More than half of US POS terminals to be EMV chip-enabled by end of 2015 – report

According to recent findings from Aite Group’s research report entitled “EMVelocity: Outlook for POS Re-terminalization and Mobile Payments,” awareness of the migration to chip among small to mid-size US retailers has increased with two-thirds of merchants aware of the standard. This is an improvement in a fairly short time frame, but a significant awareness gap still needs to be addressed for the remaining one-third of merchants who are unaware.

The study points out that while nearly all large US merchants have either begun or completed their conversion to chip-capable terminals, a large percentage of small to midsize US merchants are either undecided or not planning to upgrade their POS infrastructure in the near future.

The report also indicates that among those who are aware, 61% have either begun work or have already completed implementation.

Furthermore, for those merchants who are aware and planning to upgrade their POS, a fairly large number have begun implementation. And the pace of implementation is accelerating, with 86% expecting to be chip-enabled by the end of 2015, the study adds.

While the Aite Group report shows that the implementation rate has accelerated dramatically, concerns remain about smaller merchants awareness of the chip migration as well as the likelihood that many midsize merchants will be able to convert in time for the liability shift. Merchants are currently protected from the USD 3 billion in counterfeit credit card fraud at the point-of-sale (a number that will grow to USD 3.6 billion by the end of 2015). As of October 2015, a portion of this burden will impact merchants who do not upgrade. This fraud will disproportionately affect small and midsize merchants that sell fungible goods such as gift cards, jewelry and electronics and who will lag in upgrading their terminals.

Beyond EMV chip, terminal providers state that nearly all terminals being shipped at this time incorporate NFC, helping to enable the mobile payment ecosystem. In another disconnect, however, only about 1 in 5 smaller merchants are aware that their chip terminals include NFC. The report describes the potential for NFC-enabled mobile payments to incent accelerated re-terminalization, acting as a complement to the mitigation of fraud risk that the chip delivers.