Chipping Away at EMV's Pain Points, MasterCard Trims Payment Times
The hurdles to broader EMV adoption in the U.S. have many causes, but to the consumer the end result is typically the same: A longer payment process with no immediate gain.
MasterCard's M/Chip Fast, a similar time-saving software update to the recently announced Visa Quick Chip, is one way to address the friction taking place at the point of sale by consumers who must wait up to 10 seconds to remove their EMV cards from a reader — if the merchant even allows them to make a chip payment at all.
"We recognize that if there is an issue with a merchant it could be because of an education issue, and it can also be because of unique structural issues or with the technology in the payment terminals," Ajay Bhalla, president of enterprise risk and security for MasterCard.
The difference between M/Chip Fast and a "regular" EMV payment is authentication happens in a single step rather than two—authorization can be completed after the chip card is removed. That makes the transaction time shorter for the consumer. Generally an M/Chip Fast payment could happen in a couple of seconds. "Consumers can have an experience which similar to the mag stripe," Bhalla said.
Both M/Chip Fast and Quick Chip are designed partly to accommodate perception and the change management for store employees and consumers who have been swiping magnetic stripe plastic cards the same way for decades.
To access M/Chip Fast, a merchant performs a free software update with its terminal vendor, which Bhalla described as "easy" to execute because the underlying technology is not changing. "We are changing the process around the transaction," he said. "It's an EMV transaction, it's secure and the merchant that has had an issue can implement this [feature] with ease and the merchant's issue can be resolved."
But rather than resolve the problems at the point of sale, Visa and MasterCard risk making things worse by providing a distinctly different experience at different merchants, warns Rick Oglesby, a senior analyst and consultant for Double Diamond Payments Research.
"This is not an ideal time to be rolling out quick chip technology," Oglesby said. "It will lead to confusion in the market and disparities in user experiences between merchants both in the U.S. and across borders."
Amex and Discover will also have to be on board with the technology or there could be disparate experiences using different cards at the same terminal, Oglesby said. Discover's CEO, David Nelms, recently advocated for U.S. issuers to add PIN authentication to EMV, a process that could extend the time consumers spend making a payment.
"That being said, I don't think this means we'll be going back to swipe in any way," Oglesby said. "Visa and MasterCard are clearly aware of the implications of rolling this out at this time, so doing now despite the timing issues is an indicator of their commitment to see the chip migration through. We're beyond the point of no return."
MasterCard is not concerned about M/Chip Fast creating a variety of experiences in the U.S. or worldwide, because the feature is designed for a subset of merchants in the U.S. that are having user experience problems or long checkout lines. Bhalla reiterated M/Chip Fast changes the process flow, but not the technology—a MasterCard EMV transaction is standard globally.
And while MasterCard considers M/Chip Fast to be a permanent feature, and not a middle step on the path to EMV, it also does not anticipate all U.S. merchants will use it.
"If a merchant has a good turnaround they don't have to make a change," Bhalla said.
M/Chip Fast is currently in testing, with wider rollout expected in the next three months. It comes about half a year after the October 2015 merchant liability shift for chip cards in the U.S.
Bhalla said MasterCard did not offer this "faster" version initially because EMV technology is used the same way around the world, and the card network was seeking a customized transaction flow.
Like Visa, MasterCard is managing EMV migration challenges while it reports bullish adoption numbers. About 67% of consumer MasterCard are chip cards, and about 1.2 million merchant locations accept chip cards, the card network said.
"I don't think I've seen a conversion of this magnitude in any country," Bhalla said.