Adoption of EMV Among SMBs, New Survey Findings

It’s close to the end of July ‘15 and the much-discussed payment network liability shift associated with EMV is just a couple of months away. According to a report released in May ‘15 by GrowthPraxis, only about 30% of the POS terminals were EMV-compliant. It was also observed that tier I retailers (those with annual revenue of more than $1 billion) had moved faster when it comes to the adoption of EMV while those with annual revenues of less than $250 million were the slowest to adopt. It is also worth noting that out of the 15 million POS terminals in the US, around 9 million terminals have been deployed at tier III retailers. As a result, it becomes paramount for aquifers to understand the drivers for EMV adoption among this category. A survey by Cayan tried to bring this out.

Recently, Cayan surveyed 344 tier III merchants to understand what it would take for an SMB to adopt EMV, the deadline after which merchants will be liable for the cost of counterfeit card fraud if they're unable to accept EMV cards. The following are some of the insights from the survey:

Current Status of EMV Adoption Among SMBs

- 48% of SMB merchants will be ready for EMV by October 1 and another 15% of the merchants to be ready by mid ‘16.

- 37% of the SMBs have no plans to accept EMV cards even after the deadline.

What Would Drive Them to Become EMV-Compliant?

The study also revealed that the cost of fraud and the increase of customer complaints would drive them to adopt EMV:

- Of the small businesses with no plans to accept EMV cards, 63% said that covering fraud would drive them to become EMV-capable, with 47% becoming EMV-capable after covering as little as $100 or less in fraud.

- More than 60% of the SMBs felt that it would be difficult for them to bounce back if the cost of fraud would go beyond $500.

- In addition, 57% would become EMV-capable if consumers complain about not being able to dip their EMV chip card, with 40% upgrading to an EMV-capable payment system after receiving five or fewer complaints a week.

- Only 16% of small businesses would become EMV-capable after hearing about another business being liable for fraudulent charges.

Furthermore, the survey also brings out the observation that small and medium-sized merchants prefer attacking one problem at a time. According to the study, the number of SMBs who do not plan to implement mobile payments is almost twice as that as those who do not plan to implement EMV. It will be very interesting to see how EMV adoption actually takes place post the liability shift.