Digital Transactions Authoritative, insightful and timely information for payments professionals
By Kevin Woodward
@DTPaymentNews
A vital measure of the U.S. payment card industry’s migration to EMV chip transactions is advancing smartly for mobile point-of-sale provider CardFlight Inc.
New York-based CardFlight says 46% of the transactions processed via its gateway in June were made with chip cards using EMV readers. That’s an increase from 41% in May and 19% in January, as outlined in the company’s periodic “EMV Migration Tracker” report.
By comparison, about 11.1% of all Visa U.S. transactions in July were chip-on-chip, according to Digital Transactions News calculations using Visa’s third-quarter results.
“For the EMV migration to be successful in the United States, issuers need to equip their cardholders with chip-enabled cards and acquirers need to equip their merchants with chip-enabled terminals,” Derek Webster, CardFlight founder and chief executive, tells Digital Transactions News via email. “It sounds obvious, but it takes an upgrade on both sides for the fraud-reduction benefits of EMV to be realized.”
The number of transactions swiped through a CardFlight POS reader is steadily declining, accounting for 54% of transactions in June, compared with 59% in May and 81% in January. At CardFlight, 70% of the credit and debit cards presented to merchants bore a chip, up from 68% in May and higher than January’s 55%.
Webster says this percentage will only grow, “but we’ve already passed a tipping point where most cards in the U.S. are chip-enabled.”
Other data culled from CardFlight’s Tracker show that more American Express Co.-issued cards had chips—at 94%—in June than the other three brands: Visa, 72%; Discover, 70%; and MasterCard 61%.
Of course, it’s not just the volume of chip-enabled cards that’s important to boosting the chip-on-chip figure. CardFlight says 64% of its merchants were enabled for chip transactions and were processing them, a figure that increased from 57% in May and from 29% in January.
The company’s data also highlight the risk for certain merchant categories of not accepting chip cards. Of cards presented to merchants in the travel-and-transportation category, 84% have chips. “Merchants that see a higher percentage of cards presented containing EMV chips are therefore exposed to liability shift-related chargeback exposure on a higher percent of their sales,” Webster says. Other susceptible merchant categories include furnishings and appliances, personal services, and business services.
CardFlight’s data also pinpoints that merchants with higher average tickets tend to have a higher rate of EMV acceptance. Of merchants with average tickets of less that $10, only 48% accept EMV. That jumps to 70% for those with tickets between $100 and $200, and up to 78% when the ticket average is more than $200.
“It shows that merchants with high purchase sizes have been much more likely to upgrade or shift to an EMV solution than merchants with a lower average transaction size,” Webster says. “Obviously the cost of a liability shift-induced chargeback is a lot higher for a higher ticket purchase (and those purchases are more susceptible to fraud in the first place) and this shows that those merchants have been thoughtful about upgrading.”
Webster says that, overall, 64% of CardFlight’s merchants EMV-enabled.
