Retailers, Consumers, and EMV


With the coming of chip-and-pin (EMV) cards to the United States increasingly in the news this week, it seemed appropriate to focus on the impact of the liability shift on small business and consumers. A new study also recalls similar shift. Remember the Durbin amendment?

Many Small Businesses Unaware of Pending EMV Liability Shift

The long-awaited change to chip-based payments cards in the United States has been on the horizon for a while now, but as we finally enter the final stages of a full transition, small businesses look to take a hit. Gallup and Wells Fargo conducted a survey showing that the new liability shift will take many small business owners by surprise.

Square’s EMV Strategy Borrows from Banks (paywall)

Part of the obvious trouble for small businesses is getting the right equipment, which is often costly. Square—beloved of small businesses all over—has offered to credit the cost ($49) of the device to the customers who use it for at least three months. It’s a familiar incentive, but they’re also playing up a few interesting aspects when it comes to sharing in liability.

The Liability Switchover and the Apple Pay Opportunity, the Apple Pay Advantage, MCX Unravels (paywall)

Ben Thompson writes about the shift to EMV from the often-ignored consumer point of view, with this cogent comment on the chip-card experience: “Here’s a big one that I didn’t really notice in previous trips abroad where I’ve used EMV cards: the process kind of sucks! With a magnetic swipe it literally takes less than a second and the card goes back in the wallet.” Given that Apple Pay (and its counterparts from Samsung and Google) require a shift in consumer behavior, well, there’s the opportunity. This piece also provides one of the clearest explanations of the technology for regular people I’ve seen. At the same time, Americans still seem to prefer paper over plastic when it comes to payments.

Bad Guys Are Already Compromising Chip and PIN Cards

As with all things, with an increase in secure technology, there’s an increase in innovation from the criminals on the other side. Physical proximity to the card is still a serious issue, and InfoSecurity looks at a few of the techniques being used to breach this latest safeguard. This of course raises the exhaustive arms-race question—will our every safeguard innovation be met so rapidly with the criminal counterpart? Will a switch to digital slow this race at all, or just shift the medium?


The Impact of the Durbin Amendment on Merchants: A Study Survey

You may remember a somewhat similar shift that began back in 2011—and the general foretelling of doom surrounding it—with the Durbin Amendment capping the fees on debit-card transactions. “Regulation has had a limited and unequal impact on merchants’ debit acceptance costs,” concludes a detailed study by the Federal Reserve Bank of Richmond. “The majority of merchants in the survey sample (about two-thirds) reported no change or did not know the change of debit costs post-regulation. Some merchants (about a quarter) reported an increase of debit costs, especially for small-ticket transactions. The remaining less than 10 percent of merchants reported a decrease of debit costs.” You can get your Durbin Amendment refresher here (courtesy of yours truly).