COMMENTS: Chipping Away at Slow EMV

Getting to the root of the problems with transaction times

By Henry Helgeson

One of the most frustrating aspects of the U.S. roll-out to the new EMV standard has been the user experience. Transaction approvals can be very slow—in fact, there are several reports of retailers shutting down their EMV implementations because it just takes too long. It’s one of the biggest consumer complaints about the U.S. transition to EMV.

We regularly speak with retailers of all sizes, and many are telling us that they don’t want EMV implemented across their multiple locations unless they can see transaction times that are acceptable to them. What’s acceptable? Certainly not the 10- to 15-second range that many are experiencing. So why is this happening? Prolonged transaction times can be attributed to poor implementation across the industry as people rushed to make the October 2015 deadline, on top of generally sloppy coding.

These issues have resulted in a very poor experience at the point of sale (POS). Transaction approval length aside, EMV is still a new experience and it is not being rolled out in a uniform fashion. It requires significant consumer and employee training and messaging, and consumers don’t know where they can and cannot use EMV. There are inconsistencies between cards, both debit and credit. It’s an awkward experience, and that’s the last thing a merchant wants at the POS. And because so many focus much of their energies on the Q4 holiday season, this makes for an unsettling year-end proposition.

Mobile can be seen as something of a silver bullet here…tap your phone and the transaction is done. It’s simple, it’s intuitive, and it’s a seamless process.

But until mobile really takes off, some in the payments industry are taking steps to address the EMV user experience fail. The card brands recently announced “quick” chip options that address the chip interaction time and enable the cardholder to remove the card before transaction completion. However, quick chips do not speed up total transaction time if the systems are not well implemented.

We don’t believe EMV has to be slow. In fact, our experience at Cayan has been quite different. Our developers in Belfast, Northern Ireland, have been using EMV for years, and they spent a lot of time researching the most efficient way to read and process information from the chip. The result has been much faster EMV transaction times—typically less than 4 seconds, which is on par with magstripe transactions.

What we did specifically was examine one million EMV chip and signature transactions processed on our platform, and analyzed two components of the transaction: terminal interaction with the chip and the round trip authorization with the processor. From a consumer’s perspective, this represents the time between the consumer’s initial insertion of the chip card into the device and the moment he or she receives approval and is ready to sign for the purchase.

We found that our in-market solution has a median time of 1.60 seconds for the terminal interaction with the chip. The median time to authorize the purchase is 1.92 seconds, with an average time of 2.56 seconds. The resulting median time for chip and signature transactions processed on our platform is just 3.66 seconds—with an average time of just over 4 seconds.

EMV speeds are not all created equal: While some card brands and issuers are extremely quick, our data indicates that one card brand’s EMV transactions take a full one second longer than the other card types.

Despite EMV inconsistencies across the payments industry, the growth of mobile has implications for broader EMV adoption. Admittedly, there have been several barriers that have long served as impediments to mobile payments growth. Lingering security concerns, issues with ease of use and onboarding, and lack of merchant acceptance have slowed the opportunity. But these items are all being improved upon significantly, largely driven by EMV. In a recent webinar Cayan conducted with Jordan McKee, senior analyst of mobile payments at 451 Research, McKee pointed out that EMV is starting to help remove impediments to mobile payment adoption. McKee called EMV a key component as it supports advancements in security (e.g., EMVco tokenization spec, identical ISO standard), user experience (mobile better than chip), and merchant acceptance (driving contactless with liability shift). This inevitably lays the foundation for value-added services—the true driver of this opportunity.

So what’s next? Mobile payments via mobile wallets are a good start, but they will not drive merchant or consumer adoption at scale. Most wallets today are really just credit card surrogates. That is not a value proposition: Credit cards actually work really well. But what does need development, and what actually matters to merchants and consumers, is everything beyond the transaction. Loyalty, rewards, offers, location-based services—these are the areas where interest and uptake are occurring today.

Faster EMV is a start, but clearly there’s still plenty of work to do.

Henry Helgeson is CEO of Cayan and Chair of ETA’s Retail Technology Committee.