Down to the wire: Why most SMBs aren't planning to migrate to EMV by October 1st.

The EMV liability shift is still slated for October 1st, even though many payment applications across the industry are still churning in payment processor and card brand certification bottlenecks. While many tier-1 retailers are certified and ready to go, integrated and semi-integrated options for SMBs are just now becoming available. That being said, many merchants are not overly concerned as only 22 percent of small retailers are prepared to move to EMV in time for the liability shift, according to a recent report conducted by Software Advice, an independent POS review site. The report, "EMV Deadline: Will SMBs be ready in time?", found that 78% of SMBs are not ready to transition to EMV and that over half in that camp have no intent to make the move at all - citing the cost to upgrade and a feeling that EMV is unnecessary as rationale.

Deadlines gone by
After the October liability shift, the party with the least secure payment technology will assume liability for fraudulent purchases. This means if merchants have not updated to EMV-enabled payment solutions by 10/1/15, they will be liable for fraudulent purchases, as EMV Connection noted. The ramifications of this vary by business-type as each merchant has their own unique level of risk pertaining to counterfeit EMV cards. For example, capital outlay required to transition to EMV makes much more sense for a jewelry store that's selling high-value goods than it does for a quick service restaurant with smaller tickets and significantly lower risk.

"Only 22 percent of small retailers are prepared to meet the EMV deadline."

While the number of EMV-compliant small businesses has doubled, from 11 percent in 2014 to 22 percent today, there is still an overwhelming number of merchants that have yet to make that jump and doubt they can do so in time. In fact, nearly one in 10 merchants were not even aware of the deadline.

Randy Vanderhoof, of Smart Card Alliance, postured a simple explanation for the unpreparedness of small businesses: Many still doubt the transition to EMV will happen, with 23 percent of respondents finding EMV technology unnecessary.

"I think there has been a sense that [merchants] were just going to ignore this," he told Software Advice. "They didn't believe it was going to happen, or they just put it out of their mind because they had more important things to worry about."

The factors of noncompliance
There are other reasons merchants have been slow to meet EMV standards. The Software Advice study found other critical factors:

  • 34% - Lack of time to research and implement: Small business owners simply don't have a lot of time on their hands, and researching and implementing new payment standards is time-consuming, so it falls by the wayside to other objectives entrepreneurs find to be more critical to their success.
  • 33% - Too expensive: Meeting EMV requirements can require significant investments in new technology and payment infrastructure, and some merchants simply are not willing - or cannot afford - these expenses.
  • 23% - Unnecessary: Merchants with little history of fraudulent card use will probably see little value in the cost associated with an EMV migration. These businesses will likely wait until it's time for a new Point of Sale solution to implement EMV.
  • 10% - Don't know: While definitely in the minority, some merchants are still unfamiliar about EMV, what it brings to the table and why they need to implement it. These merchants will need to get up to speed quickly if they still want to meet the deadline.

As with any major shift in technology, education is key to a smooth transition. Merchants should communicate with their Point of Sale and merchant services providers to determine if an immediate upgrade to EMV makes sense for their business or if they'd be better served to wait until their next Point of Sale update to make the jump.


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