Shipments of smart payment and banking cards in the United States are projected to increase to just over 502 million in 2015, up from 223 million in 2014, according to latest research from IHS Technology (NYSE:IHS).
Payments Research Key Findings:
Security breaches and the liability shift in October 2015 have concentrated minds and kick-started EMV migration in the United States.
- A key driver that has helped EMV migration in the United States has been the liability shift. The liability shift came into effect on 1st October 2015. Retailers that have not deployed EMV-compliant point-of-sale (POS) terminals are liable for credit card fraud at their locations. Based on the time when retailers started replacing their old POS terminals with EMV-compliant ones, it was never realistic to have all retailers EMV-compliant by 1 October 2015. This is expected to be a strong motivator for those merchants, potentially accelerating the second wave of the EMV migration.
- Having EMV-compliant POS terminals is also good news for mobile payment solutions. With the launch of Apple Pay, Samsung Pay and Google Pay, NFC payments are becoming a more popular form of mobile payment. With the liability shift happening in the United States in October 2015 and the increasing number of POS terminals that are becoming EMV-compliant, NFC payments are projected to become more popular. Today, the only technology that provides compatibility on the POS terminal side with plastic cards and mobile solutions with the same environment is NFC. The more contactless EMV cards and terminals that are deployed, automatically the more places where NFC on a phone can be used.
- The security breaches at Target, Home Depot and other retailers have certainly galvanized the retail industry; and boosted EMV migration efforts in the United States. The United States migration to EMV cards will undoubtedly reduce payment card fraud; and is a step in the right direction. EMV migration can take anywhere from two to five years to complete; it is definitely not something that can be done overnight. Therefore, much planning and implementation is required in order to make an EMV migration a success in the United States.
- For smart card suppliers (Gemalto, Oberthur Technologies, Giesecke & Devrient and Safran Morpho) and smart card IC suppliers (Infineon Technologies and NXP Semiconductors) the United States EMV migration represents a growth opportunity and will help drive the global EMV card shipments to 3.3 billion in 2020.
In summary, the United States has been a laggard when it came to EMV cards; but the market there is finally coming of age and gaining some traction. It has taken a while for large volumes of the more secure EMV cards to be shipped to the United States, but the next five years will prove more fruitful with shipments of over 650 million smart payment and banking cards there in 2020. Please feel free to contact me with any questions.