Sen. Durbin Wants Answers on EMV Terminal Certification Delays
More than seven months after last October’s EMV liability shift in the U.S., customers “are forced to continue using fraud-prone magnetic stripe technology” because chip-reading payment terminals remain idle, charged U.S. Sen. Dick Durbin in a letter to Federal Trade Commission Chair Edith Ramirez. The Democrat from Illinois now wants the federal agency to investigate the EMV rollout, including any flaws in the certification process for EMV-capable payment terminals.
Durbin’s recent EMV letter follows one in March to EMV standards umbrella group EMVCo. that asked it to explain the snags in the U.S. EMV transition. The new Durbin letter, dated May 11, is hardly the first time the terminal certification delays have received negative attention. At an EMV overview session at the All Payments Expo in New Orleans in March, for instance, Mercator Advisory Group senior analyst Alex Johnson said that while at least 50 percent of U.S. terminals can handle EMV transactions, only about 20 percent of those capabilities have been activated. That’s because merchants with those POS systems haven’t gone through the lengthy process of testing the hardware, nor have acquirers rushed to certify that those terminals are EMV compliant, he suggested. Johnson and other experts on the APEX EMV panel said the rollout should hit its full stride by 2020.
That said, EMV cards continue to flood the market: MasterCard recently reported that 67 percent of its cards carrying its brand also have the anti-fraud chip technology. That represents a 51 percent increase since Oct. 1, 2015. Visa, meanwhile, reports that 256 million U.S. debit and credit cards carrying the Visa brand are EMV-enabled. More than 1 million merchants can accept EMV transactions; that translates into about 20 percent of U.S. merchant locations, Visa said. And both card networks recently announced plans to make EMV transactions faster for consumers.
Durbin, though, pointed to significant financial concerns for small and midsize merchants as a result of problems with the ongoing EMV rollout. His letter mentioned an unnamed grocery chain with stores in Illinois and other states that spent approximately $385,000 to buy 770 EMV card readers at $500 each “but has been unable to use the equipment due to repeated delays in obtaining certification.” His letter called the EMV certification process “opaque and confusing, with each card network requiring its payment processors and equipment providers to test and certify a merchant’s hardware and software for compliance with specifications that are largely derived from (EMV specification umbrella group) EMVCo.” Durbin also contends that while the EMV certification process can “last for months … some of the technical requirements were not even available until shortly before the October 2015 shift to EMV technology.”
The letter posed a series of six questions for the FTC to answer, all of them revolving around certification issues. Durbin gave no deadline for the answers.