Cutting down credit and debit card fraud by implementing EMV chip card acceptance has become US retailers’ top payment issue in 2016, but they are also busy with new data security enhancements such as point-to-point encryption and tokenization to better protect payment card data, according to a new report by National Retail Federation (NRF) and Forrester.
The study also found that EMV adoption has been hampered by bottlenecks throughout the US payment system and that the emphasis on security has pushed aside other priorities such as mobile payment.
CIOs and technology executives of 59 large and mid-sized retail companies participated in the survey, which focuses on retail industry payment issues.
NRF vice president for retail technology Tom Litchford said: “EMV is important, but chip cards alone won’t do the job of making data secure, especially if they’re only chip-and-signature rather than more-secure chip-and-PIN.
“That’s why retailers are working hard on technology like point-to-point encryption and tokenization that will ultimately do more to achieve the goal of putting hackers out of business. And the sooner security issues can be resolved the sooner retailers can bring new innovations to the way shoppers pay for their purchases like mobile and digital wallets.”
When asked to list their top three payment challenges of the past year, over three-fourth (76%) of retailers surveyed cited EMV as the top contender and 46% cited chargeback issues often related to EMV, while 37% pointed to implementation of security efforts like encryption and tokenization.
To counter these challenges, 86% of the respondents said they have implemented or expect to implement the new Europay MasterCard Visa chip card system by the end of 2016.
The study report added that ‘many retailers are working feverishly’ to complete the EMV transition but ‘payment vendors have not been able to keep pace’ with certifying EMV equipment installed by retailers.
Brendan Miller, principal analyst at Forrester, said: “Retailers will have made significant progress and investments securing and reducing fraud by the end of 2016. 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.”
The study also found that retailers are taking a measured approach to new forms of payment such as mobile and digital wallets. Only 17% of the retailers surveyed said 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% intend to accept only one ‘or a very few’ types of digital wallets rather the half-dozen vying for acceptance, the report noted.