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Doubts Emerge About Small Merchants’ EMV Readiness

Digital Transaction News
Feb. 14th, 2014


As Key Chip Deadline Looms, Doubts Emerge About Small Merchants’ Readiness

By John Stewart


With Visa Inc. and MasterCard Inc. digging in their heels on a key chip card deadline, payments executives are expressing doubts that all U.S. small businesses will be ready. “The short answer is no,” says Henry Helgeson, chief executive of Merchant Warehouse, a Boston-based merchant processor. “We still have a lot of work to do as an industry.”


In October 2015, the major card networks will shift liability for card fraud to the party that isn’t equipped to handle chip card transactions on the Europay-MasterCard-Visa (EMV) standard. While Visa and MasterCard appeared to some observers to be willing to back off somewhat on that deadline recently, both networks have confirmed the date in the wake of the massive data breach at Target Corp. and other retail chains.


That’s just some 400 business days away. Big retailers may be ready, observers say, because of their greater resources and ability to acquire needed hardware and software directly from terminal vendors. But a number of factors are slowing down the nation’s 23 million small enterprises, which account for 54% of U.S. sales, according to the Small Business Administration. The SBA uses a range of numbers to define small businesses; a small merchant, for example, cannot have yearly revenues greater than $5 million to $21 million, depending on its product mix.


One factor holding up small businesses is that technology sales to them are usually complicated and indirect, which means it takes longer for hardware and software to reach small merchants than it does to filter into large retailers’ stores. For the most part, these merchants are dependent on independent sales organizations and other resellers for gear, software, and advice. “We can’t directly reach out to [small] merchants,” says Erik Vlugt, vice president of product marketing at terminal maker VeriFone Systems Inc. “But we can reach out to ISOs. Can they do more? It would be wonderful if they did.”