Small Business Adoption of EMV Technology

Small Business Adoption of EMV Technology
May, 2015

§  Research was completed online among owners/managers of U.S.
small businesses that accept credit cards at storefront/physical
locations or via mobile swipers.
§  A total of 504 interviews were completed.
§  Interviewing was conducted by Ebiquity between April 22-27,
2015.
§  The overall results have a margin of error of +/- 4.4 percentage
points at the 95% level of confidence.
Research Method
2

Key Takeaways
1.  Awareness of the October 2015 deadline for EMV adoption is low and the majority of small business
owners surveyed have not yet committed to migrating to EMV-compatible systems.
2.  Education should be the top priority for all small businesses, regardless of their current intent to migrate
to an EMV compatible solution – few owners understand the implications, including the financial and
legal liabilities.
3.  Among those small businesses who are still undecided, alleviating budget concerns will have the
greatest impact in increasing the likelihood for participation in the EMV migration.
4.  The biggest challenge for adoption of EMV will be among the smallest businesses (1-5 employees) who
have the lowest awareness and highest budget concerns.
5.  The opportunity exists for Intuit to act as a trusted advisor for small businesses regarding the EMV
migration, its costs and implications.
3

CARD PAYMENT TRANSACTIONS AMONG
SMALL BUSINESSES

Card payments account for a significant portion of
annual sales for many small businesses
10%
11%
29%
31%
19%
0% 5% 10% 15% 20% 25% 30% 35%
Not Sure
Over 80%
61%-80%
31%-60%
1%-30%
On average, over half (56%) of small
businesses’ sales are conducted via credit
or debit card; with one-in-ten (11%) who
say that credit/debit transactions account
for over 80% of their annual sales.
There were few differences across
company size by revenue, however smaller
companies (fewer than 20 employees) were
more likely to have a higher percentage of
their sales conducted via credit/debit card.
ON AVERAGE, WHAT PERCENTAGE OF YOUR
ANNUAL SALES IS CONDUCTED VIA CREDIT OR
DEBIT CARD?
Q. 1 5
CARD PAYMENT TRANSACTIONS
Mean 56%

There is generally a lag time of 1 – 3 business days after a
card transaction before businesses have access to funds
3%
4%
14%
37%
42%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
5+ business days
4-5 business days
3-4 business days
2-3 business days
1-2 business days
According to the small businesses
surveyed, on average it takes 2 business
days for credit / debit card transactions to
be deposited into their bank accounts.
Over one-third (37%) of small businesses
surveyed wait a maximum of 3 business
days for card transactions to be posted to
their account.
WHEN YOU MAKE A SALES TRANSACTION USING A
CREDIT OR DEBIT CARD, ON AVERAGE, HOW LONG
DOES IT TAKE FOR IT TO BE DEPOSITED TO YOUR
BANK ACCOUNT?
Q. 2 6
Mean: 2
business days

The majority of small businesses surveyed utilize
card payment systems that will be impacted by EMV
42%
44%
66%
0% 10% 20% 30% 40% 50% 60% 70%
Online payment processor (e.g.,
PayPal, Google Checkout, etc.)
Mobile card reader (e.g., Square)
Desktop / countertop card terminal
Two-thirds (66%) of small businesses
surveyed utilize card terminals to process
payments.
•  Businesses that use POS terminals are more
likely to be larger in terms of employee size
(75% of companies with 6+ employees and
74% of those with $250K+ in revenue)
A similar proportion of small businesses
use mobile readers (44%) and / or online
card payment processors (42%).
HOW DO YOU PROCESS YOUR CUSTOMERS’
CREDIT / DEBIT CARD PAYMENTS?
Q. 7 7

Businesses and their customers both benefit from
offering card payment options
33%
41%
47%
49%
54%
58%
0% 10% 20% 30% 40% 50% 60% 70%
I use it as a way to take deposits
from my customers
I don't have to wait in bank lines to
deposit cash or checks
Less potential for mishandling of
cash
I don't lose sales when people don't
have enough cash to buy my
product or service
I know that the payment will go
through
People tend to buy more when they
can pay with credit card
Among the top benefits of offering card
payment options, businesses report
increased purchasing power for customers
(58%) and fewer lost sales (49%).
Over half of business owners indicate that
the knowledge they will receive payment is
an important benefit (54%) to offering a
card option to customers. This is a key
point of emphasis in that if businesses do
not migrate to EMV, they will lose out on
this benefit should a transaction be deemed
fraudulent.
WHICH OF THE FOLLOWING ARE WAYS YOUR
BUSINESS BENEFITS FROM OFFERING CREDIT OR
DEBIT CARDS AS A PAYMENT OPTION TO YOUR
CUSTOMERS?
Q. 3 8

Most small businesses experience fraudulent activity
related to credit/debit card sales transactions
21%
12%
13%
18%
37%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Not sure
Over 10%
3%-10%
1%-2%
0%
Nearly two-thirds (63%) of small business
owners surveyed indicate some level of
fraudulent activity on credit or debit card
transactions on an annual basis.
On average, 7% of card transactions are
considered fraudulent, with a higher
proportion noted by larger companies – as
high as 16% in companies with 51-100
employees.
Notably, one-in-five (21%) small business
owners are not aware of what percentage
of their annual card transactions may be
fraudulent.
ON AVERAGE, WHAT PERCENTAGE OF YOUR
ANNUAL CREDIT OR DEBIT CARD SALES
TRANSACTIONS IS CONSIDERED FRAUDULENT?
Q. 5 9
Mean 7%

The most common form of card fraud is expired
credit or debit cards
14%
10%
10%
14%
19%
33%
0% 5% 10% 15% 20% 25% 30% 35%
Some other fraud
Fraudulent credit/debit cards
Data breach/being hacked
Identity theft
Stolen credit/debit cards
Expired credit/debit cards
One-third (33%) of small business owners
surveyed indicate expired credit / debit
cards as the most common form of card
fraud.
Stolen cards are mentioned as most
common by one-in-five (19%), followed by
identity theft (14%).
One-in-ten cite data breach/hacking or
fraudulent cards, respectively, as the most
common form of fraud they face.
WHAT IS THE MOST COMMON FORM OF CARD
FRAUD YOU FACE?
Q. 6 10

On average, most small businesses are spending less than
$200 annually on maintaining their POS systems
Seven-in-ten (70%) small businesses
spend less than $200 per year on their
POS system, including upgrades, rental,
maintenance and other fees/expenses.
The average annual spend is $189.
Smaller businesses – those with 5
employees or less – are most likely to be
spending the least, two-thirds (65%) spend
less than $100 per year.
Businesses with more employees and
higher revenues tend to spend more – over
$220 on average.
ON AVERAGE, HOW MUCH MONEY DO YOU
SPEND ON YOUR POS SYSTEMS ANNUALLY
INCLUDING UPGRADES, RENTAL FEES,
MAINTENANCE, ETC.?
Q. 8
Under
$50,
22%
$50 but
less
than
$100,
22%
$100 but
less
than
$200,
26%
$200 but
less
than
$500,
15%
$500 or
more,
14%
11
Mean: $189

Small businesses surveyed are generally receptive to a
new payment solution that would significantly reduce card
fraud
15%
6%
27%
11%
42%
0% 20% 40% 60% 80% 100%
It depends on how difficult it
would be to upgrade my
equipment
No, I don't have the time to
research a new payment
solution
No, my business is too small to
justify the expense of installing
new equipment
Yes, if it helped me get paid
faster
Yes, I would update my POS
system if it's within my budget
Over half (53%) of small business would
accept a new payment solution that would
significantly reduce the probability of credit/
debit card fraud.
Ensuring the POS update is within budget is
the main concern (42%) among those who
would change systems and expense (27%) is
the biggest barrier for those who would not
consider the solution.
Smaller companies are significantly less likely
to consider the update, mostly due to budget
(46% of companies with 1-5 employees
said they wouldn’t change).
IF THERE WAS A NEW PAYMENT SOLUTION THAT WOULD SIGNIFICANTLY
REDUCE
THE PROBABILITY OF CREDIT/DEBIT CARD FRAUD, BUT YOU HAD TO
CHANGE YOUR POS SYSTEM, WOULD YOU ACCEPT THE NEW PAYMENT
SOLUTION?
Q. 9
No:
33%
Yes:
53%
12

The amount a business is willing to invest in a new POS
solution to reduce fraud is dependent on company size
3%
7%
16%
24%
51%
0% 20% 40% 60% 80% 100%
$2,000 or more
$1,500 but less than $2,000
$1,000 but less than $1,500
$500 but less than $1,000
Under $500
Half (51%) of small businesses surveyed
would be willing to invest less than $500 in
a new POS solution that would significantly
reduce the probability of credit/debit card
fraud.
Another quarter of small businesses would
be willing to spend between $500-$1,000
(24%).
On average, small businesses overall
would be willing to invest approximately
$780 to reduce the probability for fraud.
However, $500 is the threshold for three
quarters (76%) of the smallest businesses,
HOW MUCH MONEY WOULD YOU BE WILLING TO
INVEST IN A NEW POS SOLUTION THAT WOULD
SIGNIFICANTLY REDUCE THE PROBABILITY OF
CREDIT/DEBIT CARD FRAUD?
Q. 10 13

EMV technology addresses areas of highest importance to
small businesses in accepting credit or debit cards
49%
51%
62%
67%
31%
37%
32%
24%
19%
12%
6%
9%
0% 10%20%30%40%50%60%70%80%90%100%
Facilitate or increase online or
mobile sales
Increasing the rate of payment
Ability to accept a wide range of
credit or debit cards
Reducing card fraud
Very Important Somewhat Important Not too/at all Important
IN ACCEPTING CREDIT OR DEBIT CARDS FOR PRODUCTS /
SERVICES, HOW IMPORTANT ARE EACH OF THE FOLLOWING
FOR YOUR BUSINESS?
Q.4 14
According to small business owners surveyed,
the area of greatest importance as it relates to
accepting credit or debit cards in their
business is reducing card fraud (67%, very
important) – EMV’s primary goal.
EMV’s universal standards will also address
the ability to accept a wide range of cards,
another important area for small businesses
(62%, very important).
Finally, increasing the rate of payment (51%)
and online sales (49%) are very important to
half of small businesses surveyed – two areas
that will be addressed by EMV.

EMV AWARENESS & INTENT TO UPGRADE
AMONG SMALL BUSINESSES

Most small businesses have some awareness of
EMV cards
37%
20%
44%
0% 20% 40% 60% 80% 100%
I have not heard of EMV cards
I am very knowledgeable about
EMV cards
I've heard of EMV cards, but
don't know much about them
Nearly two-thirds (64%) of small business
owners surveyed have heard of EMV
cards, however only one-in-five (20%)
consider themselves to be very
knowledgeable.
Just over one-third (37%) of small
business owners have not heard of EMV
cards. This increases significantly among
companies with 1-5 employees – over half
(54%) have no awareness of EMV.
Seven-in-ten (70%) companies with
revenues over $250K are aware of EMV.
HOW KNOWLEDGEABLE WOULD YOU SAY YOU ARE
ABOUT EMV CARDS?
Q. 11
Aware of
EMV
64%
16

Fewer small business owners are aware of the
requirement to migrate to EMV solutions
Just over half (52%) of small business
owners surveyed are aware of the
requirement to migrate to EMV solutions in
order to avoid financial and legal liabilities.
Six-in-ten (59%) of the smallest companies,
1-5 employees, are not aware of the
requirement. Awareness is also low among
companies with less than $250K in revenue
and those in the North Central region (55%
are not aware, respectively).
ARE YOU AWARE OF THE REQUIREMENT TO
MIGRATE TO EMV (OR CHIP-ENABLED) SOLUTIONS
IN ORDER TO AVOID FINANCIAL AND LEGAL
LIABILITIES?
Q. 12
Yes,
52%
No,
48%
17

Awareness of the October 2015 deadline for EMV
adoption is low
42%
39%
19%
0% 20% 40% 60% 80% 100%
I have not heard of a deadline
for adoption
I've heard there is a deadline,
but I don't know when it is
I am aware of the deadline and
know when it is
Only just under one-in-five (19%) small
businesses surveyed claim to be aware
of the October 2015 deadline for
adopting an EMV compatible POS
system.
81% of small business owners are not
aware that October 2015 is the
deadline for adoption. 58% of small
business owners in companies with 1-5
employees have never even heard of a
deadline.
ARE YOU AWARE OF THE DEADLINE FOR ADOPTING AN
EMV COMPATIBLE POS SYSTEM?
Q. 13
Not Aware of
October 2015
Deadline
81%
18

Majority of small business owners surveyed have not
committed to migrating to EMV-compatible systems
Just over two-in-five (42%) small business
owners surveyed have committed to migrating
to EMV-compatible systems. These are
typically larger companies in terms of
employee size and revenue.
One-in-ten (10%) overall do not intend to
migrate.
That leaves nearly half (48%) of small
businesses surveyed who remain undecided
about whether they will make the switch by the
October 2015 liability shift. This number rises
to 62% among companies with 1-5
employees.
DO YOU PLAN TO MIGRATE TO EMV-
COMPATIBLE SYSTEMS BY THE OCTOBER
2015 LIABILITY SHIFT?
Q. 14
Yes, I
already
have
them,
14%
Yes, I am
in the
process
of
obtaining
them,
28%
No, 10%
Not
sure /
haven't
decided
yet,
48%
19

The biggest barriers to upgrading to become EMV-
compliant include the cost of the new terminal and
education
7%
2%
4%
15%
20%
27%
30%
32%
57%
0% 10% 20% 30% 40% 50% 60%
Some other reason
Do not have enough credit/debit
card transactions to justify
Lack of awareness of the need for
upgrade
The need to upgrade terminals in
multiple locations
The need to train employees on new
terminals
The need to educate customers who
are unfamiliar with the procedure
The need for software upgrades
The lack of time/resources to
research the terminals
The cost of the new terminal
Nearly six-in-ten (57%) small business
owners surveyed who indicated they will
not/have not decided to migrate to EMV
cited the cost of the new terminal as the
main reason not to comply.
The second most important reason that
businesses cite for not choosing to upgrade
is the lack of time and/or resources
required to research the terminals (32%).
Educating employees (20%) and
consumers (27%) are also concerns.
Three-in-ten (30%) small business owners
cite the need for software upgrades as a
main reason not to upgrade.
WHICH OF THE FOLLOWING ARE THE MAIN
REASONS YOU HAVE CHOSEN NOT TO/MIGHT
CHOOSE NOT TO UPGRADE TO BECOME EMV
COMPLIANT?
Q. 15 Base: Total Small Business Owners/Managers Who Will Not/Have Decided to Migrate to EMV (N=294) 20

Businesses who have not made the commitment to migrate
to EMV are largely unaware of the implications
85% of small business owners who will not
migrate to an EMV compatible system or
have not yet decided to do so are unaware
of the financial and legal liabilities they will
be responsible for.
ARE YOU AWARE OF THE FINANCIAL AND LEGAL
LIABILITIES YOU’LL BE RESPONSIBLE FOR IF YOU
DON’T MIGRATE TO AN EMV COMPATIBLE SYSTEM
BY OCTOBER, 2015?
Q. 16 Base: Total Small Business Owners/Managers Who Will Not/Have Not Decided to Migrate to EMV (N=294)
Yes,
15%
No,
85%
21

Most small businesses cannot handle the consequences that
may result from not migrating to an EMV compatible system
Among small businesses who will not
migrate to an EMV compatible system or
are still undecided, the vast majority (86%)
admit that they may not be able to handle
the financial and legal liabilities of
fraudulent card transactions.
IF YOU DON’T MIGRATE TO AN EMV COMPATIBLE
SYSTEM YOU WILL BE HELD LIABLE FOR FRAUD
CHARGES: IS YOUR BUSINESS ABLE TO HANDLE THE
FINANCIAL AND LEGAL LIABILITIES OF FRAUDULENT
CARD TRANSACTIONS?
Q. 17 Base: Total Small Business Owners/Managers Who Will Not/Have Not Decided to Migrate to EMV (N=294)
Yes,
14%
No,
50%
I'm
not
sure,
36%
22

Affordable options and easy set-up would most likely
influence small businesses to migrate to EMV compatible
systems
16%
26%
38%
38%
45%
54%
0% 10% 20% 30% 40% 50% 60%
Need to update POS terminal as
part of general equipment refresh
Greater protection of customer data
More information on EMV
compatible systems and its process
Consequences of financial and legal
liabilities as a result of not migrating
Easy set-up and usage of EMV
compatible systems
Affordable cost of EMV compatible
systems
Over half of small business owners who will
not migrate to an EMV compatible system
or are still undecided say that making the
cost affordable (54%) would influence their
decision. Another key factor cited by nearly
half is the easy set-up and usage of an
EMV compatible system (45%).
Just under four-in-ten say that the
consequences of financial and legal
liabilities or getting more education on the
system and its processes (each, 38%)
might influence them to migrate.
WHAT WOULD INFLUENCE YOUR DECISION TO
MIGRATE TO EMV COMPATIBLE SYSTEMS?
Q. 18 Base: Total Small Business Owners/Managers Who Will Not/Have Not Decided to Migrate to EMV (N=294) 23

Small business owners are looking for information to help
them better understand the migration of EMV cards
2%
33%
36%
41%
46%
52%
55%
0% 10% 20% 30% 40% 50% 60%
Some other information
Email newsletters
News articles
Video tutorials
Information from credit card issuers
Information from banks
Information from credit card
processors
Small business owners are looking to card
processors (55%), issuers (46%) and banks
(52%) to give them more information to
help them better understand EMV
migration.
In particular, they would appreciate video
tutorials (41%) to educate themselves on
EMV.
WHAT KIND OF INFORMATION WOULD HELP YOU
BETTER UNDERSTAND THE MIGRATION OF EMV
CARDS?
Q. 21 24

Small businesses need education around the types
of liabilities they must assume after EMV migration
34%
21%
20%
26%
27%
0% 20% 40% 60% 80% 100%
I don't know
None of these
Exposed EMV chip card data
Liability for fraudulent
transactions
Exposed customer data Nearly half (45%) of small businesses –
including those who have already chosen to
migrate – believe that they will be held
liable for exposed customer data, fraud
transactions or exposed chip card data
after they migrate to an EMV compatible
system.
Only one-in-five (21%) know they will not
be responsible for any of those liabilities.
One-third (34%) don’t know their
responsibilities.
IF YOU DO MIGRATE TO AN EMV COMPATIBLE SYSTEM, WHICH
FINANCIAL AND LEGAL LIABILITIES WOULD YOU BE
RESPONSIBLE FOR?
Q. 20
Any of
these
45%
25

Education is also needed on the potential for fraud to
move to CNP channels after EMV migration
16%
43%
17%
23%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
I would expect
MORE card
fraud
I would expect
LESS card
fraud
I would expect
the SAME
amount of card
fraud
I don't know
Greater than two-in-five (43%) small
business owners expect LESS card fraud in
card-not-present (CNP) channels such as
online, phone, mail or fax, after migration to
an EMV compatible system.
23% report that they do not know the
impact EMV migration may have on
fraudulent CNP transactions.
Among those who already intend to
upgrade, 26% know to expect MORE card
fraud in CNP channels, however 49%
expect LESS.
IF YOU MIGRATE TO AN EMV COMPATIBLE SYSTEM, HOW DO
YOU THINK THAT WILL IMPACT THE NUMBER OF FRAUDULENT
TRANSACTIONS ONLINE, VIA PHONE, MAIL OR FAX FOR YOUR
BUSINESS?
Q. 19 Base: Small Business Owners Who Accept Cards by Phone, Fax, Mail or Online (n=436) 26

Small Business Profile
Mean # of
employees
23
Mean Revenue $669,800
Mean years in
business
14 years
42%
21%
38%
Service-based Product-based Both products
and services
Business Type
2%
2%
2%
3%
3%
4%
5%
5%
5%
5%
5%
6%
7%
11%
17%
19%
0% 5% 10% 15% 20%
Other
Telecommunications
Transportation/Warehousing
Govt/Public Sector/Nonprofit
Restaurants/Bars
Education
Auto/Industrial/Manufacturing
Media/Entertainment/Travel
F/I/RE
Food/Beverages/CPG
Wholesale trade
Hardware/Software/IT
Healthcare
Construction
Business/Professional services
Retail trade
Industry
Northeast 25%
North Central 25%
South 25%
West 25%
28
APPENDIX
Region

Small Business Payments Profile
1%
6%
35%
76%
88%
79%
94%
0% 20% 40% 60% 80% 100%
Online payment processor/
PayPal
Emerging payments (e.g.,
Bitcoin)
Mobile payments (e.g., Apple
Pay, Google Pay, Samsung
Pay)
Check
Cash
Debit cards
Credit cards
Payments
Accepted
In-person 94%
Mobile 43%
Online 65%
Phone 54%
Fax or
mail
22%
29
APPENDIX
7%
8%
23%
35%
27%
32%
16%
21%
23%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Over 80%
61%-80%
31%-60%
1%-30%
0%
In-person
Online
Debit/Credit
Card Channels
Percent of
Annual Sales
Conducted
On average, 8% of
annual online
sales are
fraudulent.

Respondent Profile
Male,
57%
Female,
43%
9%
31%
24%
36%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Under 30 30 - 40 41 - 50 Over 50
Age
Gender
Owner,
65%
Role
30
APPENDIX
Manager
, 35%

JENNIFER CLARK
T: +1 646 998 7248
F: +1 646 998 7277
E: jennifer.clark@ebiquity.com
EBIQUITY
US Office
156 Fifth Avenue, Suite 604
New York, NY 10010

Small Business Adoption of EMV Technology

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