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ETA Expert Insights: Improving the Customer Checkout Experience

By: Scott Goldthwaite (Aliaswire), ETA Technology Council Chair, and Jared Poulson (Payroc), ETA Technology Council Co-Chair

Here in the US, we’re about two years into the EMV migration. Chip cards are quickly becoming a fixture of brick-and-mortar commerce. The ETA Technology Council surveyed ETA members to determine the status of the migration. In this article, we provide a progress update and share our observations on improving the consumer experience at the point of sale.

In 2016, financial institutions issued about 675 million chip cards in the US – roughly 2 cards for every consumer. In March 2017 alone, there were one billion Visa chip transactions in the U.S. (worth about $49.1 billion) and over two million chip-enabled merchant locations, representing about 44% of all U.S. storefronts. And consumers are using their chip cards. EMVCo reports that nearly 1 in 5 US card-present payment transactions in 2016 were chip-on-chip, meaning that both the card and the terminal were EMV-enabled. Compare this rate to 2015, when just 2% of transactions (or 1 in 50) were chip-on-chip. That’s a tenfold increase in just one year.

The impact of the EMV migration is not limited to the payments industry – consumers are taking note of the shift, too. And, sarcastic tweets aside, the majority of consumers are happy with their chip cards. A 2016 NerdWallet survey of US consumers found that nearly 4 in 5 respondents (78%) say they have positive feelings about EMV chip credit cards, and 43% say that EMV chip cards are their preferred form of payment when paying in-store (whereas just 29% of survey respondents say that they prefer magnetic stripe cards). And 47% say that consumers benefit from the additional security offered by chip cards.

However, some shoppers are frustrated by slower transaction times. This is partly a perception issue: swiping the magnetic stripe takes virtually no time, while dipping the chip card means leaving the card in the terminal for the duration of the transaction. So a chip transaction feels much longer than a mag stripe transaction. According to an analysis of test transaction data by UL, the average EMV transaction takes 13 seconds. For high-volume businesses, like quick-serve restaurants, slower transactions make a dent in the bottom line. For Scott Goldthwaite, SVP of Operations at Aliaswire, “… the added time to process EMV reduces throughput at checkout. Lost revenue at checkout is more significant than EMV savings on fraud shift.” And as a result, some of these businesses are deciding not to upgrade to EMV at all. The perception of speed makes a big difference in the adoption of EMV.

The payments industry is taking steps to speed up EMV. Recognizing that many consumers were confused by certain prompts on the terminal, terminal manufacturers like Ingenico have opted to remove extraneous system prompts to streamline the user experience. In 2016, Visa launched Quick Chip, Mastercard launched M/Chip Fast, and American Express launched Amex Quick Chip. These programs aim to reduce the time a card spends in the EMV terminal. When these “quick EMV” programs are deployed, the EMV terminal will prompt the user to remove their card as soon as the card has transmitted the cryptogram for authorization. Under a normal EMV transaction, the user would have to keep their card in the terminal until the authorization signal is returned. With “quick EMV,” the transaction is processed as a deferred authorization, similar to a contactless transaction. Additionally, “quick EMV” allows the terminal to enter a pre-determined placeholder amount, so that the card can be removed before the final amount is known (think of scanning items at the supermarket). Thanks to these changes, the user can quickly dip and remove their card, making the transaction seem much faster.

Still, consumer confusion persists at checkout. According to the NerdWallet survey referenced earlier, about 52% of consumers will instinctively swipe or dip their card at the terminal, regardless of whether or not the EMV terminal has been activated. Specifically, 39% of respondents dip their card whenever they see a chip reader, and 13% swipe the magnetic stripe regardless of whether they see a chip reader or not. In some cases, a consumer who dips will be told they must swipe, and vice versa. More visible chip slots, combined with clear instructions from store employees trained on how EMV works, will help alleviate some of this confusion. ETA created a suite of resources to help small merchants prepare for EMV. These are available at www.sellsafeinfo.org

Much of this consumer confusion arises because not all EMV terminals in stores have been activated. EMV transactions are far more complex than magnetic stripe transactions – after all, magnetic stripes are the payments equivalent of a cassette tape, and nowhere near as sophisticated as EMV chips. Mag stripes simply store static data, while chip cards generate a unique cryptogram for every single transaction. And because chip cards are more complex, ensuring they work correctly is a long, often time-consuming process. To help merchants and MSPs with upgrading their POS technology, ETA released the “Merchant Guide to Modernizing Your Payment System” in partnership with Discover and Boomtown, available to ETA members.

The EMV migration presents opportunities for payments and technology companies to streamline the consumer experience at checkout. Increasing the perceived speed of transactions goes a long way towards making chip transactions seem routine and effortless. Clear instructions and signage at the point of sale can help alleviate confusion and help consumers feel more confident in using their chip cards. But the potential for innovation at the point of sale goes far beyond these best practices. From targeted loyalty offerings to mobile wallets to augmented reality, there’s never been a better time to reinvent the consumer experience and launch commerce into new frontiers.

With thanks to Irv Henderson (talech) and Allen Friedman (Ingenico) for their contributions to this article.

The ETA Technology Council identifies current and emerging technology-related issues and helps communicate these issues to the membership. The Council provides information on technology trends and applications to ensure that ETA is established as a valued information source for members and for the industry. ETA members can join the Council here.