The problem without a solution. The coming train wreck. No way out. These are but a few of the descriptions being bandied about by ISOs, increasingly frustrated by small merchant unwillingness to upgrade both POS devices and ATMs to EMV.
Exhibits A and B in this conundrum are the most recent press releases by both Ingenico and Verifone, blaming recent earnings misses on plunging EMV-ready hardware sales to merchants. With sales below forecast and, presumably, now bloated hardware inventories, both companies must be scratching their heads as to why, nearly a year after POS liability shift, an estimated half of all U.S. merchants have yet to upgrade their POS devices to EMV. Both companies blamed small merchants for delaying their adoption of EMV technology in POS devices. Ingenico went further, blaming the card brands for a “relaxation” in fraud chargeback rules meant to spur EMV adoption by these same merchants.
With the ATM liability shift scheduled for October 1 (MasterCard) and October 1, 2017 (VISA, AMEX, others), the focus now shifts to ATMs, where most of these same small merchants have not upgraded or replaced their mag-stripe ATMs. Will we see a mass small merchant adoption of EMV at the ATM later this year? Not likely. Will the card brands “relax” the fraud chargeback rules as we saw with POS? Right now, no one is saying. What are ISOs with large portfolios of merchant owned, non-EMV ATM terminals to do? Here are a few options:
Upgrade kits are the cheapest option for both merchants and ISOs. Depending on the manufacturer, ATMs up to 15-20 years old are still supported and can be upgraded easily to EMV through the purchase of an upgrade kit. At a cost of around $500, ISOs may be able to persuade merchants that the cost of upgrade far outweighs the risk of coming fraud chargebacks. At better performing sites, ISOs may even be willing to absorb the cost of an upgrade kit in exchange for an extended contract.
Trade-in non-EMV hardware for new, EMV ready gear. Depending on the site and the merchant, a new ATM may be the best solution. However, the high cost of a new ATM has thus far been a barrier to widespread merchant upgrade. Trading in older, non-EMV hardware to the manufacturer accomplishes a number of things. First, the net cost of the new ATM is drastically reduced by credit given on the trade. Secondly, the older ATM stays out of the landfill. Reduced upgrade cost plus environmental responsibility can be an irresistible combination in convincing merchants to upgrade.
Refurbished, EMV-ready ATMs are an increasingly popular option with merchants. Where merchants want a fresh machine without the new ATM sticker shock, refurbished ATMs have exploded in popularity. Depending on configurations, a refurbished ATM, partially offset by the trade-in of a used ATM can further reduce a merchant’s cost to nearly that of an upgrade kit! Refurbished ATMs as an option for merchant upgrade to EMV can be a powerful tool in the hands of ISOs.
With most small merchants still taking a “wait and see” approach to ATM EMV upgrade, ISOs need a variety of tools to proactively address the issue. By providing a number of low-cost alternatives to their merchant customers, ISOs may be able to move the needle where the “just buy a new ATM” approach has thus far failed The alternative may well be costly court battles between ISOs and merchants over who pays six-figure liability shift claims as we saw in Canada.
(Contributing Source: atmatom.com)