Everything You Need to Know About the Switch to Chip Cards

by Sarah Grotta 0

Square has been publishing information for its merchant clients regarding the U.S. EMV migration through its online resource center called Town Square. A recent posting which very nicely explains the essential points of EMV for merchants, Square makes the offer to upgrade its customers to an EMV and NFC enable POS device for free, at least for an undefined promotional period. This will set the expectation on price point for other Square-like device providers in the market. In the FAQ section of their newsletter regarding the facts of EMV, Square makes the following offer:

Will migrating my business to EMV cost me an arm and a leg?
It doesn’t have to. The Square contactless and chip reader—which accepts both EMV and NFC payments—is free for a limited time for qualified sellers. Reserve yours.

Square also provided some interesting data regarding the types of transactions they are seeing:

Here’s some data we’ve seen: about 17 percent of the cards swiped on Square Stand or Reader now contain a chip, up from roughly 3.5 percent in January 2014. For now, the majority of the cards are still being processed as magnetic-stripe transactions (all chip cards also have a magnetic stripe on the back). But as sellers upgrade to EMV technology, more and more of these transactions will be processed via the chip on the card instead of the magnetic stripe. A big milestone here is the liability shift, which, as we mentioned, happens in October. At the current pace of chip card issuance, we expect roughly 35-40 percent of cards to be chip-enabled by the time the liability shift hits (though this may change if issuers speed up or slow down their pace).

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group.

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