So Long to Swiping? Not So Fast

I've been carrying around my EMV™ card for months. But just like you and your cardholders, I'm still swiping. A year after the first liability shift deadline, progress is being made but the transition is not complete.

You probably thought by this time your decisions and concerns would be behind you. Yet, you and your cardholders are still dealing with EMV changes, challenges and choices.

EMV chip-on-chip transaction volume continues to grow – up more than 200 percent quarter over quarter among Fiserv clients.

Think of the October 2015 liability shift as just the beginning. The next step – the transition from swiping to inserting a card – is likely causing confusion and headaches for your cardholders. Fiserv found just 44 percent of consumers have received instructions on using their EMV card at the checkout.

Changes for the U.S. Payments Industry

Your cardholders are learning new payment processes and how to dip – not swipe – their EMV cards. But not every merchant will take the new cards. MasterCard® found just 33 percent of all U.S. point-of-sale locations take chip cards. However, that represents a 468 percent increase since October 2015 – and a 158 percent increase in regional and local merchant adoption.

EMV chip-on-chip transaction volume continues to grow – up more than 200 percent quarter over quarter among Fiserv clients.

The move to EMV credit cards is moving faster than debit cards for a couple of reasons. For credit cards, EMV migration started first and the routing requirements are different. Just a few large issuers hold most credit cards, which simplified the switch.

Fraudulent transactions from counterfeit, lost or stolen cards are down since the shift. Visa® reports merchants who completed the chip upgrade saw counterfeit fraud dollars drop by 47 percent year over year.

Overcoming Challenges

A few large merchants accept only PIN debit transactions, with no option for cardholders to bypass and sign. That's a big deal for your cardholders, who may be used to signing. Now they have to know and enter their PIN number – even for rarely used debit cards like those linked to HSA accounts. Make sure your cardholders understand this change and be prepared to help reset passwords.

What about fallback transactions? That's what happens when transactions made with an EMV card at a chip-capable terminal fall back to magnetic stripe processing – most often because a merchant's back-end systems aren't ready to accept EMV transaction data. Fallback issues can usually be quickly resolved. Cardholders may also be frustrated when they can't get cash back or make cash-over transactions with their EMV cards, since only a few merchants allow those transactions.

Losses from chargebacks for counterfeit fraud are a concern for merchants. Visa and MasterCard have made modifications to their chargeback rules to reduce the number of counterfeit chargebacks.

Choices for Your EMV Migration

What's your strategy for reissuing cards? Mag stripe cards can be reissued as EMV cards when they expire, or you can replace every card with EMV cards at the same time. To speed things up, think about using a rolling reissue, in which you reissue every card based on the month it expires – no matter the year.

Will you disable old cards once a new card is issued? Will you continue to issue ATM-only cardholders a debit card? Those are additional choices you'll need to make.

What's Next?

EMV cards offer big advantages for you and your cardholders. The benefits – improved security, an improved global experience – may be worth the changes, challenges and choices you might face during the transition.

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