More than half (52 percent) of U.S. merchants have an active, certified EMV terminal that accepts chip cards, according to March 2017 data from The Strawhecker Group, a payments-industry advisory firm.
This research, which is based on actual data from 500,000 merchants also shows, for the first time, how EMV acceptance differs geographically:
Which states are ahead, which are behind
In general, “the Rust Belt lags, and the West Coast is kind of ahead of the curve,” says Jared Drieling, director of business intelligence for The Strawhecker Group.
Border states (like California, Arizona and Texas) may owe their relatively high rate of EMV to adoption to the higher rates of identity and counterfeit-card fraud they tend to face, Drieling says. This increased risk could have spurred them to be faster adopters.
As for other stand-outs (like New Mexico), Drieling says it might be the case of merchant acquirers in those states being “ahead of the game, getting out to their merchant base and certifying and activating their terminals.” Meanwhile, merchants in states that stand out for being behind may have delayed due to their state retailers’ association advising them to hold off on upgrading.
EMV adoption goes hand-in-hand with contactless
Regional differences aside, the most compelling result of this research is how EMV adoption is trending with contactless NFC adoption (the technology that enables mobile wallets like Apple Pay). Here’s another map, this time showing how states fare in contactless-terminal adoption:
As you can see, contactless adoption tends to be lower than overall EMV (dip-the-chip) adoption. However, EMV adoption and contactless adoption are very strongly correlated. The correlation coefficient is 0.996 – with perfect, positive correlation being 1. In other words, they’re growing at the same rate.
That’s because, when merchants upgrade their terminals to accept EMV chip cards, those new terminals “come with some additional bells and whistles,” Drieling says. One of those bells and whistles is contactless capability.
So, based on this data, the requirement for merchants to upgrade for EMV will likely allow mobile wallets to flourish.
“We’ve heard a lot of news about Apple Pay and all these cool mobile wallets, but we don’t see those products really being utilized in the market.” Drieling says. “Why? Because there was no contactless infrastructure.”
Big changes in store for shopping experience
Burgeoning contactless infrastructure won’t help just mobile wallets, Drieling says.
Five years down the road, Drieling says, the familiar “clunky” point-of-sale device will likely be replaced. In-store beacons, for example, could use NFC technology to do everything from sending you coupons to your phone for that flat-screen TV you lingered by, to allowing you to check out from other places in the store besides the long check-out line. Contactless technology integrated with rewards programs could also allow you to seamlessly pay with rewards points.
“This is a really exciting time in the point-of-sale phase,” Drieling says. “In the next five years, the point of sale is not going to look the same.”