Seventy-eight percent of small and mid-sized businesses still haven't adopted EMV-ready systems. That's the scary scenario described in a new study from the Austin, Texas-based Software Advice on EMV readiness.
The study also reported that 23% of non-compliant retailers said EMV migration is "unnecessary," and 62% of U.S. consumers are still without an EMV chip card.
"Small business retailers have a lot on their plates, especially for the majority of independent merchants that don't have a POS system in place and are managing their store using manual methods," Justin Guinn, market research associate for Software Advice, said. "That might help shed some light as to why only 22% of small retailers are EMV-ready."
The report noted that 64% of single-store retailers do not currently have a POS system in place, and the impending EMV deadline, it seems, offers a great chance for retailers to finally upgrade to a POS system while also making the transition to chip card readers, Software Advice said.
Given the severe consequences of failing to comply with the EMV deadline, one would think there'd be some urgency among retailers to become EMV-ready. However, that doesn't seem to be the case, and Software Advice named a lack of time as a key reason why retailers without EMV readers in place have yet to transition.
"It's very likely that they might simply not have the time in their busy day to compare, research or adopt EMV technologies," Guinn explained.
In fact, Software Advice's data supports that reasoning, which shows 34% of merchants listing, "not enough time to research or implement" as their top reason for not adopting EMV technology.
Expense has been another big deterrent, with 33% of the retailers surveyed citing cost as a top factor for not being compliant.
"Considering the tight margins that main street businesses are running on, this justification makes sense," Guinn said.
The researcher suggested this same sentiment may also be the reason why so many retailers have yet to adopt a POS system at all. Factors such as cost and implementation time can make it easy for retailers to put off purchasing software, but the operational benefits of a POS system, including time saved on both the front- and the back-end, greatly outweigh the costs, he said.
The industry's primary cause for concern when it comes to the EMV mandate is the liability shift for fraudulent charges. When retailers are held liable, severe financial damage can result – especially for smaller, independent businesses.
"Taking a step back though, the thing that non-compliant retailers really have to ask themselves is, 'Is the potential liability that could come from credit card fraud greater than the time or money it might take to adopt an EMV-ready system?'" Guinn added.
According to Randy Vanderhoof, executive director of the Smart Card Alliance, "After October 2015, the entity that is the least secure in [its] technology will be the one liable for the fraud, if it turns out that that transaction was a counterfeit card."
Vanderhoof warned that those who have no intention of upgrading to EMV technology might change their tune a month later, once they get socked with a large chargeback that they've never seen before.
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