Oct. 1, 2015 was the day the highly anticipated shift to Europay, MasterCard and Visa chipped cards was slated to take effect in the United States. A huge turning point for financial institutions, retailers and merchants, the adoption of EMV cards would significantly reduce card-related fraud.
The deadline was to mark the shift in responsibility from the card issuer to the merchant in all instances that card fraud occurred at payment terminals that are not in compliance with the new standard.
Yet even with customers' security being compromised in record breaking numbers, some businesses have been slow to transition. The Food Marketing Institute, representing about 40,000 grocery stores and 25,000 pharmacies, said in a letter to American Express, Discover, MasterCard and Visa that waiting lists and a lack of software specifications would delay meeting the mandate, and requested a new deadline of 2016.
A survey conducted by Card Services for Credit Unions and The Credit Union Times, discovered that a large majority of credit unions also missed the deadline.The Credit Union Times reported that of 220 credit unions studied, 78 percent missed the deadline.
"Credit unions averaged $226,000 in credit card fraud costs in 2014."
According to Pymnts.com, an online platform that measures commerce data, more than 18 million point-of sale terminals accept EMV cards around the world. Yet in a 2015 report from Payments Cards and Mobile 2015, fraud in the United States has increased year after year.
What low adoption rates mean
Though the U.S. as a whole is already the last key market to employ chipped credit and debit cards, National Association of Federal Credit Unions' president and CEO Dan Berger is advocating for a more rapid reform. In a letter to Congress members, Berger called the FMI's letter a remarkable delay tactic when considered with the number of fraud incidents of late.
The Credit Union Times-CSCU survey reported 39.5 percent of credit unions planned to send members EMV cards when their existing cards expired; but a two-month survey by Ranstad Technologies showed IT executives having little interest in transitioning to EMV technology any time soon. Respondents across more than four industries didn't expect EMV standards to affect their bottom line.
Credit unions don't have the same luxury of postponing interest in EMV technology. Even if members are not yet requesting cards equipped with EMV chips, neglecting to fully engage with the new industry standard could cause credit unions to bear the burden of criminal data breaches. Credit unions averaged $226,000 per institution last year, with a chance of making only 50 percent back, Berger wrote in his letter to Senators Mitch McConnell (R-Ky.) and Harry Reid (D-Nev.).
Though conversion costs are upward of $50,000 per credit union, getting on board with new guidelines is not only safer for members, but also more cost-effective.
"... [I]t's time for merchants and retailers to act in good faith and do everything they can to protect consumers, and that includes embracing EMV technology and welcoming a GLBA-like standard that would help prevent breaches from occurring," wrote Berger.