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The debut this summer and later in the year of chip cards for cardholders of Walmart and Sam’s Club branded credit cards likely will spur other retailers to accept the new payment card technology.
That’s the finding from a Digital Transactions News survey that asks if the issuance of the Walmart and Sam’s Club chip cards will spur EMV acceptance by other retailers. A majority—65%—said it will, while 23% said it will not and 13% responded maybe.
Beginning June 23, Sam’s Club, the membership store unit of Wal-Mart Stores Inc., will begin sending credit cards embedded with chip bearing the Europay-MasterCard-Visa standard to cardholders. The move is a precursor to October 2015, when the liability for counterfeit card fraud will shift to the party not equipped for EMV.
Later this year, Walmart will replace Walmart-branded cards with chip versions. Both the Walmart and Sam’s Club cards bear MasterCard Inc. branding, and are issued by GE Capital Retail Bank. Point-of-sale terminals in Walmart and Sam’s Club stores either have or are in the midst of being updated to accept chip cards.
No doubt, Walmart is a retail behemoth—its fiscal 2013 sales totaled $473 billion—that may influence other retailers. They also may be impacted by Target Corp.’s decision to advance chip card acceptance in its stores. In April, Target said it would convert its Redcard credit and debit card portfolio to use MasterCard’s chip-and-PIN technology, and install chip-compatible point-of-sale system
The high-profile nature of these two retailers will spur other retailers along the EMV migration path, says Mary T. Monahan, executive vice president and research director of mobile at Javelin Strategy & Research, a Pleasanton, Calif.-based advisory firm.
“As the number one in the Fortune 500, with almost a half a trillion in sales, Walmart is a heavyweight among the heavyweights,” Monahan says. “Walmart will now begin to push other retailers to move to EMV cards by touting the higher level of security that they offer their customers.”
And Target, with a need to repair its standing following a data breach disclosed in December, also will champion chip cards, she says.
No doubt the Target breach and the Walmart chip cards will make a difference, says John Berkley, senior vice president of product at Durango, Colo.-based Mercury Payment Systems.
As Walmart and Sam’s Club customers become accustomed to paying with chip cards, that will aid overall consumer awareness, he says. But that itself won’t be enough. “It’ll take awareness on the consumer side, momentum from other issuers, and either interest or a forcing of the hands on the merchant-acceptance side,” Berkley says.
Though EMV acceptance will be spotty for a while, he is encouraged by a growing interest in it from merchants. “We see merchants reaching out to us and our resellers,” Berkley says. “Those things weren’t happening a year ago.”
