Study: EMV Existence Much More Widespread Than Its Use
Despite the accelerating rollout of EMV debit, the actual use of chip cards at chip-enabled POS terminals has been held back by the “slower-than-anticipated” pace of merchant EMV adoption, with just 4 percent of all debit card transactions with a chip card happening at a chip-enabled terminal, according to the 2016 Debit Issuer Study from Discover Financial Service’s PULSE network, released on Aug. 9.
Even among just the subset of chip debit card transactions, only 11 percent occurred at chip-enabled terminals, while 89 percent were processed as traditional magstripe or card-not-present transactions.
The report is based on data from 72 financial institution debit issuers representing 48 percent of total U.S. debit transactions. The study projects that approximately three out of every four debit cards in the U.S. will be chip-enabled by the end of December. That represents significant growth over the one-third of debit cards that were chip-enabled at the end of last year.
Chip transactions are growing at triple digit rates year-over-year, the study noted—and issuers continue to focus on encouraging chip acceptance, viewing EMV as “a critical step toward increasing the security of card-based transactions and reducing fraud loss rates,” PULSE said.
Issuers are also out in front of merchants and consumers when it comes to mobile wallets, the study found. By the end of 2015, two-thirds of all issuers were issuing cards eligible to be loaded onto mobile wallets, such as Apple Pay, Android Pay or Samsung Pay—an increase of more than 100 percent compared to a year earlier. But consumers have today loaded just a small percentage of eligible cards. Apple Pay is by far the leader in this area, with 3.5 percent of all eligible debit cards having been loaded. Android Pay and Samsung Pay lag behind, with both platforms seeing just 0.2 percent of eligible cards loaded. However, once debit cards are loaded to a wallet, Android Pay and Samsung Pay users tend to use them more, averaging 1.7 and 1.8 transactions per enrolled card each month, respectively, as of January 2016. Apple Pay debit cards averaged just 0.7 percent a month at that time, according to the study. And despite the currently slow uptake, a mobile payments boom could be on the horizon. Nearly half of the issuers polled predicted mobile would comprise more than 25 percent of all debit transactions over the next five years.