EMV in the US: Where have we gotten to?

October 1st 2015 marked a milestone in EMV adoption in the US. On that date, liability for fraud on purchases made in store shifted from issuers to merchants, in certain instances, where retailers have failed to upgrade to EMV-ready technologies. But what are the effects of these changes so far?


Before and after October 1st


Between July 2014 and July 2015 - prior to the liability shift - less than one percent of card-present US transactions used EMV cards, according to EMVCo. The figure was significantly lower than the 33 percent global average.


EMVCo has yet to release new data revealing the current percentage of transactions where chip cards are used. However, recent MasterCard statistics showed 68 percent of all US-issued consumer credit cards from the company featured a chip as of April 30th - a 51 percent jump since the liability shift.


The data aligns with CreditCards.com research, also from April, that found 70 percent of cardholders polled said they were in possession of an EMV card.


Meanwhile, the number of chip-ready merchant locations reached 1.4 million during the same timeframe. Of these, one million were local and regional retailers, which is one-quarter of the total of these types of businesses.


As the proportion of both cardholders and chip-ready merchants increases, it's likely that future studies will reveal a marked rise in EMV transactions.


The effect on fraud


Fraud prevention is one of the key benefits of chip cards, and the results of introducing the technology have been substantial in various nations across the world.


"Other countries that have already adopted chips have seen significant reductions in counterfeit card fraud over time - as much as 60, 70 or even 80 percent," explained Catherine Murchie, senior vice-president of North American Enterprise Security Solutions for MasterCard.


In the US, EMV has already seen a promising reduction in counterfeit card crime. MasterCard studies across large chip-enabled merchants found a 39 percent decline in counterfeit card fraud basis points between January 2015 and January 2016.


Furthermore, dollar volume losses for counterfeit crime at these retailers dropped 27 percent over the same time period.


Looking ahead


While it's difficult to predict how quickly EMV cards will become ubiquitous across the US, The Strawhecker Group estimated 90 percent of merchant locations will accept chip payments by the end of next year.


EMV cards are already used for 97 percent of transactions in Europe Zone 1 countries, EMVCo estimates. Moreover, EMV is used for 87 and 84 percent of face-to-face payments in Latin America and the Middle East/Africa, respectively.



Given the current pace of market change, similar figures can be expected across the payments industry in the US over the coming years. This trend is likely to result in more secure transactions for consumers, as well as lower fraud costs for merchants and financial institutions. Of course, when the US adopts PIN instead of signature then this will further reduce fraud and speed up transactions.