Consumer’s Chip Card Conundrum

The EMV migration deadline is coming and while consumers will be faced with a change in the way they pay, it may be merchants who truly aren’t prepared for the shift.

The EMV migration deadline is coming, and while consumers will be faced with a change in the way they pay, it may be merchants who truly aren’t prepared for the shift.

As of Oct. 1, the liability for fraudulent transactions officially moves to merchants. From that point on, these companies will bear the full cost for any counterfeit, lost or stolen transactions during a “card present” point of sale.

But the confusion and frustration over merchant liability has the potential to end in both lost sales and unexpected fraud after the shift takes place, Fast Company reported over the weekend.

According to Julie Conroy, research director for retail banking at Aite Group, by the end of 2016 only 59 percent of retail locations will be equipped with EMV-enabled readers. This will leave millions only prepared to accept cards with magnetic stripes, Fast Company said.

Besides the most significant change of replacing the swipe of a card with a dip, another friction point EMV-enabled cards pose to the purchasing process may actually lie with retail clerks. Many of which may not have a clear understanding about how transactions with chip-equipped cards actually work.

Based on a survey conducted by Conroy’s group in 2014, only 16 percent of merchants surveyed said they planned to provide formal training to front-line employees, Fast Company reported. While 78 percent claimed they would plan “informal employee-to-employee training,” it is unknown whether that will be helpful to consumers.

An even more troubling result from that same survey was that one in three small to mid-sized businesses, those with several million dollars in annual sales or less, were clueless about EMV in general.

“There are a lot of questions around EMV and how merchants need to be prepared so that they do not run into unexpected business costs,” Neil Randel, CEO of First American Payment Systems, told PYMNTS earlier this year.

Randel warned that not being prepared for EMV could put merchants, especially small businesses, at risk.

“EMV payments are a part of the payment ecosystem, whether a merchant is prepared or not,” he stated plainly. “In today’s world, consumers are very aware of data breaches and issues with fraudulent transactions. They will want to avoid businesses that do not have the most up-to-date payment security.”

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The Future Of Unattended Retail Report: Vending As The New Contextual Commerce, a PYMNTS and USA Technologies collaboration, details the findings from a survey of 2,325 U.S. consumers about their experiences with shopping via unattended retail channels and their interest in using them going forward.

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