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Reflections On the EMV Chip Card Migration, One Year In

A full year has now passed since the U.S. EMV liability shift took effect on October 1, 2015. The shift disrupted the credit card industry, directly influencing merchants’ businesses and the level of fraud liability risk to which they are exposed. Over the past year, a lot has changed and both consumers and merchants are adapting to the new payments environment, but we still have a long way to go as an industry.

Mainstream press and most people only became aware of EMV chip cards around the time of last year’s liability shift. In reality, the shift from magnetic stripe to chip-based credit cards in the United States has been in the works for much longer. At CardFlight, we had teams working on developing and deploying EMV solutions since 2014. We are proud to be one of the only mobile solution providers in the U.S. to receive EMV certifications and approvals prior to the liability shift. In fact, I spent last October 1 in Washington, DC as a guest of the Electronic Transactions Association, where CardFlight was one of the companies featured for having EMV-enabled point of sale solutions available to merchants.

As attention and interest in the EMV chip card migration picked up from all sides, it quickly became clear that October 1, 2015 was not a big bang, but rather an interim milestone in a broader shift. Less than half of all credit cards in circulation contained chips, few merchants had deployed EMV-enabled solutions, and both consumers and retailers had limited experience completing chip card transactions.

More remarkable, there was a dearth of real data about where the market was actually at. While EMV was a hot topic in the press, most published statistics relied on surveys, individual anecdotes or forecasts rather than real transactional data. Because CardFlight processes transactions on behalf of tens of thousands of merchants in all 50 U.S. states, we have access to cold hard data about the cards customers are using and the technologies merchants are using to accept those payments.

We created something called the CardFlight EMV Migration Tracker, which assesses the impact of EMV chip card migration within the payments industry, something we hoped would serve as a resource for other companies to understand how the EMV migration changes their own businesses and the market overall. We first published this in December 2015 and since then have updated it quarterly with new data. Today, on the anniversary of the liability shift, we are publishing our latest update.

So, where are we at now?

  • 78% of cards now contain EMV chips, up from 46% in October 2015.
  • American Express leads the way in EMV card issuance, with 96% of their cards now EMV-enabled.
  • 73% of CardFlight merchants are EMV-enabled, more than 2.5x the national average.
  • More than half (56%) of CardFlight transactions in September were EMV “chip on chip”, showing our success in leading consumers and merchants through the EMV migration.

As an industry, we’re in a time of transition. Nearly 4 out of 5 cardholders have EMV chips on their credit cards. With roughly 30% of U.S. merchants now EMV-enabled, customers are getting used to dipping the chip instead of swiping the magnetic stripe. Of course, this only leads to further confusion at merchants whose terminals have a chip card slot but haven’t yet upgraded it with EMV-certified software.

Amidst all this change and confusion, many people forget the whole reason the shift: reducing fraud. Counterfeit card fraud is one of the leading sources of fraud losses in the credit card ecosystem, and EMV technology makes this type of fraud nearly impossible. For retailers who completed or are close to completing their upgrades to EMV, MasterCard reports a 54% decrease in counterfeit fraud costs year-over-year.

Whether you like or dislike EMV, and whether you have found the migration straightforward or confusing, one thing is certain: EMV chip cards will be the primary way to pay for in-person commerce in the United States over the next few years. While the first year of this migration has been a wild one, the trend lines are clear.

Interested in more data about the EMV chip card migration? You can also download the full October 2016 CardFlight EMV Migration Tracker with charts and additional data points at http://bit.ly/2dxN9FV

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Derek Webster

Derek founded CardFlight in 2013 after transversing the States from San Francisco to New York. Serving as our CEO, he first fell in love with payments over a decade ago. Derek lives and breathes mobile payments, and makes it his mission to revolutionize the way we pay. If he’s nowhere to be found on land, you’ll surely be able to find him in the seas, racing on a sailboat.