Blog: I Want My EMV

By Kate Fitzgerald, Emerging Payments Editor

EMV chip card technology that helps block counterfeit card fraud at the POS is coming to the U.S., and last week I was one of the first on my block to experience it. Though I’ve been reading and writing about EMV for years (and went out of my way to be prepared), it still caught me by surprise. Now I’m itching to find more opportunities around town to execute chip transactions the way Europeans, Canadians and other consumers around the world have been doing it for years.

Walmart appears to be at the forefront of the U.S. EMV shift. The nation’s largest retailer in recent months began turning on EMV card-processing capabilities at a smattering of U.S. locations. The other day in Scottsdale, Ariz., when I pulled out my newest card—which has a chip plus the traditional mag stripe—the Walmart cashier stopped me, saying, “Wait, is that a chip card?” He instructed me to insert the card into the slot below the PIN pad, and voilá. But not without a hitch.

I’d heard all about how EMV works, and requested chip-equipped versions of my two favorite cards. Instead of swiping the card, with EMV I’d need to “dip” it into the EMV slot, leaving it there for a number of seconds. Easy, right?  Sure, but darned if I didn’t pull my card out too early! Yep, I did exactly what merchants say occurs in every market when consumers switch from the old mag-stripe-and-swipe approach to the new EMV chip-and-dip way. But I learned fast, with Walmart’s well-trained clerk patiently waiting. The second time around, I was a pro, waiting for a prompt from the terminal telling me it was time to remove my card, at the same moment the receipt printed.

A little more than a year from now—when the card networks’ October 2015 EMV liability-shift date arrives—many U.S. consumers probably will have at least one or two chip cards in their wallets and all this will be routine. But for the moment it’s still something of a novel experience to have an EMV-compatible card—and most likely it’s a credit card, as distribution of EMV debit cards is still pending because of some initial technical challenges.

Experts estimate that presently less than 10 percent of U.S. payment cards are EMV-compatible, but that number is growing exponentially each month as issuers mail out EMV cards to portions of their card portfolios. Some observers believe the recent spate of data breaches affecting payment card security has accelerated the U.S. shift to EMV. Target Corp. last month announced all its store terminals will be EMV-ready by September and early next year Target will begin processing EMV transactions at all its stores.

Consumer Education Needed

Certain industry watchers are warning that it will take at least four years for EMV to take hold broadly across a relatively vast market like the U.S., and there will be some challenges. Issuers must explain the new cards’ capabilities to consumers and retailers must educate clerks on how to instruct consumers on proper usage. This may cause some fumbling and confusion at first, if the experiences in other nations are any guide.

There’s also a common perception that EMV transactions take longer because swiping a card happens in milliseconds, while an EMV card must stay inside the payment terminal slot for at least few seconds for processing. The EMV terminal during those moments generates unique transaction data so any card data intercepted at the POS cannot be replicated for fraudulent purposes. When that process is complete, a prompt appears on the terminal screen telling the cardholder it’s time to remove the EMV card.

It seemed to take a minor eternity of 14 seconds from the time I dipped my EMV card until the prompt appeared and the receipt printed, as my gaze never wavered from the terminal screen. A little later I swiped the same card at a different store—a traditional mag-stripe transaction—and guess what? That transaction actually took a little longer. In my own test, it took a total of 20 seconds altogether from the speedy swipe of the mag stripe to when the receipt printed, when habitually I kill time scanning the nearby magazine covers. What a surprise!

Merchants and issuers have grumbled plenty about the projected costs of switching such a large market from the static magnetic stripe card standard to a more secure EMV card environment. But as more issuers unleash chip cards, volume costs are going down. And as more cards make their way into the market and merchants one by one turn on EMV capabilities, we may find that other obstacles—including our resistance to learning new tricks—are not as great as feared. Meanwhile, I feel a little more secure knowing there’s one less place fraudsters can skim my credit card data. I want more!

Kate Fitzgerald covers emerging payments at Paybefore. She can be reached at [email protected].