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NEW YORK — The coming EMV liability shift for point-of-sale (POS) transactions in-store, set to take place Oct. 1, was a main focal point of conversation for retailers and exhibitors alike Monday at the 104th annual National Retail Federation (NRF) Convention & Expo, Retail's Big Show.
A large number of exhibitors displayed EMV chip technologies, as well as related security offerings at the trade show, which concluded Tuesday at the Jacob K. Javits Convention Center.
EMV — an acronym for Europay, MasterCard and Visa — was also a primary focus of educational sessions during the convention, including one session entitled "EMV Liability Shift Demystified!" presented by David Hogan, executive director, and John South, chief security officer at Heartland Payment Systems Inc.
Retailers are not required by law to upgrade to an EMV-ready POS by Oct. 1, but convenience store retailers do need to upgrade their POS devices if they want to avoid responsibility for fraudulent or lost/stolen debit and credit card transactions in certain instances.
"EMV could not have prevented the Target or Home Depot breaches," said Hogan. "But it does improve security. It does reduce fraud."
As of Oct. 1, if a consumer presents a chip-based American Express, Discover, MasterCard or Visa card to a retail terminal meant only to accept swipe cards, the merchant is responsible if fraud subsequently occurs. Currently, credit-card issuers are responsible for such fraudulent transactions.
Additionally, merchants are responsible for lost or stolen chip-based cards presented to a magnetic stripe POS in all cases expect Visa, which will continue to accept responsibility itself, explained Hogan. Retailers are also responsible if a chip-and-PIN debit or credit card is presented to a terminal only upgraded to accept chip-and-signature cards.
Of course, any retailer making the proper upgrade to an EMV-capable POS will have no responsibility for fraudulent or lost/stolen transactions. However, upgrading to an EMV-ready POS can be costly.
"Take a look at your chargeback rates. If the average ticket is less than $10, some retailers may make the decision not to upgrade," said Hogan. "If you do not upgrade to EMV, I recommend you have end-to-end encryption and tokenization. These take a lot risk out of the [equation] right away."
Heartland's executive director added that although only 5 percent of U.S. credit and debit cards featured a chip at the end of 2014, these cards will become omnipresent this year. In fact, according to the Aite Group, 70 percent of U.S. credit cards and 41 percent of debit cards will be EMV enabled by the end of 2015.
View From the Fed
EMV and security were not the only topics of discussion at the NRF Show.
Monday kicked off with a keynote interview with Ben Bernanke, former chairman of the Federal Reserve, who recounted the events leading to the financial crisis that began in 2007. He referred to the 2008 collapse of Lehman Bros. as the lowest point in the crisis, something that was depicted in the 2011 HBO movie "Too Big to Fail."
The U.S. economy is much better today, though. "It's the best the U.S. economy has looked since before the crisis," said Bernanke.
The Great Recession has led to changes. In a fascinating tidbit, Bernanke acknowledged that he himself recently was denied the refinancing of a mortgage by a bank because he was unable to prove he had a steady income during the past two years.
Shifting to the retail landscape, Bernanke said lower gas prices are "straight good news for retailers" as this is adding plenty of disposable income to consumers' wallets.
"2014 was a good year for consumers," he concluded. "Confidence is up. Oil is down. We haven't had a better situation since 2006 or 2007."