NGA News

EMV Transition Still Presents Challenges and Confusion

Sep 30, 2016

Arlington, VA – The National Grocers Association (NGA) today sent a letter to the House Small Business Committee with an update on the payment system transition from magnetic stripe electronic payments to EMV (Europay, MasterCard and Visa) chip cards, also known as the EMV transition, within the independent supermarket industry.

The transition to the EMV standard in the U.S., which began in 2011, continues to be an ongoing process in which millions of credit and debit cards have been redistributed to consumers and new point-of-sale (POS) card terminals are being installed by merchants. As part of the transition, the payment brands, as represented by EMVCo, instituted a “liability shift” that took effect on October 1, 2015, making merchants fully liable for any fraudulent purchase that takes place at a non-EMV certified terminal.

Merchants across all industries have faced challenges throughout EMV implementation due to delays in the manufacturing of EMV terminals and the certification process that is required to activate them. Despite making the investment to comply with the October 1 deadline by installing the necessary equipment and software upgrades, many NGA members have been unable to obtain the required certifications through no fault of their own, and as a result are now facing a significant increase in fraudulent chargebacks.

The letter reads: “The greatest challenge for merchants in implementing the change to EMV technology has been the timeline that was unilaterally set by EMVCo without input from merchants. The timeline that was announced by Visa and MasterCard in 2011 called for the liability shift to take place just four years after the announcement was made. Unfortunately, delays, such as changes to programming coding necessary for retailers to implement EMV, were still being released as late as a few weeks before the October 2015 deadline.”

NGA conducted a two-part survey of its members and found that in January of 2016, only eight percent of NGA members were able to accept EMV payments. Nearly 10 months later, only 33 percent of NGA members survey were EMV-capable, however 90 percent of those surveyed indicated that they had invested in EMV hardware and software in their stores but continue to wait to be certified by EMVCo.

The financial investments made by NGA members are significant; the median cost of EMV implementation has been $30,000 for NGA members, with many companies spending far more than that figure. 

“Independent supermarket operators have worked diligently to prepare for this transition and invested tens of thousands of dollars in new hardware and software well before the October 1 shift, only to be left waiting on a massive backlog in the certification process which is controlled by the card networks,” said Greg Ferrara, NGA senior vice president of government relations and public affairs. “None of these delays are the fault of grocers, yet it’s the Main Street grocer who is facing an onslaught in new chargebacks as well as confusion among their consumers who don’t understand why they can’t use their chip cards at their local supermarket.”

To read NGA’s full letter, click HERE.