2015 EMV Migration Report

Recent high-profile data breaches, such as those perpetrated against Target and Home Depot, have thrust smart chip credit cards and the term “EMV” into the public consciousness as the banking and retail industries ready themselves for the impending October 2015 liability shift. Visa and MasterCard set that as the deadline for when banks and merchants must have enabled chip-card payments or else incur significant added liability for fraudulent transactions.

But, as the consumer education process continues, the question still remains: How prepared are the country’s largest retailers and credit card issuers? How many cards and point of sale machines will be replaced? And are any banks or retailers opting for added liability rather than overhaul their hardware?

In search of answers, WalletHub contacted the 10 largest U.S. credit card issuers, the 50 largest retailers and five smaller retailers that were recently the victims of infamous data breaches.

Main Findings

• All 10 of the largest credit card issuers are in the process of issuing chip-based credit and debit cards and expect the majority of their portfolios to be updated by the end of 2015.
• All of the major retailers that responded to our survey are on track to meet the October 2015 EMV transition deadlines set by VISA and MasterCard.
• All of the major banks are issuing chip-and-signature cards, with 40% also supporting PIN capabilities. In addition to all major retailers accepting signature-based cards, 65% plan to accept chip-and-PIN cards as well.
• All chip-based cards issued by major banks will continue to have magnetic stripes – enhancing usability while also mitigating certain fraud protection benefits.
• Retailer transparency regarding EMV is surprisingly low given the level of consumer concern about data breaches and financial security. Only 17 of the 55 retailers we contacted provided information about their policies – including only 25% of those that have been victims of breaches.
• Contrary to retailers, credit card issuers displayed exceptional transparency, with all of them providing information about their EMV transition plans.

Detailed Findings

Banks

Retailers
Retailers not listed in this table have not provided information regarding their EMV migration plans, and public information regarding this process could not be found.

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Ask The Experts

1. What are your thoughts on the findings of WalletHub’s report?
2. What are the biggest investment opportunities you see as a result of the U.S. migration to the EMV standard?
3. What impact do you think EMV technology, especially the brand implemented in the U.S., will have on fraud rates?

 

Methodology

In compiling this report, we reached out to the 10 largest U.S. credit card issuers, the 50 largest retailers and five smaller retailers that have been the subject of data breaches in order to better understand and relay information regarding the U.S. transition to the EMV standard. The list of retailers is based on National Retail Federation statistics regarding annual revenue, and it includes both traditional retailers and fast-food chains.

All 10 issuers were readily transparent about their policies, while retailer collaboration was scarce. Only 17 of the 55 retail organizations participated, while the rest either declined or did not answer at all – displaying a worrisome lack of transparency given the retail security climate.

Questions Asked of Credit Card Issuers:

1. What percentage of credit cards will be chip-based by October 2015?
   a. Will all customers or just new applicants get them?
   b. Will they offer chip-and-signature or chip-and-pin cards?
   c. Will their cards continue to have a magnetic stripe?
2. Do you plan to issue EMV debit cards as well?
3. What is your take on the security tradeoff between chip-and-signature and chip-and-pin technology?

Questions Asked of Retailers:

1. What percentage of payment terminals will be equipped to accept chip-based credit and debit cards by October 2015?
2. What type of payment terminal upgrades do you expect to make?
3. Will a customer with a chip-and-pin credit card be able to enter in his or her PIN in order to complete a transaction?
4. Do you plan to reissue store-branded credit cards with EMV computer chips? If yes:
a. Will all customers or just new applicants get them?
b. Will they be chip-and-signature or chip-and-PIN?
c. Will they continue to have a magnetic stripe?