EMV Observations at the Liability Shift

Navigator Edition: October 2015
By: Stephen Kiene

October 1, 2015 marked a significant shift in the rules governing fraud liability for credit and debit card transactions on EMV cards. (Click here for background on the U.S. EMV liability shift.) For cardholders, however, the POS payment experience has been evolving over the past year, and the evolution is far from complete. By early next year, we expect many more merchants to enable the chip capabilities on their terminals, but already, the vast majority of U.S. credit card holders and a large number of U.S. debit card holders have had their first experience conducting a chip-authenticated transaction.

While merchant personnel are generally well-prepared to help customers use new chip terminals, there are still points of friction and confusion for cardholders at checkout due to inconsistencies in terminal capabilities. First Annapolis has observed three circumstances related to the EMV roll-out that continue to cause the most cardholder confusion:

  1. Different experiences at chip-capable vs. chip-enabled merchants;
  2. Different experiences using EMV credit vs. EMV debit cards; and,
  3. Different experiences using EMV debit cards across merchants.

Chip-Capable vs. Chip-Enabled Terminals

Most big-box merchants and large chain stores have upgraded their hardware for EMV (i.e., their terminals are chip-capable), but many of these merchants have not yet turned on the EMV functionality (i.e., their terminals are not chip-enabled). If a terminal is not yet enabled, the chip-card slot is not functional and the terminal will not respond if a cardholder inserts a chip card. This is one of the most confusing things for cardholders: some terminals look like they should accept a chip card, but they actually don’t, so consumers that see a chip-accepting terminal are never sure whether to swipe their card or insert it. Where in-store terminals have been enabled to accept EMV transactions, First Annapolis has observed very strong training and education from store employees related to helping customers insert the chip card and enter a PIN (if prompted), but if a terminal is not yet enabled, employees may have had minimal (if any) training.

Credit vs. Debit Acceptance

Another point of confusion is the difference between credit cards and debit cards. Wal-Mart, Target, and Home Depot were early to roll out EMV terminals, and if an EMV-enabled credit card is swiped in these stores, the terminal will instruct the cardholder to insert the card to complete the transaction using the chip. However, the cardholder experience varies widely if the cardholder swipes an EMV debit card (see Figure 1) as a result of the extra requirements on the part of merchants to implement and certify support for the U.S. Common AID for EMV debit. Some large merchants currently support EMV credit but not EMV debit, while some support both but are less likely to force the transaction to the chip if a cardholder tries to swipe a debit card first. This results in inconsistent experiences for customers with credit and debit cards.

Figure 1: In-Store Cardholder Experience for EMV Credit and Debit
(sample of selected U.S. merchants, as of October 1)

Fig1_In-Store-Cardholder-Experience-for-EMV-Credit-and-DebitSource: First Annapolis Consulting primary research, public statements by issuers and merchants.

EMV Debit Functionality

For debit cardholders, the EMV experience varies between merchants, and in some cases there may be functionality gaps between a traditional debit transaction and an EMV debit transaction (e.g., inability to get cashback at the point of sale).

As shown in Figure 1, Wal-Mart, Target, and Home Depot each support EMV debit differently at this time. Wal-Mart only recently began accepting EMV debit transactions in some stores, and in many locations, a cardholder who tries an EMV debit transaction will still see the transaction fail and will be told to swipe their card to complete the sale. Target is successfully accepting EMV debit in all stores, but the vast majority of their stores did not support PIN-debit routing via the U.S. Common AID as of October 1st. The practical implication for cardholders is that a customer cannot currently get cash back at the POS on an EMV debit transaction at most Target locations. Home Depot, conversely, has successfully certified and implemented EMV debit routing to the Common AID in all stores. In most Home Depot stores in the U.S., all transactions are automatically processed using the U.S. Common AID, so cardholders are prompted to enter their PIN for any debit transaction.


These large merchants are only a small sample of the U.S. POS environment, and the cardholder payment experience will continue to evolve for many months as more merchants transition. We do not think issuers should attempt to provide pre-emptive cardholder messaging focused on exception cases and market variances (which could cause even more customer confusion). However, banks and merchants alike should continue to educate cardholders about new EMV processes, provide clear and consistent training material related to chip security, and prepare internal staff to deal with the most likely points of frustration and confusion as in-store EMV acceptance continues to develop.

For more information, please contact Stephen Kiene, Senior Consultant,, specializing in Debit and Prepaid.

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