Mobile payments bubble to the surface amid EMV growing pains
We're about seven weeks into the great EMV liability shift in the U.S. and let's be honest, the transition hasn't been a smooth one.
Retailers and banks continue to squabble over chip-and-signature vs. chip-and-PIN. Issuers are still mailing out new chip cards. Merchants continue to upgrade their payments terminals and some who have done so still haven't activated chip acceptance. Consumers are irked by EMV transaction times.
As Hall of Fame football coach Vince Lombardi once shouted from the sidelines, what the hell's going on out here?
We all knew this transition wasn't going to be easy or instant. The industry anticipated some growing pains and hiccups along the way. But is it supposed to be this much of a hassle, especially from the consumer perspective? Let's consider some stats from a recent Harbortouch survey.
The merchant-services provider sponsored a survey that found one in five consumers consider transaction time as the No. 1 issue when using an EMV-enabled credit or debit card.
Some other survey highlights include:
- only 21 percent of consumers have used an EMV card;
- millennials boast the highest EMV adoption rate, at 25.3 percent;
- the majority of consumers (67 percent) say that swiping cards is the fastest payment method; and
- survey respondents were four times more likely to worry about speedy processing than about chip card security or the availability of EMV terminals.
U.S. consumers have found the EMV checkout experience to be anything but a smooth one. And that's ironic when you consider what payments companies, retailers and service providers are striving for these days with the customer experience.
Buzzwords such as "frictionless," "seamless" and "Uberization" have infiltrated conversations about what's best for how consumers interact with their favorite brands. While I'm all about making buying experiences as easy as possible, EMV at the physical point of sale is like the return of the old knuckle-buster credit card machine. The customer experience is going backwards.
A lot of consumers consider time money and if they have to spend an extra second paying for something, it's a problem. That's an unfortunate byproduct of our go-go society these days, but it's something that will never go away. So, at this point, what can everyone in the payments chain do to sidestep the new EMV customer experience?
Proximity mobile payments look like the obvious answer, and I realize I'm a bit biased considering what I do for a living. But if there were ever a time for widespread consumer adoption to happen, it would be now.
Tap-and-pay is a much more attractive option for consumers than dip-and-pay. There's no argument there. I've experienced some chip transactions that take up to 30 seconds and it's mostly because cashiers have no idea what they're doing. I encountered one cashier at a Rite Aid who said these words to me: "I think you have to swipe your card, then dip it."
I knew better, of course, but the cashier kept interrupting my checkout experience and cancelling my transaction because I wasn't doing it her way. I now use Apple Pay wherever the opportunity presents itself.
Consumers also might be more inclined to give proximity mobile payments a try now that Apple, Google and Samsung have flooded the airwaves with commercials about their respective systems. The companies' advertising campaigns have created more awareness than ever even though adoption still lags. But as consumers continue to vent their frustrations with the EMV transaction process, I'll bet adoption numbers get a good-sized bump in January after a holiday season filled with longer checkout lines brought on by the transition. It's already happening.
Another factor to consider with increased consumer adoption is that most folks update their smartphones every two years and the market will arrive at a point where NFC is just another standard feature. The more tech-savvy consumer will be inclined to use one of the major mobile wallets for the “cool” factor alone, but as these schemes add more utility such as loyalty and rewards, the “Pays” become more attractive to everyday consumers, as well. Of course, systems such as those from Starbucks, Dunkin' Donuts and others will continue to gain adoption.
Whether any of these factors will lead to more mobile payments is difficult to determine. But consumers aren't dumb. If they know that a quicker way to pay for things exists with proximity mobile payments, why not give it a try? We'll still have consumers who will cling to plastic cards no matter what, and that's OK. But if everyone in the payments chain can convince consumers schemes such as the "Pays" are safe, then we could be on to something here.
Will Hernandez Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.