Why Are Businesses Not Upgrading to EMV?

Copyright: ratmaner via Shutterstock.com

The clock is ticking for businesses in the United States that accept card payments - by the end of this month, these merchants must have point of sale (POS) terminals compatible with the new chip-based card technology being rolled out (commonly referred to as EMV). Failure to do so can end up costing business owners greatly, as the cost of fraud is shifted away from banks and onto them. Despite this, most small and midsize business (SMB) owners are not ready, or not planning on upgrading their readers. The reason behind this pushback can be attributed to two major causes.

Chip & Signature Is An Expensive Half-Measure. Upgrading their credit card readers, and training employees is to use them is no trivial venture. If they want to accommodate Chip & Signature credit cards (the type of EMV being implemented in the United States), merchants need to have POS terminals that can capture a customer's signature. Typically, these machines are at least twice as expensive as the average Chip & Pin reader (the other variant of EMV).
We surveyed some of the most readily available card readers to merchants, through online providers, and found that the average cost of a card reader that supports signatures to be $556, while the non-signature counterparts cost just $206.

The other seldom spoken about cost of EMV is the time lost on upgrading/training. Before they can be put to use, these new POS will need to be linked up with existing computer systems (if any), and installed. After that is done, all register attendants will need to be shown how to use and troubleshoot these readers, so they can show customers the "new way of paying". The larger the business, and the more employees these business owners have working POS terminals, the larger the time cost will become.

If all these changes will ultimately save business money on the fraud front, why are they so hesitant to make the shift? The answer lies in the fact that all this cost is being put into a half-measure. Most experts agree that chip & pin credit cards offer greater security to consumers, over chip & signature. Internationally, some markets that at first moved to chip & signature, have after a couple of years switched over to chip & pin (such as Australia). Business owners do not want to sink these high costs into a technology that could very well be obsolete in a few years. If the shift was made currently to chip & pin credit cards, not only would businesses incur lower transition costs, they would also have a more long-term solution at hand.

Nearly 1 in 4 SMB Owners Think EMV Is Unnecessary. A recent study put out by Justin Guinn, a Market Research Associate with Software Advice, found that 23% of businesses they surveyed consider EMV terminals to be unnecessary. Furthermore, 10% haven't even heard about this new technology before. This study was not the only one to demonstrate the lack of readiness on the part of US businesses. Just last month, Wells Fargo reported that only 49% of business owners are aware of the upcoming liability shift.


Given what we know about the prevalence of credit card fraud in the United States, and the impending October liability deadline, all these studies show a problem in the mindset of many business owners. Their attitude towards EMV seems out of tune with many industry experts, which suggests the failures of the migration to chip & signature may stem from the education/messaging side of things. Even though some business associations have been actively campaigning and distributing educational information about EMV, the message has not yet been delivered on a nationwide scale.
Unfortunately for many business owners, many of them will only be reading and hearing about the importance of EMV in the coming months, as the story gains national coverage - with 20 days to go before the liability shift occurs, many will be left wishing they were better informed, at a much earlier time.