EMV a Boon — or Burden — for Retailers?

In a series of hearings on Capitol Hill this past week, two starkly different views of the ongoing movement to EMV emerged – and depending on who you listen to, the shift is a boon or burden.

As noted by the National Association of Convenience Stores (NACS) on Thursday, the first hearing, held earlier this month by the Congressional Payments Technology Caucus, focused on security, and testimony from banking and finance industries. As part of a continuing series titled “The EMV Deadline and What It Means for Small Businesses,” testimony from FI firms said that the transition to EMV has been a low-cost proposition, and security has gotten better post the Oct. 1 deadline.

But a starkly different position emerged last week when retailing executives went before the Committee to state their case that the EMV switchover carries high costs and high security risks.

Several executives from the convenience store arena testified before the Caucus that costs have exceeded expectations. Testimony from one retailing professional, Jared Scheeler, who serves as managing director of the Hub Convenience Stores, said that the movement to EMV has cost his four convenience stores, all located in North Dakota, more than $134,000 to install POS readers.

Industry-wide, according to the NACS, the transition costs have been as much as $26,000 per store, compared with a per-location annual profit of $47,000, and across the spectrum of the 152,000 convenience stores across the United States, which comes to $3.9 billion.

In testimony before the Caucus, Scheeler noted that “As a small business, the transition to EMV has been a costly and burdensome undertaking. It does not appear that the card companies took into consideration the realities of operating a small business when they came up with their transition plans. In addition to the substantial time and money involved, the card companies have erected considerable obstacles that restrict my ability to reduce payment card fraud at my stores.”

Scheeler pointed to lost time tied to software upgrades, which also caused lost income due to missed payments. As the executive said, his company (as well as all others seeking compliance) must get certifications across PIN debit and signature debit, and credit transactions And before any transactions can be accepted, there are significant hurdles to be crossed in terms of staff training and pilot testing even before EMV can begin.

Across a series of five witnesses testifying this month, common themes emerged – namely that costs have exceeded, and are likely to continue to exceed, estimates. Four out of the five retailing professionals also said that security benefits of chip with PIN outweigh those of chip without PIN, the latter platform being promoted by the card networks.

Such wariness from retailers stands in stark contrast to testimony earlier this month, where the ABA’s Jim Reuter, the executive vice president and chief operating officer of FirstBank, said in remarks before the Committee that the chip is the technology that helps ensure security, and not the PIN. That dovetails with other ABA findings, chiefly a survey that found 70 percent of consumers polled think retailers should install chip-enabled card readers through the EMV rollout as soon as possible.