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EMV: To Adopt or Not to Adopt?

  • By Andrew Deichler
  • Published: 6/12/2015

NEW ORLEANS -- Retail treasury professionals who gathered Thursday for the 2015 AFP Retail Roundtable expressed widespread apprehension about adopting EMV. Though the EMV liability shift kicks in soon, leaving them on the hook for security breaches, many retailers are unconvinced that implementing the solution is necessary.

Is EMV worth it?

Some retailers see EMV as a very costly solution that does not offer a many benefits. “We already have point-to-point encryption and use tokenization in our solutions, so it’s huge cost for us to upgrade several thousand locations to EMV,” said one retail treasurer. “I’ve been hearing a lot of discussion about people who are delaying it. And the way the United States is implementing EMV, it’s not offering the security people think it is.”

Furthermore, some retailers might not even be able to meet the deadline if they wanted to. “We’ve decided for our new locations to go ahead and order EMV terminals, but we can’t get them for two or three months,” said another retail treasurer.

However, that may actually be more cost-effective in the long run, the treasurer added. “After the initial push, I can’t imagine that the prices of those terminals won’t go down,” she said. “From just the basic law of supply and demand, in about six to 12 months they’ll probably down. They’re expensive right now.”

Magnus Carlsson, AFP’s manager of treasury and payments, noted that the fast food business does not see a lot of fraud, given the cost of their items. “So many of them are willing to take the hit rather than adopt chip cards,” he said.

Another cost for retailers, or at least an important consideration, is completing training for store employees. The actual process of accepting an EMV card is different from accepting a mag-stripe card, and cashiers will need to know what they’re doing before the retailer rolls it out. “Your cashiers have no idea what EMV looks like,” said one retail treasurer. “You need to make sure they know how to accept the payment.”

Who’s adopting?

Even the retailers who are in the process of implementing EMV are unlikely to have it installed by the deadline. Only five retailers at the roundtable said they would be ready by October.

As for the rest of the group, most of them are unsure when they will have EMV in place. A fast food restaurant treasurer said that her company has elected not to implement before the deadline. Another treasurer for a sporting goods retailer said her company was initially working towards meeting the deadline but ultimately decided to hold off until early 2016.

Several treasurers agreed that that the consensus among many retailers is that they need to adopt EMV simply because reputational risk is paramount. They understand that EMV—particularly chip and signature, which is what the U.S. is heading towards—is not particularly secure. However, with the epidemic of data breaches retailers have seen in the past several years, they want their customers to know that they are meeting the minimum security requirements. 

This is the case for a treasurer for a retailer that provides food services for businesses. His company is adopting EMV to “kill two birds with one stone.” EMV terminals are equipped with near-field communication (NFC) capabilities, which is becoming more desirable with the advent of Apple Pay, and competitors like Android Pay soon to hit the market. However, “it will probably take us two years to implement and we’ll still only be at 90 percent,” he said. “We’re not really doing it for the EMV, but our clients are demanding that we have EMV.”

Craig Martin, executive director of the Corporate Treasurers Council, also expressed doubts about the actual value of chip cards that don’t use a PIN. “Why we’re okay with chip and signature, I have no idea,” he said.

Carlsson noted that he’s heard that the banks are pushing back against chip and PIN because it’s more costly for them than chip and signature. So perhaps retailers aren’t the only ones concerned more with the perception of security than security itself.

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