Fixing The EMV Quagmire

By Ian Goldman | CEO, Celerant Technology

To say that EMV rolled out in the United States with a few hiccups would be a fairly large understatement. Before the official compliance deadline of October 1, it was apparent that many retailers were not going to be ready on time — but the biggest problem was that EMV transactions were so confusing and frustrating for both retailers and shoppers that often even retailers that were compliant simply decided not to use EMV at all.

This put consumers in a bit of a lurch. They attended to their holiday shopping with chip-enabled credit cards in hand only to face uncertainty at the checkout counter. Do I swipe or insert? Once they figured which method whatever store they were in was using, customers facing EMV transactions were in for a rude awakening: The one or two second long magnetic swipe had been replaced by inserting the card into a terminal and leaving it in place, sometimes for 30 seconds or more while the bill was totaled, card was read, and authorization received. For already stressed out holiday shoppers, it was ugly.

Many retailers resorted to putting tape or stickers over EMV slots and letting all customers swipe just to keep things moving and avoid frustration. Think about what that means: The inconvenience EMV transactions put on customers and clerks was so great that they disabled it, knowing that doing so shifted liability for fraudulent charges on counterfeit cards to them. Not exactly the warm welcome the credit card industry was hoping for, but it was better for retailers than hearing the dreaded, “This is too much trouble, I’ll just go buy it on Amazon.”

Free patches from Visa and Mastercard hit the street

Acutely aware of the pain EMV was inflicting on their networks of retailers, major credit card brands set out to speed up transactions. In April, Visa rolled out Quick Chip and MasterCard introduced M/Chip Fast as free software upgrades to credit card terminals. Both solutions work on the same premise: They pull information from EMV chips in a quick “dip and remove” action that only takes about two seconds. Instead of requiring the card to remain in place until the transaction total is known, they create cryptograms using predetermined amounts that are automatically updated once the transaction total becomes available.

Technically speaking, these updates do not do anything to make transactions complete faster. However, they drastically reduce the amount of time customers have to be actively engaged in the transaction process, waiting for a machine to release their cards. The result is that virtually all customers perceive a noticeable increase in transaction speed and efficiency, improving their overall shopping experiences.

Understand where and how you can benefit

Although these software updates do not decrease transaction times from a technical standpoint, they can reduce overall checkout times because shoppers can put away their credit cards before the transaction is complete. This puts them in better positions to clear the register quickly after the process instead of lingering as they gather their belongings. For quick turnaround businesses like fast food restaurants, coffee shops, discount retailers — anywhere that it is typical to have a queue of shoppers waiting to checkout — this can make a measurable difference in number of customers served per hour.

Retailers that typically work with shoppers on an individual basis like luxury apparel stores, jewelry stores, and full service restaurants are less likely to realize a noticeable benefit from reducing card in reader time. The best way to determine how likely updating EMV software is to improve shopping experience for customers is to think about the busiest times in your store. Is there often a line to checkout? Are shoppers typically busy or in hurries? If so, improving the perception of checkout will result in better equity for your brand. This will escalate as more retailers install the updates because customers will realize that checking out at some stores is easier and will begin to favor them.



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