In Blackhawk’s latest earning call there was a particular interesting bit around high denomination open loop gift cards (e.g Visa/Mastercard/American Express gift cards). There is also come good news in sight. Here is the relevant section of that earning calls (courtesy of Seeking Alpha):
On slide eight, we’ve provided an update on the EMV-related impact to our Gift Card business. We have continued to dialogue regularly with our non-EMV compliant distribution partners on measures they have taken to mitigate their liability for fraudulent credit card activity in their stores. A few partners decided to take restrictive measures and a few important partners have taken increasingly restrictive measures around the sale of higher denomination open loop cards during late Q1 and into Q2.
Some EMV-impacted retailers have established lower limits on credit card purchases of gift cards or removed higher denomination products from the displays in impacted markets. We are seeing forecasted compliance dates slip at multiple retailers due to the complexities around testing and certification of their point of sale EMV upgrades, creating risks that dates could move out.
As of today, our top-25 accounts, seven, going to eight later this week are now compliant; four are tracking toward their compliance date; two have moved up their date; and 11 have moved back their date. Our updated forecast assumes some delays. We continue to actively monitor the situation, and based on the information currently provided by our partners we are estimating that stores representing approximately 95% of open loop gift TDV will become EMV-compliant by the end of September 2016.
For those not familiar in October of last year an EMV liability shift occurred. This change meant that “the party that is the cause of a chip-on-chip transaction not occurring (i.e., either the issuer or the merchant’s acquirer) will be financially liable for any resulting card-present counterfeit fraud” (Visa’s definition).
Because high value open loop gift cards are one of a fraudsters items of choice, merchants that aren’t EMV ready are choosing to remove these cards from shelves rather than accepting the risk from the liability shift. Thankfully Blackhawk expects that 95% of their open loop gift card sales stores to be EMV-compliant by September 2016, which should mean it’s easier to purchase these with credit cards again. Fingers crossed this prediction is true.
Hat tip to reader Bodiddely
