Less than half of American businesses have adopted the credit card chip technology that was all the rage in the fall of 2015.
Only 37 percent of businesses are currently able to accept chip-enabled credit and debit cards, according to a survey by The Strawhecker Group. TSG's sample included 92 payment service providers that service more than 3.9 million merchants, or about 50 percent of the U.S. card-accepting market.
Chip cards, also known as EMV cards (for Europay, MasterCard and Visa), are touted for safety and improved security over traditional cards. Retailers, credit card companies and merchants were supposed to adopt the new technology by Oct. 1, 2015, or face penalties. Missing the deadline made U.S. card-accepting merchants liable for fraudulent transactions.
In September, 27 percent of merchants supported the new EMV cards, with an expectation of it rising to 44 percent by December. That has not happened four months after the deadline.
TSG found that the three big hurdles slowing EMV implementation are payment processor readiness, gateway readiness and technical staff resource availability.
"It appeared that some merchants delayed EMV migration completely until the holiday season ended to prevent friction and confusion at the checkout line," said Jared Drieling, business intelligence manager at TSG.
Drieling believes, however, that the "merchants in higher-risk categories felt the impact of the liability shift last year and we'll see them aggressively ramp up plans to migrate."
EMV cards use an embedded microchip to provide data protection when the card is inserted into a chip card reader. Considered more secure than traditional cards that require the swipe of a magnetic strip, the chip card produces a unique code for each transaction.
But Jason Brewer, senior vice president for the Retail Industry Leaders Association, said this migration was just "half a step in the right direction." Some retailers have complained that banks and credit card companies have chosen to issue chip cards that require a signature, rather than a personal identification number. The PIN is believed, by many retailers, to be more effective in fighting fraud.
Ten percent of retailers are performing EMV-enabled transactions that are working well, and another 12 percent say their EMV-enabled transactions need improvement, according to a report from Boston Retail Partners.
On the other hand, financial company Visa noted significant progress in the chip transition.
"The liability shift date was just the starting line," said Stephanie Ericksen, vice president of risk products at Visa.
On its fiscal first-quarter conference call, Visa CEO Charles Scharf said that "while we know we have a long way to go over the next few years to reach the critical mass of adoption that we desire, we feel very good about the progress to-date."
Based on Visa's recent client surveys, the company expects 50 percent of locations to be enabled by the end of this year, while The Strawhecker Group anticipates that 72 percent of all merchants will be ready to process chip cards by year-end.