Viewpoint: Is Faster EMV the Best Solution?

By Sean McQuay, NerdWallet

The last time you checked out at the store, it might’ve taken a little longer than usual.

That’s partly because EMV card readers—the ones that ask you to insert or dip your EMV-chipped card, rather than swipe it—prompt you to leave your card in the machine for several seconds. If you remove it before the machine buzzes, your payment could be declined. This sacrifice is made in the name of extra security, but security shouldn’t have to be so slow.

From the moment you dip your card to the time you retrieve it, using the new EMV card readers usually takes about 20 seconds. Although the process isn’t that much longer than swiping, it can seem longer or more cumbersome, especially when you’re a parent like me with kids pawing at the candy in the checkout aisle. And that’s after you figure out whether the terminal wants you to swipe or dip.

Security Side Effects

The U.S. shift toward EMV last October created an incentive for merchants to update their point-of-sale systems to accept EMV chip cards and for banks to issue chip-enabled cards to reduce their own card-present fraud liability and make payments more secure.

But consumers have noticed they’re trading safety for time. One in five consumers said transaction time was their top concern when using an EMV-enabled credit card or debit card, according to a survey of 5,000 U.S. adults by point-of-sale system company Harbortouch.

And while I appreciate the extra security EMV technology brings, I’m less optimistic about merchant adoption of card-dipping transactions. Only about 37 percent of retailers have started accepting them, according to the most recent estimates from The Strawhecker Group, a consulting firm for payment companies. (Editor’s Note: according to the most recent estimate from Visa, 20 percent of U.S. merchant locations accept EMV transactions.)

That spotty EMV acceptance can make the wait even longer. When I go to pay at a store, I don’t know whether I’ll swipe or dip, even if the merchant has an EMV terminal, and making the wrong guess can be frustrating. Taken with the 20-second lag, it’s a poor consumer experience.

The ideal payment process should be secure, fast and consistent. To get there, we have two strong potential fixes on the table: mobile payments and faster EMV payments.

Mobile Wallets: Fast Process, Slow Adoption

Most of the new EMV card readers also are designed to accept mobile wallets, such as Apple Pay, Samsung Pay and, my personal preference, Android Pay. These payment methods are speedier than card-based EMV payments and just as secure.

They are slowly becoming mainstream: About 28 percent of smartphone owners surveyed said they had used mobile payments in the 12 months prior to the survey, according to a 2015 study from the Federal Reserve. Digital marketing firm eMarketer projected the value of mobile payment transactions would increase by 210 percent in 2016.

“There’s somewhat of a perfect storm brewing,” said Jared Drieling, a manager at The Strawhecker Group. “I think with the EMV process of having a consumer insert or dip that card, and the whole process taking a little longer, it essentially lowers the bar now for mobile wallets to take off.”

Compared with card-based EMV transactions, mobile payments are much more efficient. With mobile payments, you don’t need to leave your device in the POS terminal to make a purchase; you just wave your phone over the card reader and authenticate with a fingerprint. Mobile payments offer EMV-level security, too. Apple Pay, Samsung Pay and Android Pay  use tokenization to encrypt your payment information, similar to what the EMV chip in your card does.

But mobile payments also face a big hurdle: consumer adoption. It’s an entirely new payment method, and it comes with its own challenges in terms of reliability and acceptance.

Faster EMV Card Payments on the Horizon

People have been using plastic cards in the U.S. for decades. The easiest way to speed up transaction times, then, might not come with newer technology, such as mobile payments, but with improvements upon the plastic standard. And that’s exactly what Visa is doing.

The payment network made headlines in April with the announcement of Quick Chip for EMV, a new specification it’s providing for free to other networks and companies that helps speed up the system for everyone. Visa says the new technology will read and authorize EMV chip payments in two seconds or less, a fraction of the time it takes now. The software upgrade also will mean that you can dip your card while the cashier is still ringing up your purchase, a capability traditional magstripes have had for a long time. MasterCard, too, jumped into the game, announcing that it’s also working to enable quicker EMV transactions.

Speeding things up is a step in the right direction, especially if you aren’t interested in switching to mobile payment. But is this a good long-term solution for a faster checkout process? Not exactly. It doesn’t eliminate the need for you to insert and retrieve your card, and that’s what makes the new payments so time-consuming in the first place. And you can’t opt in to it; you’ll have to wait for merchants to implement the technology. These card-dipping transactions, even when they’re a couple of seconds faster, still make for a less-than-ideal consumer experience.

A Frictionless Future

Slightly inconvenient card-based EMV payments are becoming the standard, but they’re just a starting point. In the U.S., the transition to EMV payments has given new payment technologies space to expand and develop. The fate of these technologies—which ones succeed and which ones fail—rests almost entirely with you and me, the consumers.

You can stay with card-based payments, if the extra time to make a transaction doesn’t bother you as much as it bothers me. Or you can set up your mobile wallet on your smartphone (but you won’t be able to use it everywhere). I hope we get something better.

Right now, mobile payments are the fastest, most secure way to pay in the checkout line. But years from now, it might be something else—maybe even a system that automatically bills you for your purchases when you exit a store or one that lets you pay with your voice or a gesture. Recently, Amazon published a patent that describes a process where a payment could be authenticated with a selfie. MasterCard, too, is exploring the technology.

For EMV payments, last October was never meant to be a deadline. The payments industry didn’t change overnight. The migration is still unfolding and bringing new possibilities with it. Says Drieling of The Strawhecker Group, “Essentially, it’s a starting line.”

Sean McQuay is a credit cards expert at NerdWallet. A former strategist with Visa, McQuay now helps consumers use their credit cards more effectively. He can be reached at [email protected].

In Viewpoints, payments professionals share their perspectives on the industry. Paybefore presents many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.