The EMV/NFC Relationship

Magnetic Stripe Reader (MSR) technology has been the primary payment method for credit card carriers for decades. EMV (Europay, MasterCard, Visa) and NFC (near-field communication) payment technologies have made their way onto the landscape and are becoming more integrated into mainstream payment methods.

EMV and NFC work together to provide a more secure payment environment while keeping the customer experience in mind, making them two important partners in the payment landscape as they provide security and convenience.

Currently, 47 percent of U.S. merchant terminals will be EMV-enabled by the end of 2015 according to the Payment Security Task Force, with many of them driven by Tier 1 and 2 merchants. However, 451 Research found that just 4 percent of merchants with fewer than 20 employees have implemented EMV terminals and 72 percent have no plan in place to implement the technology prior to the October liability shift.

Findings also indicated the underlying reason for this lack of adoption was due to small merchants constantly being inundated with upgrade recommendations from vendors, with little incentive to make the switch due to cost and limited budgets. The solution, however, could come in NFC payments. Most payment service providers (PSPs) provide dual interface terminals, meaning they offer both EMV and NFC methods. 451 Research has found that smaller merchants value mobile payment acceptance with 46 percent planning or considering Apple Pay, making NFC the priority while EMV adoption becomes an added bonus.

While smaller merchants are still hesitant to make the push for EMV due to some believing it will not result in ROI due to the costs associated with becoming EMV compliant, the EMV mandate will push them towards implementation or be held liable. Smaller merchants will be more likely to adopt a dual interface solution given the value they place on the mobile payment acceptance provided by PSPs. More importantly, card issuers are pushing EMV cards out with 450 million expected to be in circulation by October 2015, making terminals that can process the transactions essential for keeping customer data secure.

For more information, see below for blogs around EMV adoption in the U.S.:

EMV and PCI Security: The Main Defense for Credit Card Data

Four Considerations on the Path to EMV Compliance

Also be sure to check back for our next blog on EMV in the lead-up to the EMV mandate in October.