The data breaches of the 2013 holiday season seem to have finally created the impetus for the U.S. payments industry to move forward on EMV migration. And while a completely operational EMV environment is likely several years away, stakeholders are making progress toward that goal. Mercator Advisory Group projects that 58 percent of credit cards and 26 percent of point-of-sale terminals will be EMV-compliant by the end of 2015, according to a news release.

A new research note from the company, "Preparing for 2015: The Year of the Liability Shift," offers the company's outlook for credit card EMV issuance and POS upgrades in the United States. It also discusses several EMV-related issues such as chip and PIN, contactless and private-label issuance, and the potential impact of card network liability shifts.

"Looming regulatory issues and rumors that liability shifts would be extended have prevented merchants from getting the head start necessary to match financial institutions' EMV reissuance," said Michael Misasi, a senior analyst in the credit advisory service at Mercator and the primary author of the research note. "Both groups will be ramping up their EMV efforts around the same time."

Factors considered as influencing EMV credit card issuance include:

• issuers' willingness to stray from typical credit card refresh cycles;
• potential EMV card supply constraints;
• previously announced issuer migration plans;
• timeline for BIN certification and EMV pilots before general issuance;
• card network liability shifts;
• incremental costs associated with PIN and contactless support;
• competitive forces in the industry;
• increased customer service issues;
• future regulatory action; and
• past and future data breaches.

Factors considered as influencing EMV acceptance include:

• merchants' willingness to will stray from typical POS terminal refresh cycles;
• number of inactive EMV terminals already in the market;
• EMV certification and testing timelines;
• previously announced merchant migration plans;
• possible expansion of the addressable market for consumer-facing terminals after EMV migration;
• card network liability shifts;
• number of terminals located at merchants most likely to achieve prompt conversions;
• need for co-brand credit card reissuance;
• uncertainty around debit EMV issuance and acceptance procedures;
• competitive forces in the industry;
• future regulatory action; and
• disruption in the checkout process.

Highlights of the research note include:

• projected EMV credit card issuance and POS terminal replacement;
• projected EMV-compliant credit card transaction volume ;
• analysis of recent and forthcoming disruption related to the industry's EMV migration;
• discussion of trends related to credit issuance such as chip and PIN, contactless, private label; and
• analysis of the impact of EMV production capacity on the reissuance process.

Estimates and projections in the research note are based on interviews with several issuer and acquirer processors and card manufacturers, data published by leading terminal manufacturers, results from Mercator's CustomerMonitor Survey Series, and the company's conversations with merchants and card issuers.

One of the exhibits in the note: