Jordan McKee, senior analyst for mobile payments for the 451 Research Mobility Team, writes in a blog post about the opportunity for payment service providers to push mobile payments with small merchants as a reason to upgrade terminals for the EMV shift.

While the Payments Security Task Force forecasts 47 percent of U.S. merchant terminals will be EMV-enabled by the end of 2015, much of this will be driven by Tier 1 and 2 merchants. To get the long tail of small merchants on board, payment service providers (PSPs) must tell a mobile-centric narrative.

451 Research finds just 4 percent of merchants with fewer than 20 employees have implemented EMV terminals and, more troublingly, 72 percent have no plan in place to implement the technology prior to the October liability shift.

The problem can largely be attributed to the fact that small merchants are incessantly hounded by vendors to upgrade to the next greatest technology, causing the EMV pitch to fall on deaf ears. Many remain unconvinced by the need to implement EMV, which is especially the case for those merchants operating in low-fraud-risk verticals such as quick service restaurants. Without a clear-cut ROI for implementing chip-compatible terminals, capital expenditure conscious merchants with slim margins could cause the U.S. transition to EMV to drag on long past 2017.

Clearly, a more compelling business case is required for EMV to resonate with this audience. To ensure a timely migration, we recommend PSPs tell a story involving:

Mobile payment acceptance: Apple Pay hype has captivated small merchants, with 46 percent either planning or considering acceptance. This provides PSPs with an opportunity to position the upgrade to EMV as an investment in mobile payment compatibility and Apple Pay enablement. A purchase of a dual-interface can be communicated as a means of future-proofing, alignment with the Apple brand and an onramp to the US$38.4bn in-store mobile payment opportunity 451 Research anticipates in the US by 2018.

Apple Pay hype has captivated small merchants, with 46 percent either planning or considering acceptance. This provides PSPs with an opportunity to position the upgrade to EMV as an investment in mobile payment compatibility and Apple Pay enablement. A purchase of a dual-interface can be communicated as a means of future-proofing, alignment with the Apple brand and an onramp to the US$38.4bn in-store mobile payment opportunity 451 Research anticipates in the US by 2018. Tablet-based point of sale (POS): Small merchants need tools that provide visibility into their customer relationships while allowing them to run their businesses more efficiently. Tablet-based PoS solutions such as Clover and ShopKeep, which combine payment acceptance with analytics, CRM and business management tools, have emerged to fill this need. Peddling these solutions allows PSPs to lead with a value proposition that involves building out customer lifetime value and fostering operational efficiencies, while positioning EMV compatibility as an afterthought, creating a more compelling sales conversation. We find 1 in 4 small merchants plan to deploy some form of mobile point of sale (mPoS) within the next 12 months.

Ensuring small merchants' timely migration to EMV will require PSPs to sweeten the pot for adoption. Leading with a mobile-centric value proposition that puts EMV in the backseat will create a story that resonates.