Study: EMV pushing aside other payment priorities

Reducing credit and debit card fraud by implementing EMV chip card acceptance has become retailers’ top payment issue in 2016.



That’s according to a study released by the National Retail Federation and Forrester, which found that merchants are also busy with new data security enhancements such as point-to-point encryption and tokenization to better protect payment card data. The State of Retail Payments 2016 study also found that EMV adoption has been hampered by bottlenecks throughout the U.S. payment system and that the emphasis on security has pushed aside other priorities such as mobile payment.



Asked to name their top three payment challenges of the past year, 76% of retailers surveyed cited EMV as the top contender and 46% cited chargeback issues often related to EMV. Thirty-seven percent pointed to implementation of security efforts like encryption and tokenization.



In response to these challenges, 86% of retailers have implemented or expect to implement the new Europay MasterCard Visa chip card system by the end of 2016.



Since EMV is intended to ensure that the card is not counterfeit but does not directly protect card data itself, retailers are working on other steps that protect card data when it is being transmitted between the retailer and card processor or stored in retailers’ computer systems. The study found 93% of retailers surveyed expect to have point-to-point encryption in place by the end of 2017 and that 61% expect the same for multichannel tokenization.



With attention focused on security, retailers are taking a measured approach to such new forms of payment as mobile and digital wallets, with only 17% citing it as one of their top issues for the year. Near-field communication used by many mobile payment systems is built into most EMV terminals, so 72% expect to be equipped for NFC by the end of 2017. But 68% plan to accept only one “or a very few” types of digital wallets rather the half-dozen vying for acceptance.



Of the major players in mobile and emerging payments, 76% of retailers plan to accept Apple Pay by the end of 2017, compared with 59% for PayPal. Fifty-three percent saying they have no interest in Venmo, 43% have no interest in Alipay and 38% with no interest in Pay With Amazon.



“Retailers will have made significant progress and investments securing and reducing fraud by the end of 2016,” said Brendan Miller, principal analyst at Forrester. “With that foundation, they can now adjust much of their focus to optimizing the customer experience by adding new payment methods and improving checkout flows to meet their customers’ changing needs.”



Technology executives and CIOs from 59 large and mid-sized retail companies participated in the study.