Forecast Indicates 800 Million U.S. Cards Could Have EMV Chips by Year’s End

By Jim Daly

U.S. credit and debit card issuers will have about 150 million more EMV chip cards in circulation by year’s end than predicted last summer, according to the latest forecast from an industry group promoting the conversion of U.S. card payments to smart cards.

The Payments Security Task Force (PST) on Monday estimated that 63% of the cards issued by eight financial institutions representing 50% of U.S. payment card volume would contain EMV chips by the end of 2015. Applying that EMV share to the entire U.S. card base of approximately 1.2 billion general-purpose credit and debit cards means that 800 million cards could have chips by Dec. 31.

Last August, the PST said that nine major issuers polled planned to have 575 million EMV cards in circulation at 2015’s end. That figure represented 54% of the issuers’ total card base, according to a MasterCard Inc. spokesperson. Applied to the entire U.S. base, the earlier forecast would have had about 649 million chip cards in circulation at the end of 2015.

In a news release issued by Visa Inc. and MasterCard, the PST said the latest figures are “strengthening forecasts originally issued in August 2014.” By the end of 2017, some 98% of the recently polled issuers’ cards will be EMV enabled, the PST said.

Either prediction shows that issuers will be pumping out chip cards at a furious pace this year. A Visa executive said at a recent payments conference that Visa’s U.S. issuers had only 48 million EMV cards in circulation as of Dec. 31, 2014. That figure represented just 6% of Visa’s credit and debit card base.

On the acceptance side, merchant acquirers apparently are deploying EMV-capable terminals at about the same rate as earlier predicted. The release says a new poll of an unspecified number of acquirers “reinforces” the PST’s November 2014 forecast that at least 47% of U.S. card terminals would be EMV capable by the end of 2015.

“These numbers show real movement from plans to action as issuers, merchants and others in the payments system engage collaboratively to bring chip cards to the U.S.,” Chris McWilton, MasterCard’s president of North America markets, said in the release.

Julie Conroy, research director at Boston-based Aite Group LLC, tells Digital Transactions News by email that the PST issuance numbers are “very much in line” with predictions Aite published last summer and in February 2015.

“The only hurdle that could slow these efforts is the certification bottleneck, which I think is posing a real challenge on the re-terminalization side,” she says.

Certification refers to the various approvals acquirers and processors need in order to begin transmitting EMV card transactions over the payment card networks. Citing the expense and hassles of replacing point-of-sale terminals the read only magnetic-stripe cards, some retailers have called on the networks to delay their Oct. 1, 2015 EMV liability shift. So far, the networks haven’t budged. Under the liability shift, financial responsibility for counterfeit fraud will be assigned to the party in the transaction, issuer or merchant, that doesn’t support EMV.

Issuers participating in the latest PST survey were Bank of America Corp., Capital One Financial Corp. JPMorgan Chase & Co., Citigroup Inc., Discover Financial Services, Navy Federal Credit Union, U.S. Bancorp and Wells Fargo & Co.