RANCHO CUCAMONGA, Calif.—Michelle Thornton thinks many small and mid-size card issuers are looking at the October EMV liability shift deadline and questioning whether they have to be ready at that point.
“They realize this deadline is not mandatory and are saying, ‘I will move in the time that works best for me,” said the manager of core products for CO-OP Financial Services, who added that most big banks will be ready by the deadline.
Noting that a great deal of the debit and even credit conversions will happen sometime in 2016—with some issuers even lagging into 2017—Thornton does expect a flurry of conversions right before the liability shift deadline.
“But the bulk of the issuers will move in 2016,” she reiterated.
Merchants Question Deadline
Merchants, too, are questioning the necessity to convert their POS by October, explained Thornton, saying the merchant side of EMV is a “mixed bag” as well.
“We see this both from merchant and issuer sides taking a while, which is what the industry has been saying for a long time,” reminded Thornton.
Michelle Thornton, CO-OP FS
One reason merchants and issuers may not be too concerned with hitting the liability shift deadline is since many on both sides—merchants and issuers—won’t be ready.
What that means, Thornton agreed, is that much of the fraud risk—at least for a period—will remain quite similar to the current threats. After the liability shift deadline, fraud costs shift to the weakest link in the transaction chain. But if both the issuer and merchant are not EMV ready and fraud occurs, for those transactions there is no change in liability,
Also, Thornton pointed out, card present fraud generally has represented about three basis points of fraud losses. “So right now you say ‘I won’t panic about this liability shift because the impact will be small in the short run’.”
Fraudsters Will Look Online
Thornton does not think fraudsters will markedly increase their focus on small retailers after the deadline, as small businesses are expected to lag far behind tier one and tier two merchants in converting POS to EMV. She thinks cyber-crooks will shift their focus where there is the most money to be made the easiest—online.
“That’s what everyone expects, and that is what we have seen in other parts of the world that have converted to EMV,” Thornton said.