EMV’s Not-Very-Even Distribution
At our Glenbrook Payments Boot Camps, we often quote futurist and novelist William Gibson’s 1993 remark that “the future is already here — it’s just not very evenly distributed” in order to demonstrate that different payment methods take varying amounts of time to become commonplace. Over the last year and more, most boot camp attendees have assumed we’re talking about recent payment approaches like Apple Pay, Android Pay, Square, and others. But EMV, that Nineties-era technology that has finally made landfall in the U.S., is hardly evenly distributed here either.
For cardholders, the U.S. rollout and distribution of chip cards remains skewed by product, geography and by demographics. Talk to a group of well-heeled Silicon Valley techies and almost 100% of them will have chip-based credit cards. A third might have EMV debit cards. Talk to a similarly professional group in the Midwest and fewer than half the hands will go up. Ask about EMV debit cards and just a smattering will respond positively.
Merchants are also far from unanimous in their EMV acceptance readiness. Target and Wal-Mart are there; many others, especially mid-tier retailers, are waiting until at least next year. Even EMV-capable terminals are unevenly distributed in that demand for the most popular Verifone and Ingenico terminals—those that have been certified by leading processors—is high while inventories are tight.
Getting It Right Takes Time
Compared to magstripe cards, EMV is complex and variable. There is no one way to issue EMV cards. Chip and signature? Chip and PIN? Unlike magstripe, there’s no single, consistent path through an EMV transaction at the POS because of that variability as well as that of the merchant’s equipment.
During a recent consulting engagement, I spoke with retailers from the UK and Canada about their EMV transition. Two themes emerged. First, the big jump in complexity posed by EMV was best outsourced to a processor or other service provider so that the merchant’s IT staff could focus on other tasks (we’re seeing US merchants follow that path, too). The second thread was the need to optimize the new EMV payment flow. To accomplish that, time and motion studies were often required to determine what the clerk might do during the transaction. For large, throughput-sensitive merchants, such optimization matters; time, after all, is money.
But even figuring out the right words for the terminal prompts, I was told, takes time. I believe it. My own experience at a favorite market proved that point.
During my prior visits, EMV acceptance hadn’t been turned on, but during a mid-November visit, seeing that the EMV reader light was lit, I decided to swipe the card anyway to check what would happen. In proper EMV fashion, the terminal responded with “Card read error! Insert card.”
OK, I’ll admit that the intent of the message is clear enough but, strictly speaking, the prompt was inaccurate (and a bit unfriendly). There was no read error at all; reading the magstripe is how the terminal knew this was an EMV card. (Yes, I can be accused of nitpicking here.)
But forgive me for scratching my head at the prompt that appeared once I dipped my debit card (see picture). There was the usual oddity of having to choose credit or debit when using a debit card. But now I’m being asked to know what choose Visa Debit or “US Debit”, whatever that is.
Picking “US Debit”, of course, was necessary if I wanted to enter my PIN in order to get cash back. The well-trained clerk jumped in to explain that one. I’d figured as much but pity the “civilian” cardholder confronted by confusing and inconsistent prompts at different retailers.
In a market where simplicity and consistency has economic value—Apple Pay, PayPal, Amazon One-Click—cards are seemingly harder to use than ever while mobile payment methods proliferate and evolve. Of course, some merchants have contactless, many don’t, and some have even turned it off.
Don’t get me started on that topic.