Page 86 - Pay Magazine s2014

finance & strategy
Countdown to Chip-Card Migration
Fig. 2
U.S. EMV UpgradE CoStS (EStiMatES)
total U.S. EMV upgrade cost est. $8.65 billion
POS terminals: 15 million
est. replacement cost: $6.75 billion
78%
16.2% credit & debit cards: 1.3 billion
5.8%
est. replacement cost: $1.4 billion
ATMs: 360,000
est. replacement cost: $500 million
source: Javelin Strategy & Research
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education. The company also offered a $100 rebate this year to small U.S. merchants that upgraded to chip-ready terminals.
Visa, in March, launched a 20- city tour to educate small busi- nesses and consumers about EMV technology by setting up educational sessions through local business associations, such as the U.S. Hispanic Chamber
of Commerce.
It’s not surprising that many small and midsize businesses don’t have a clue about EMV or a strategy in place to accept chip cards, if they don’t sell goods or services with black-market demand and their counterfeit POS card fraud risk
is low, according to Mimi Hart,
CEO of POS terminal maker and consulting firm MagTek Inc. “The business case to upgrade to EMV is still not there for most small
and midsize merchants,” she says. “Each merchant must consider its own business case before investing in new payment terminals.”
EMV’s Silver Lining: NFC
Payment terminal makers also are working to spread the word about EMV with educational programs, while playing up the silver lining for merchants making the switch.
New EMV-compliant payment terminals generally come equipped to support NFC, a core technology in many emerging mobile payment services like Apple Pay. Not all retailers are switching on NFC yet, but many are showing renewed interest in doing so. Cayan, a processor and merchant acquirer formerly known as Merchant Ware- house, has fielded queries from retailers looking to upgrade their payment terminals primarily
to accommodate NFC-based mobile payments. “After Apple Pay de- buted, some merchants called expressly seeking help in accepting mobile payments, which is a first,” says Marc Castrechini, Cayan’s vice president of product management.
“It’s a myth that there’s no return on assets for merchants moving
to EMV in the U.S.,” adds Erik Vlugt, vice president of product marketing for VeriFone North America, a supplier of EMV equip- ment. New portable and pay-at- the-table terminals, which also are EMV-enabled, can incrementally boost merchants’ profits by im- proving efficiency and minimizing losses. Introducing NFC-capable terminals also can expand the base of available customers and poten- tial sales from younger and more tech-savvy consumers gravitating toward mobile payments, he says. “Merchants that haven’t fully explored their EMV options are missing out on opportunities,” Vlugt believes.
Even for a small merchant in a far-flung location, switching to an EMV-capable terminal can project cachet and—in some cases—help a business expand from a fixed POS focus to embrace mobile and omnichannel commerce, suggests Scott Holt, vice president of marketing for Ingenico North America. Ingenico, a veteran terminal manufacturer, last year bought m-POS pioneer ROAM
to expand its suite of payment- acceptance solutions.
“Retailers are reacting to the EMV push in different ways, but between the benefits EMV offers for expanding NFC payments acceptance and the fraud risks
it helps mitigate at the POS, the cost of not making the transition to accept chip cards could be higher than many merchants realize,” Holt says.