The topic of EMV is not new among the POS and merchant processing industry. But while the discussion has lost a bit of steam, the opportunity for merchant processing and point-of-sale vendors hasn’t.

It is no secret that the adoption rate for EMV has been slower than expected. What is more surprising is the number of merchants who still do not understand what EMV is or the risks that are involved with not accepting chip cards. The industry as a whole has seen an influx of fraudulent chargebacks due to consumers who are now savvy enough to identify merchants who do not accept EMV. Cardholders looking to take advantage of merchants who still swipe has become more common costing merchants millions of dollars a year in indisputable chargebacks.

EMV BY THE NUMBERS

Since the EMV liability shift in October 2015, the EMV conversion rate among merchants has been slower than expected. According to EMVCo, the percentage of card present EMV transactions for the year of 2018 stood at 53.5%, an increase from 41.2% in 2017.  This is much different than the transaction rates in Canada and Mexico they are more than 93%.

WHY HAVEN’T MERCHANTS SWITCHED?

For many merchants, the thought of installing machines and changing their business practice can seem daunting and expensive. It is common for some merchants to have looked into implementing EMV only to find out that their POS will require a costly upgrade. The best approach for these types of merchants is education. It is important for them to know there are options available that will fit their budget and eliminate a bulk of their chargebacks.

HOW TO EDUCATE MERCHANTS ABOUT EMV

The first thing a merchant must understand is that implementing EMV does not have to be as costly as their POS company might have quoted them. It helps if the merchant familiarizes themselves with EMV and understands the risks and costs associated not accepting chip and pin transactions.

First, What is EMV and Why is it Important?

EMV is a global standard for credit cards that uses computer chips to authenticate rather than the magnetic strip on the back of the credit card. Unlike the magnetic strip, the information on the EMV chip is encrypted and virtually impossible to replicate. This reduces the risk of fraudulent cards being created.

After the liability shift in 2015, issuing banks who categorize transactions as fraudulent immediately look to see how the card was accepted. If the card was swiped at the POS/credit card terminal, the bank will immediately rule in the cardholder’s favor leaving the merchant unable to fight the chargeback. If the card was “dipped” (an EMV transaction”), the cardholder can not rule the charge as fraudulent as the merchant tool the necessary steps to eliminate the risk, and a chargeback will not be issued.

Understanding the Return on Investment

Before you look into the best way to implement EMV, it would be best to understand the merchant’s return on investment. What is their average ticket size? Monthly volume? Number of chargebacks they see a month? For some low volume merchants, you may find the cost of implementing EMV does not justify the savings of avoiding chargebacks. But for the majority of merchants, the savings can be exponential over time.

For example, say a merchant who does $20K a month in volume with an average ticket of $30 sees four fraudulent chargebacks a month. The inability to fight these chargebacks could result in $120 a month in lost revenue and another $80 in chargeback fees. Not to mention, there is a trend where consumers are taking advantage of merchants and running up large tabs then simply calling in a fraudulent transaction leaving the merchant left covering the bill. For these types of merchants, the cost of EMV terminals would pay for themselves over the course of 2-3 months.

Ease of Implementation

The merchant must know is that there are options for implementation that more than likely fit their budget.

Point of Sale- Semi-Integrated

The majority POS systems offer semi-integrated solutions (a separate pin pad next to the POS machine for running credit cards). There are many benefits to this as the merchant is still able to run transactions through their system and the POS is taken “out-of-scope” when it comes to PCI requirements. You can learn more about semi-integrated solutions in the Pax Integration FAQs on BOLD’s University page.

Point of Sale- Non-Integrated

If the merchant is running a POS that does not offer EMV in a semi-integrated environment, there are also options to run the credit cards on a separate machine outside of the point-of-sale. While this is not ideal and can alter their business process/reporting, it does offer a cost-effective approach to avoiding chargebacks.

Stand Alone Terminals

If the merchant does not use a POS system, it is important for them to know that the cost for EMV enabled terminals is minimal. Many merchant processors and POS companies offer the credit card hardware for free as an added benefit of going with their merchant services.

Merchants have begun to feel the effect of and are looking for choices. It is a good time to open up a discussion with businesses looking for a change by offering information and solutions that fit their needs and budget.

If you have more questions about EMV or are interested in the hardware/software packages that we provide our partners, feel free to fill out the form below and a BOLD. representative will contact you shortly.