Who Thinks We’re Ready for EMV?

Actimize FMC Product Team, Financial Markets Compliance

​Now that the Labor Day Weekend has come and gone and the US’s EMV liability shift deadline of October 1 looms less than three weeks away, I’m sitting here wondering why only a few non-geeks are discussing how this fairly transformative date will impact consumer-merchant-issuer relations. Here’s my theory; this silence is due to a combination of two factors. First, lots of other payments-related news is competing for everyone’s attention right now. And secondly, this deadline seems to be an irrelevant nuance to most consumers – and, unfortunately, for the short term, it may also be irrelevant to most merchants. Let’s tackle these factors one at a time. 

By “other payments news”, let’s reflect on the events of the past few weeks:
  • ​​​Samsung Pay, Apple Pay & Possible Android Pay Announcements: These are still novice payment methods for most people, and adoption is still in the early days if we take a multi-year view of things. The fraud liability around these payment types remain unresolved and the average consumer has yet to tinker with such technology and to really think about it as something they would use multiple times a day.
  • ​PayPal’s Split From eBay: Lots has been written about this and there’s no end in sight for all sorts of speculation about M&A, partnerships, adjusted rate structure fees, and the like. Since the split occurred this past July, the payments giant announced its acquisition of Modest, which helps merchants create mobile apps for their stores and with a focus on “buy” buttons. I suspect more M&A and other big announcements are on the horizon.
  • Wearables: They’re hotter than ever and all over the place on people’s wrists everywhere I look. Apple’s event this week further strengthens this notion, and wearables definitely appear to be the hot new must-have tech item. How payments will further relate to wearables is something to keep your eyes on in 2016 and 2017.
  • Bitcoin: It is still everywhere, despite this year’s general slump in prices. Blockchain has most definitely emerged as a more significant issue and protocol (rather than the notion of a cryptocurrency in its own right) and this topic shows no sign of abating – even though it is changing into something few had predicted.

As for the second factor mentioned above, relevance to both merchants and consumers, I think it is most helpful to consider merchants and consumers separately.
  • Educating Merchants: I am not a merchant, so cannot speak to this in great detail from behind their side of the counter. However, from my ongoing unscientific analysis (which consists of me continuing now for nearly a year to try to pay with the chip portion of my card across the US), most merchants I interact with and pro-actively ask, “Can I pay with this chip on my credit card?, still look at me as if I have three heads and then motion me to pay with the swipe portion of the POS terminal. Moreover, I’d say at least a third of all POS terminals still have the chip-accepting por​tion of their terminals blocked or covered shut in some way! Are elves going to magically appear across the US on September 30 to unblock them before the October 1 deadline hits?! This aligns with Intuit’s data from June, in which they found that less than half (42%) of small businesses planned to implement new POS devices or software. A small business consulting firm called Manta similarly found that 28% of small business owners were not even aware of this looming change.
  • Educating Consumers: There just doesn’t seem to be much attention being paid to educating consumers. There is still no real evidence of consumer education appearing in any of the places one might expect to see it: bank branches, call center representatives, call center recordings (IVR systems), mobile apps, online advertising (think AdWords), billboards, paper statements, websites (both pre-login and post-login), and more. I have interfaced with all of these “points of engagement” at least once in the past 90 days and have seen nothing of substance informing consumers about chips or how to use them. Ironically and to their credit, the mainstream non-payments media has done a decent job of covering this story. Hopefully this mainstream news coverage will make people aware of this technology in the coming 6-18 months during which I think we can expect to see much more pro-active communication from merchants, issuers, and others on this topic.

I’ll leave you with this nugget: when The Economist Intelligence Unit recently asked​ consumers about their priorities when it comes to customer experiences, nearly half (47%) of consumers said they prefer purchasing processes that are simple in response to the question “Thinking of the ideal customer experience, which of the following elements are most important to you?” This finding demonstrates further evidence that payments-related minutiae, such as how payments are processed and how fraud might occur or be charged to a given party involved in the transaction are nuances that are irrelevant details for most consumers. Until these issues are brought to bear in a tangible manner (e.g. the merchant who gets charged for a large fraud loss or the consumer who suddenly realizes it is easier to pay with a mobile device than via a clunky experience at point-of-sale using a chip), this date will pass with few noticing or doing anything about it in terms of changing their behavior.

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