Digital Transactions Authoritative, insightful and timely information for payments professionals
The number of EMV chip card-accepting U.S. merchant locations reached 2.3 million in June, up from 2.02 million in March and an increase of 77% from 1.3 million in June 2016, according to new figures from Visa Inc.
Visa says in its latest EMV report that half of U.S. storefronts now accept chip cards, an increase of 473% since the U.S. EMV conversion began. The official start was almost two years ago, Oct. 1, 2015, when the major payment card networks shifted liability for counterfeit fraud transactions to brick-and-mortar merchants if they could not accept the new EMV cards.
The number of EMV-enabled merchant locations at the end of 2016 was 1.81 million, which means that on average nearly 2,700 new locations were brought online daily in 2017’s first half.
Visa also reported that U.S. financial institutions had issued 449.1 million Visa-branded credit and debit cards as of June, more than half of them debit, up 37% from 326.8 million a year earlier. Some 62% of Visa cards now have a chip.
With more chip cards and more places that can accept them, U.S. EMV transactions and payment volumes are rising quickly. Visa handled 1.21 billion chip transactions in June, a 151% increase from 482.6 million a year earlier. Chip payment volume grew 109% to $58.4 billion in June from June 2016’s $27.9 billion.
Chip cards are most effective against point-of-sale fraud, especially counterfeit fraud but also lost-and-stolen card fraud. Visa, which did not give specific loss figures, said counterfeit fraud dollar volume at chip-enabled merchants dropped 58% in March compared with a year earlier.
Payments researcher Thad Peterson, a senior analyst at Boston-based Aite Group LLC, says there aren’t a lot of surprises in Visa’s latest report. “It looks like EMV is ramping nicely and their numbers are in line with our forecasts,” Peterson tells Digital Transactions News by email.
Peterson adds, however, that the continuing EMV rollout is laying the foundation for contactless payments. That’s because most EMV terminals also can process contactless payments using near-field communication technology, though many merchants have yet to turn on that functionality. Mobile wallets such as Apple Pay and Android Pay use NFC, but Peterson doesn’t expect a big rise in contactless transactions until issuers begin offering so-called dual-interface cards that support both contactless and contact EMV transactions, the latter being the dominant implementation today.
“The infrastructure is in place for contactless to emerge, all that’s needed is some contactless cards,” says Peterson. “I expect that issuers will look at what’s going on in the [United Kingdom] and think seriously about offering dual-interface cards.”
Dual-interface cards are costlier than contact-only EMV cards, but they facilitate very speedy transactions such as on the cards used on London’s subway system. Card maker CPI Card Group Inc. says dual-interface cards cost $2, compared with $1 for a contact-only EMV card.
The National Retail Federation recently reported that, based on an online membership survey, about 70% of small physical merchants have installed EMV terminals. The NRF and other merchant trade groups have strongly pushed for adding PIN authentication to EMV credit card transactions and the many debit purchases currently authorized by signature, a change in payment procedures that the card networks and most issuers have resisted.
