Study: The bulk of US payment cards will be EMV enabled within 17 months
By the end of 2015, 70 percent of credit cards and 41 percent of debit cards in the United States will be EMV enabled, according to a new report from research and consulting firm Aite Group.
“EMV: Lessons Learned and the U.S. Outlook” reviews the experiences of five countries that preceded the United States in migrating to the EMV standard: the United Kingdom, Australia, Brazil, Mexico and Canada. Additionally, the study also describes the U.S. path to EMV based on interviews with top U.S. issuers and payment networks, and makes recommendations for U.S. issuers based on the lessons learned from other countries.
Rising counterfeit card fraud has built the EMV business case for U.S. issuers, as credit card fraud rates doubled between 2007 and 2014 to the current rate to 10 basis points — 10 cents out of every $100 transacted. Debit card fraud is seeing a similarly rapid increase, Aite said.
Other contributing factors include the increasing difficulty that U.S. cardholders have in using their magnetic stripe cards overseas, the desire to accelerate the upgrade of terminal infrastructure to facilitate NFC-based mobile payments technology, and the decreasing cost of chips and terminals.
Based on issuer interviews, Aite said the EMV-enabled card issuance process will ramp up in Q4 2014, with eight of 18 issuers beginning general issuance to the public by the end of 2014 and three more joining in by the end of Q1 2015.
Aite Group found that the majority of card issuers are choosing to initially issue contact-chip rather than dual-interface cards, a decision driven by factors that include cost, the desire to keep deployment as simple as possible, and a belief that the merchant infrastructure will not be ready to support contactless transactions in any great scale by the liability shift date.
Julie Conroy, research director in retail banking at Aite Group, said that as issuers begin to make the shift to chip cards, they will have several issues to think about:
Taking the world's largest card market from mag stripe to EMV is a massive undertaking. The 17 months before the liability shift takes effect will pass by quickly, though, and issuers, based on lessons learned from other countries, should consider issues like fraud migration paths and how to counter them, as well as how to educate the consumer and merchant alike on chip cards. They should also consider using third-party expertise, already deployed in the EMV migration of other countries, to streamline the implementation process and help with the knowledge transfer.
Source: ATM Marketplace