Changing the Public Perception of EMV

Despite confusion or frustration, payments pros need to communicate chip migration successes

By Jared Drieling

Just one year ago, many U.S. consumers were completely unfamiliar with the letters “EMV” or the term “chip card.” Today, most Americans know the words and likely have a chip card in their wallet or purse, accompanied by an opinion about the change. But, they may still not fully understand why the shift to EMV is an important advancement in securing the payments infrastructure.

Despite claims to the contrary, we’re exceeding most expectations in terms of EMV adoption. We expected the transition to take at least five years, which is the time it took European nations to get to 50 percent chip-transaction market penetration. Nearly three-quarters of Americans report they already have at least one chip card. According to preliminary results conducted by The Strawhecker Group (TSG), about half of all U.S. merchants now have an EMV terminal and a third of U.S. merchants are enabled and activated (in other words, accepting chip-on-chip transactions).

Why the Negative Publicity?

For years before the liability shift, the payments industry worked to drive awareness, education, and early integration of this technology and to help businesses convert to this more secure form of card payment, which protects them and their customers. The card brands and issuing banks spent millions on merchant and consumer campaigns to ensure the public was aware of the change well before October 1, 2015.

Despite those efforts, confusion has been a signature of the shift and unfavorable stories in the media have been in no short supply. The EMV migration has been a challenge for merchants. Seventy-six percent of them, in the National Retail Federation’s inaugural “State of Retail Payments 2016” study, reported that EMV implementation was their top challenge during the past 12 months. Merchant frustration regarding EMV, especially around testing and certification, has led to nearly daily headlines criticizing the payments industry’s handling of the chip card migration.

Initially after the EMV starting line in October 2015, many media reports incorrectly described EMV as a government mandate or an initiative that had little benefit for merchants in general. We are now starting to witness more EMV education in the market, specifically from the media in terms of how it views and understands the importance of EMV in the U.S. payments ecosystem.

However, the growing pains associated with the switch to chip cards have proved frustrating for consumers. Nearly a year after the shift, consumers still often face confusion and delays at checkout counters when trying to make payments. Many consumers don’t know what to do at checkout—whether to swipe or insert a card, or sign or use a PIN. They are dealing with longer lines, and merchant staff is still learning about the cards and how they work.

Social media magnifies these frustrations. A single tweet can spread like wildfire. For example, a recent tweet calling for everyone to get on the same page on EMV garnered tens of thousands of retweets and likes and led to a story in the New York Times (read it here: bit.ly/EMVtweet). Keep in mind, this tweet did not come from a celebrity but from a gentleman with less than 2,000 followers.

Moving Forward

When communicating with the public, it is important that we put the migration in context. This process of upgrading every merchant in the United States is unprecedented in its complexity and scale. In fact, this is the largest change in commerce in the past 40 years. Payments is an ecosystem, requiring many independent players working together to advance this vital consumer convenience.

To put EMV into perspective, the transition from analog to digital television in the United States took six years. It took the mobile phone industry 13 years to reach 25 percent adoption. Even the upgrade from cell phones to smartphones took five years to reach 25 percent of the population.

Despite confusion or frustration, as an industry we need to communicate our successes. EMV is working to protect the U.S. payments ecosystem from counterfeit card fraud. The share of financial losses stemming from counterfeit activity fell 18 percent in the first quarter of this year, reaching its lowest level since early 2013. Merchants who have made the switch are enjoying the benefits of EMV; in March, Visa merchants that accept chip cards reported a 35 percent year-over-year decline in fraud. That’s a huge cost-saving incentive, which should entice previously reluctant merchants to upgrade their terminals.

Beyond security, the chip card upgrade also ushers in the future of payments, as most EMV terminals are equipped to accept contactless payments, enabling tech-savvy consumers to pay using the mobile device that is rarely out of hand’s reach. This technology also offers merchants possibilities for personalized marketing, engaging rewards, and myriad opportunities to capitalize on Big Data.

The EMV migration, despite its present perception, has made great strides in which the payments industry as a whole should take pride. It is a step toward making payments more secure for everyone. TT

Jared Drieling is the business intelligence manager for The Strawhecker Group, which is active on ETA’s committees and councils. Reach him at [email protected].