminals accepting contactless transactions.

The next time US cardholders receive a new card it will probably be equipped with an EMV chip, and most likely be contactless. The US is finally making the transition to secure cards based on the European EMV standard, mostly because the liability shift imposed by the three big credit card brands — Visa, MasterCard and American Express — will start on October. If the merchant is EMV compliant and has a POS system equipped to read EMV cards, and the card is not, because the financial institution has not started issuing them yet — effectively forcing the merchant to run your card on the magnetic stripe reader — then the bank or credit card issuer has to pay for the misuse of the card. Conversely if the issuer has upgraded to EMV by sending chip cards to its card holders, but the merchant has not upgraded their point of sale to accept them, the retailer bears the cost for counterfeit fraud.

That’s why the smartcard industry expects 2015 to be the year when most credit and debit cards will become EMV compliant. The Payments Security Task Force (PST) forecasted that 575 million chip cards will be issued by the end of 2015, representing about 71 percent of credit cards and 41 percent of debit cards.

Also the industry consensus is that forty-seven percent of the merchants in the US will be ready to accept EMV transactions by the end of the year.

“These numbers reflect the significant momentum behind the adoption of EMV chip in the United States,” said Ryan McInerney, president of Visa Inc. last summer “By the end of next year [2015], these issuers estimate that one in two of their U.S. payment cards will be chip-enabled, which represents real progress given the scale and complexity of this overall effort.” While this year EMV will receive a big push because of the liability shift, it will probably take another three years for full adoption.

To read the rest of this article, visit EBN sister site EETimes.

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