November 25, 2015
It has been almost one month after the EMV transition deadline and it is time to look at some of the results of the EMV adoption experience. While there are differences in experience depending on the side, we will be focusing on customer experience which hasn’t been exciting. Various payment processors suggested their insights, assessing the customer experience with a new card, and the results are not in favor of the new standard. Here are examples of the pain-points for customer using EMV cards.
Harbortouch, a leading national POS system and merchant services provider, published the results of a national survey on 5,000 US adults which examines consumer sentiment and usage trends among early adopters of EMV. The results indicated that one in five consumers consider transaction time as their top concern when using an EMV-enabled card. Nearly four times as many survey respondents are more worried about speedy processing times over chip card security or availability of EMV terminals.
With the holiday season around the corner, brick-and-mortar retailers should be concerned about the result. As Harbortouch suggests, big-box stores like Target, Best Buy and Walmart – who make big chunk of their revenues during the holiday season and depend on in-store experience – should be especially concerned. Those companies have been going through major expenses and transformation in security strategies to comply with new requirement.
Jared Isaacman, Founder & CEO of Harbortouch, commented, On average, it takes between 7–10 seconds to pay using a chip card versus 2–3 seconds to pay using a traditional swipe card. While seemingly small, during busy times like the holidays, these increased processing times could add up quickly. It is possible we will see longer checkout lines or even cart abandonment by those unwilling to wait. Retailers could feel the pinch from lower in-store holiday sales or customers turning to their mobile devices to shop.
Big-box stores can use in-line checkout options to fight the lines and customer experience inconveniences caused by EMV given that nearly 44% of customers would be open to purchasing goods in line instead of waiting to check out at a retail counter if it meant decreasing wait times. With 33% of survey respondents unaware of the option of in-line checkout, the strategy may help retailers to exceed expectations and be one-step ahead of the emerging issue.
Another issue with EMV cards brought up by First Data, the global leader in electronic commerce, is that consumers sometimes forget to take their cards with them after inserting them into a POS device for a transaction. It leads to a necessity to remind consumers to take their card in addition to reminding to leave the card in the slot for the whole time for transaction to be processed and completed. Because the chip cards which replaced the magnetic striped card are devoid of a PIN by default, forgotten cards in the reader can become a major issue and lead to fraud or stolen cards.
Transition of habits
Harbortouch’s survey indicated that only 21% of consumers have used EMV cards with the highest adoption rates (25.3%) among millennials. Obviously, EMV has a way to go in terms of customer adoption and there are actions to take to smoothen the transition. In addition to that, the survey results revealed that 67% of people believe that a traditional swipe card is the fastest method available.
Magnetic stripe cards shaped US consumers’ shopping habits and has set certain habits of payment at the checkout. A different scenario of the chip card usage requires merchants to assist customers with the sequence of actions to take. There are several implications to that, described by the First Data in the company's white paper on EMV in the US, – for the merchant and for the customer. Merchants have to change their prompts at the counter and take extra time to instruct a customer or to remind to take a certain step. The extra effort requires resources in training personnel and extra time serving a customer that may have difficulties. With old habits of swiping a card still in mind, new cards require customers to get used to a different way of handling payment, which will take time. Frustration and technical issues with the different scenario of payment may increase the tension and create pressure for customers to give up and use a contactless payment method or swipe the chip card (the first batch cards will still have the magnetic stripe).
No PIN, additional expense to ensure personal financial security
With the new requirement, cardholders are gradually receiving new cards from their banks and are forced to dip instead of swiping. There are significant costs for each of the stakeholders in this transition to take. As stated by the NRF Senior Vice President for Government Relations David French, The card industry is demanding that the entire merchant community spend between $30 and $35 billion dollars to install chip-and-PIN terminals but, with precious few exceptions, banks are only willing to undertake the expense of introducing chip without PIN cards. These new cards do not reduce fraud across the board. Thoughtful customers concerned about security in CNP transactions and cases when the card is forgotten or lost will have to order PIN cards at their own expense. Even with an insignificant price the extra costs associated with it, there is extra work to be done for customers to ensure their security themselves.
New fraud loopholes
For swipe cards, there is a catch. As we mentioned, by default, card issuers take expenses to issue non-PIN cards. With those cards being lost or stolen, there is a great opportunity for online fraudsters to hit customers’ account with online purchases. Another point here is fraud related to handing your card for a payment to a restaurant worker, for example, or any other person in a role of a courier. The issue was raised by BBC in the UK in 2013 when a scam involving people being persuaded to hand over their bank cards lost victims more than £3M since 2011. The chip cards currently sent to the customers in the US are not doing much to prevent the same issue unless the customer orders a chip-and-PIN card while customers are being assured that the chip card is addressing the security issues better than the older, well-known card types.