Consumers Know EMV Is Coming, They’re Just Not Sure What It’s All About

By Kevin Woodward

Consumers know their credit and debit cards are changing, they’re just not sure exactly what is happening. That’s one of the findings from a survey released by payments provider Harbortouch.

In the survey of 18,000 U.S. consumers, 89.4% said they were aware of the transition from magnetic stripe cards to ones bearing an EMV chip, but 56% said they did not know what an EMV chip card is.

Consumers, along with merchants and financial institutions—including issuers and processors—are among the critical elements of the payment card industry. As the United States makes the EMV transition, which beginning Oct. 1 shifts the liability for fraudulent transactions to the entity that doesn’t support EMV, all three need to make the switch.

Financial institutions are well-prepared, having ensured their systems are ready to process EMV transactions, but have millions more chip cards to issue. And, some retailers, like the big chain stores, are ready for chip transactions.

Many of the retailers not yet ready don’t anticipate much fraud, claim the hardware upgrade is too expensive, or say not enough consumers have chip cards to warrant the upgrade.

The Harbortouch survey, conducted in August, found that 53.6% of consumers had not received replacement cards from all of their credit card providers, with 39.4% saying they had and 7% unsure. Visa Inc., on Tuesday, said there were more than 141 million Visa chip cards in circulation in the United States, more than any other market. However, according to Visa’s operational performance data, there are 318 million credit cards and 471 million debit cards in the United States that bear the Visa mark. A year ago, Visa says, there were only 20 million U.S. chip cards.

“The numbers are kind of going in the right direction,” Jared Isaacman, Harbortouch chief executive, tells Digital Transactions News. “If you’re a card issuer you want to see a slow progression to greater awareness.

Of course, getting the cards into consumers’ hands and getting them to use them is a task unto itself. A majority—65.9%—said they paid for a purchase by dipping a chip card into a point-of-sale terminal. Use varied by the consumer’s location, too. Of those in rural areas, 76% had used an EMV payment terminal, compared with 64.7% in urban and 64.4% in suburban areas.

The greater rural use may be because of discount retailer Wal-Mart Stores Inc.’s early efforts to install EMV-compatible POS terminals, but this is uncertain. “This big chain got ahead of this,” Isaacman says. Retailer Target Corp. and large drugstore chains also made early forays into chip acceptance, he says.

Though Oct. 1 is days away, no one contends there will be an automatic and dramatic shift in the U.S. payment card industry. It will take time, Isaacman says. “This is a 30-year-old technology coming to the United States,” he says. “It makes so much sense in the realm of defeating counterfeit credit card. There’s progress being made.”