EMV in the US: Are We There Yet? [payCLT Event in Charlotte]

The topic for the February 17th payCLT event was a panel discussion on EMV: Fact vs. Fiction. With a diverse set of speakers from various parts of the EMV ecosystem on the panel, the conversation was bound to be exciting. Dean Nolan kicked off the event by introducing the panelists: Crystal Allen (EMV Project Manager at Extended Stay America), Suzanne Galvin (SVP, Product Management for Elan/ATM & Debit Services at US Bank), Josh Brant (CEO of Allegiance Merchant Services) and Chuck Winter (Principal at North Highland). The room was packed, the energy was high and LTP was there to bring you a first hand report.

After the obligatory references to terminology and clarifications around what’s being implemented in the US - Chip Card vs. EMV Card vs. Chip & PIN vs. Chip & Signature - the speakers jumped right into the core issues, viz. chargebacks, deployment costs, the fraud balloon, consumer experience, and the interrelationships with other payment technologies. LTP has covered these and other EMV topics extensively in our insights and research reports over the years. In this article, we will focus on the themes that were discussed by the panelists, as captured in summary form.

Firstly, the issue of fraud and chargebacks. The general feeling was that merchants are not yet seeing the benefits of this migration, and they are still losing money to card-present chargebacks. The unsophisticated merchants are especially affected if they do not have high margin products. The promise of reducing fraud has not yet been delivered, and given the diversity of payment cards that are still out there, it will be a while before merchants will start seeing any clear benefits. The notion of fraud being like a water balloon that simply shows up somewhere else when suppressed in one place was well understood, but unless the processes and accountability was properly understood and managed, that seems to be mere theory.

Next was the issue of cost of deployment. Even a relatively large company such as Extended Stay America has paused in its efforts to deploy EMV fully until there are clear signs how things will pan out. While the positive benefits for a large retailer like Target, who needed to burnish its image after the fraud attack, were clear and probably outweighed the costs, for everyone else in general, EMV was pitched by vendors and consultants as a mandatory requirement that also provided fraud protection. In reality, the practical considerations for smaller merchants, such as lack availability of high speed internet, overwhelm their decision-making because customers are looking to solve it all, not just check the box. It;s not acceptable for transactions to get timed out often because of low bandwidth connections that are inadequate for EMV use.

Finally, there was robust discussion on the consumer experience and the expectations relative to online (app or web-based) payments, contactless / NFC payments and mobile wallets. While there was no consensus, especially as the topic lends itself to plenty of speculation and pontification, it was clear that all parties are watching the dynamics of consumer behavior closely, especially because of the changing expectations of millennials and Gen M.

All the panelists claimed to solve for consumers, and that was hardly a surprise, but it was also unclear exactly how any of the EMV work is benefitting consumer directly yet. For example, it takes longer at the counter when paying with a chip card, but then some retailers are using that time to engage with them and /or up-sell products and services. It’s also not clear yet whether consumers are complaining about the changes or enjoying them. In fact, some comparisons with a similar NFC roll-out in the US and anecdotal experiences were captured in an earlier post on the topic.

Overall, a great evening in the queen city, with lively discussion and networking for payments professionals looking to learn more about the innovations in the space. LTP is proud to be a media partner of this not-for-profit organization: we began our coverage of payCLT last year in December with this predictions podcast, and we look forward to upcoming events.

The next event is scheduled for March 4th at 9am with the evergreen topic: Factors Driving Customer Adoption of Mobile Payments