April 4, 2016
Published in CSP Daily News
WASHINGTON -- Despite having to assume responsibility for fraudulent card purchases, 42% of retailers still have to upgrade their in-store point-of-sale (POS) terminals to be compliant with Europay MasterCard Visa (EMV) security standards, according to a recent study.
The report included all types of merchants from big box to convenience stores, but researchers for Washington, D.C.-based CardHub say the sluggish retail reaction to the credit-card companies’ firm stance on EMV is surprising.
“The retailer response … has been shockingly muted … which is problematic considering merchants that do not implement EMV-compliant payment terminals are now liable for fraudulent purchases made in their stores,” officials with CardHub said in the report. “And the roughly $8 billion in fraudulent card purchases made in the U.S. each year certainly represents a mountain of risk for resistant retailers.”
The major credit cards set a liability shift date of Oct. 1, 2015, for in-store POS and Oct. 1, 2017, for in-pump POS if card fraud occurs at sites not equipped to accept EMV “chip” cards.
For convenience stores, the hurdle has been with in-store POS registers that are tailored to forecourt environments. Providers all along the digital-payment path are working to make transaction times fast and ensure the hardware and connections work consistently.
“We run into trouble where there’s integration into the POS,” Gray Taylor, executive director for Conexxus, Alexandria, Va., told CSP Daily News. “Everyone is feeling their way through it.”
7-Eleven was one of 50 large retail chains reviewed in detail. CardHub noted that while the Dallas-based chain did not respond to requests for its EMV plan or implementation status, researchers sampled random stores and found none of them were implementing EMV as of March.
The research also surveyed consumers, with 41% saying they don’t have or don’t know they have a smart-chip card, and 56% said they don’t care if their retailer’s payment terminal is chip-enabled.
About 40% said they had never used a chip-based card to make a payment, while 40% said they received a chip card in the past six months.
In conducting this report, CardHub surveyed a representative sample of the general consumer population as well as a diverse selection of retailers about chip-based cards and EMV security.
To gauge the sentiment of the general population, they conducted a nationally representative online survey of 1,000 individuals between Feb. 26 and Feb. 27 on SurveyMonkey’s online platform. After all responses were collected, researchers normalized the data by age, gender and income so the panel would reflect U.S. demographics for income-earning adults. Survey results have a 3.2% margin of error.
For the retailer component, CardHub chose to include 50 large chains as well as five smaller merchants, each of which has experienced a data breach in the past. They first called 15 stores from each retailer between Feb. 16 and March 9 and asked about their chip-card acceptance capabilities. In selecting the stores, CardHub chose the three largest metropolitan areas in each region: West (Los Angeles, Phoenix, Seattle); Midwest (Chicago, Detroit, Minneapolis); Northeast (New York, Philadelphia, Boston); Southwest (Dallas, Las Vegas, Albuquerque, N.M.); Southeast (Washington, D.C.; Miami; Atlanta) and contacted one store within 20 miles of each metro area. If no stores were located in a given metro area, the next largest was chosen.
Researchers then attempted to confirm the information they collected with each retailer. All responses were subsequently incorporated into its findings.
For retailers that chose not to respond to requests, the company used the data initially collected. The list of retailers that refused to collaborate or did not respond to multiple attempts to verify information included Costco, McDonald’s, Ahold USA/Royal Ahold, TJX, Kohl’s, Taco Bell, Pizza Hut, Meijer, Wakefern/Shoprite, Subway, J.C. Penney, 7-Eleven, Aldi, Ace Hardware, Ross Stores, Starbucks, Bath & Body Works, Bi-Lo, Wendy’s, Menards, Staples, Burger King, Trader Joe’s, BeBe, Jimmy John’s and Victoria’s Secret.