July 6, 2016

EMV: Where retailers and consumers stand today



As “chip cards,” or EMV-enabled credit cards, permeate checkout counters around the world, a new question has been added to the transactional conversation: Swipe or dip?

Designed to offer reasonable protection against credit card fraud and data theft and made possible by storing data on a small computer chip instead of on a traditional magnetic stripe, EMV cards are a long-awaited payment innovation and are taking the retail world by storm.

“We have heard that around 675,000 merchant locations are processing EMV cards today, and it is growing by 50 percent each month, which is a significant improvement from just a few months ago,” said Randy Vanderhoof, director of the EMV Migration Forum in a March 2016 J. P. Morgan Chase article.

Still, the transition hasn’t been all smooth sailing for consumers or for retailers.

A fall 2015 ACI Worldwide study reported almost 59 percent of credit or debit cardholders hadn’t received a new chip-enabled card at the time of the survey, and 67 percent hadn’t even received information from their credit card issuer or bank explaining what EMV meant and how it would impact them. Even more interestingly, the 2016 EMV Adoption Survey by CardHub found 41 percent of people don’t have or don’t even know if they have a chip card.

So it makes sense that a new survey by Walker Sands Communications found almost 1 in 3 consumers (30.7 percent) reported being confused by the prospect of using a chip card, and almost 1 in 4 (23.7 percent) reported encountering cashiers unable to guide them through the EMV process, being unfamiliar with it themselves.

Even for consumers who are familiar and comfortable with using their new chip-enabled cards, 37 percent have encountered a chip card reader that wasn’t working at checkout. This is likely because some retailers are either still working to get their EMV systems up and running, or are even potentially delaying the process on purpose. Bankrate found some larger retailers had specifically cited “disrupting the checkout process” (perhaps with questions from those consumers confused about the process) as a reason to delay EMV adoption.

Consumers, who don’t want to give up convenience for security, aren’t entirely pleased about the advent of EMV cards, either. A recent study by Ingenico Group, the world’s largest maker of payment terminals, found more than half of 1,000 consumers surveyed preferred swiping because it was faster (current chip card “dips” take an average of 10 seconds, according to Harbortouch).

Card issuers are taking this preference seriously, and major players like MasterCard and Visa have already announced new chips that can be inserted and removed in approximately two seconds.

Soon, it’s unlikely credit card users will have any in-store options other than a quick “dip” of an EMV card. For consumers looking to avoid the potential headaches that come with fledgling chip card usage in the meantime, there’s always cash. For retailers, there’s no comparable shortcut. Worldnet co-founders William Byrne, CEO, and Dr. John Clarke, head of product innovation, said in a recent report that EMV is “a journey that has only just started. Over 90 percent of the nation’s merchants are represented by small and mid-sized businesses [that have not yet implemented EMV card readers], so, in many eyes, the hard work really only starts now.”