Will Small Businesses Migrate To EMV by October 2015?
‘Small businesses in the US are still not ready to migrate to new EMV (Europay, Master, Visa) standards’, says a recent study commissioned by Intuit, a leading financial management solutions company. The survey conducted by Ebiquity, a data analysis firm, has found out that only a marginal percentage of small companies is aware of the October 2015 deadline of EMV adoption. A total of 504 small to medium business owners were interviewed for the study.
What is EMV?
EMV is a global standard designed for smart payment cards and POS systems to control fraudulent activities. In EMV smart cards, data is stored in integrated circuit chips instead of using magnetic tapes. EMV chip produces dynamic data for each transaction and that cannot be reused for another transaction. This will ensure more security and make cards less vulnerable to treacherous in-person transactions.
Since EMV offers better security measures, it is being adopted all across the world. EMV adoption rate is 99.9% in Europe, 84.7% in Canada and 71.4% in Asia Pacific. However, the adoption rate is only 0.03% in the United States where occurs nearly 50% of the credit card fraud worldwide. Therefore US too has enhanced the migration of smart cards to EMV standards and is trying to reissue most debit cards and credit cards by October 2015.
Low EMV awareness among small businesses – some vital statistics
Almost two-third (64%) of the companies have heard of EMV cards, but only 20 percent know about it in detail. The unawareness of EMV cards is found to be high among small companies that have an employee size of 1 to 5. 70 percent of companies having revenues over $250,000 have enough awareness of EMV.
Only almost 52 percent of the small business owners understand the necessity to migrate to EMV solutions in order to avoid financial and legal liabilities. The more striking factor is that only 19% of the companies know that the deadline for migrating to EMV compatible POS system is October 2015. 58% of the owners of companies with 1 to 5 employees haven’t heard of a deadline yet.
The number of companies willing to adopt EMV based systems is also small. Only 42% companies are ready for the migration. 10 percent of companies, so far, have no intention to do it. The renaming companies are still undecided on moving to EMV by the October 2015 liability shift.
What are the causes?
As per the survey the major hurdles before the companies to become EMV compliant is the cost of new terminal and the difficulty in educating. Nearly six-in-ten (57%) of the companies admitted that the cost of new terminal is their primary reason not to upgrade to new EMV POS systems. Other important reasons for not choosing the shift is the lack of resources in research, and difficulty in educating employees and customers about the new system. Nearly 30 percent of small business owners pointed out the issues of upgrading software as a main concern.
How this issue can be solved?
Although the majority of the small business owners admit that they are not able to handle the liabilities of fraudulent card transaction, 85% of them don’t know the financial and legal liabilities they will be responsible for not upgrading to the new system by October 2015.
The study indicates that making the new system cost affordable may drive more business owners to EMV adoption. The chances will be high if the system has easy setup and usage. Almost 40 percent of the respondents suggested that education on the system and its process, and awareness of the liabilities due to non-upgrading will persuade more business owners to comply with the new EMV system before the deadline.