Small merchants are unclear on how to best approach EMV, but many report that they would be willing to deploy EMV terminals if they could also accept mobile payments including Apple Pay.  Are small merchants really looking for a BOGO (buy one, get one) when it comes to upgrading their terminals?  Buy a pair shoes and get the socks for free?  Could this be the way for merchant acquirers and ISOs to position terminal upgrades to their small biz clients?

Javelin just introduced its Small Business Banking service that focuses on needs and opportunities for banks, issuers, merchant acquirers to serve the small business sector. 

Our most recent study of small ($1 to $10 million in sales) and micro merchants ($100K to $1 million in sales) ) shows that many of these merchants have not yet upgraded their payment terminals to accept EMV cards. Of these businesses, 36% would be motivated to do so if a terminal could both accept EMV and mobile payments.  When we looked only at the small merchant segment that number jumped to 45% - almost half.

Are small merchants being hypersensitive to all the noise and fuss about Apple Pay?  Clearly, media coverage is disproportionate to actual adoption.  Or is the cost of a new terminal forcing a small business to get the maximum bang for the buck?  Whatever the case may be, the halo effect of Apple Pay, Google Pay, Samsung Pay and other mobile payments could be a way for acquirers to sell EMV enabled terminals. Javelin will continue to track the change in adoption of EMV among small businesses and their uptake in mobile payments.

With the looming Fraud Liability shift coming in October, we are cautiously predicting that only half of these businesses will have implemented new POS hardware. Come November, they will be surprised when they get a note in their statement stating that they are responsible for the fraud costs that occurred the next month. The government and banks need to do a better job of preparing business owners for the impact EMV fraud liability shift. Otherwise, small businesses will be the weakest link in the EMV chain and will bear a significant portion of today’s counterfeit card fraud costs, which could cause some to go out of business.      


About Michael Moeser

Michael is the JAVELIN’s Director of Payments. He advises clients on the rapidly changing payments industry. Michael is focused on tracking the evolution of the payments industry, covering specific areas such as person-to-person payments, U.S. and global EMV card migration, digital wallets, merchant acceptance of different payment forms, cross-border payments, real-time transactions, and digital payments.

Michael specializes in assisting clients in developing new payment products or repositioning existing services to capitalize on market opportunities, understanding how to market to particular consumer and small business market segments, and developing new corporate strategies that can transform an existing payments franchise.

Michael brings over 20 years of experience from the payments and consulting industries. Before joining JAVELIN, he led the international small business card portfolio at Visa, launching new and growing existing debit and credit card programs with banks and financial services companies across the globe. Previously, he was the Head of Competitive Intelligence at Capital One, a Payments Knowledge Expert at McKinsey’s Payments Practice, and the Head of Product Marketing at Ondot Systems, a Silicon Valley mobile card control startup. He has presented to audiences around the globe, primarily at Visa and McKinsey client and public audiences.

Michael holds a BBA in finance from the Ross School of Business at the University of Michigan and an MBA in marketing and entrepreneurship from the Kellstadt Graduate School of Business at DePaul University.

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