Consumers, banks and merchants all want faster payments, but new technology only seems to be making the process slower.
The U.S. shift to EMV-chip card payments has thrust the issue of transaction times into the spotlight by replacing a familiar payment process with one that many perceive to be slower and more confusing. Visa and MasterCard developed separate technologies to address this concern, but so far these have been long-term solutions to a very immediate problem.
To speed up the transition to speedier EMV, MasterCard is calling for collaboration throughout the payments industry, starting with the EMV Migration Forum. MasterCard shared its specifications with the forum to get the ball rolling on deploying its M/Chip Fast technology, which shortens the amount of time consumers spend paying with an EMV card.
"We're open to different suggestions, our goal is to work with the forum on ways to optimize and speed transactions," said Chiro Aikat, senior vice president of product delivery for EMV at MasterCard.
While the card networks say progress is being made to convert the U.S. card payment system to EMV chip cards, some merchants and consumers are pushing back against the migration due to confusion and the perception that EMV is slower. Consumers who are used to quickly swiping their magstripe cards are frustrated with the new process that asks them to leave their card in a reader for up to 10 seconds.
Behind the scenes, EMV and swipe transactions take a similar amount of time to complete, but EMV transactions appear longer to the shopper because of the length of time the card is left in the terminal.
Visa and MasterCard have developed systems that trim this time to about three seconds, but the card networks do not consider these solutions to be universal. Rather, they are aimed at high-volume merchants.
It’s still too early to know if ‘faster EMV’ options will speed checkout, but it’s a potential accelerator of both transactions and chip card adoption, according to Art Harper, director of solutions consulting for payment card and plastics solutions for PSCU.
“If it does [speed] process, then those merchants who have not implemented EMV due to perceived lengthened wait times have no reason for not certifying those point of sale terminals for EMV,” Harper said.
MasterCard's M/Chip Fast builds on the principles of contactless payments, or "tap and go," MasterCard said. Visa, which offers a similar technology called Quick Chip, speeds payment times by allowing the merchants to skip several steps in the process that are less important in the U.S. than they are overseas. Visa did not return a request for comment for this story by deadline
Discover and American Express have not announced plans for a similar service.Other companies, such as Walmart, are also trying to reduce chip card transaction times. In Walmart's case, it's removing a prompt from the transaction process.
"This is something that really needs to be standardized. Having different user experiences across different locations would be confusing and could create disruption at the point of sale," said Rick Oglesby, president of AZ Payments Group. "It's also important that the networks unify around these standards."
Having two EMV experiences is not a concern, Aikat contends, because the point of sale terminal instructs the consumer when it is O.K. to remove the card—there is no outward sign that any one merchant offers expedited payments.
The industrywide standard that MasterCard desires remains to be written, though Aikat said agreements on testing, coding and certification guidelines for different options to speed EMV transactions would be helpful.
"Within the EMV Migration Forum, there are ongoing discussions amongst the payment brands, processors and merchants to better understand each of the brands' specifications for faster chip transactions and how they might impact merchants and cardholders – there is a desire to have a seamless implementation for merchants and a consistent checkout experience for consumers," said Randy Vanderhoof, director of the EMV Migration Forum, in an email from the EMV Migration Forum’s external public relations team.
Vanderhoof did not call the efforts 'standards' saying the forum is not a standards body.
Beyond the issue of transaction speed, Visa and MasterCard are also struggling to get merchants to understand their respective rules for EMV transactions, which differ on debit routing protocols and elements of the October 2015 liability shift. The effort MasterCard announced Thursday does not deal with these issues, Aikat said, though he added the card network is open to further collaboration outside of transaction speed.
Overall, the card networks have painted a bullish picture of the EMV migration, noting that the U.S. is now the world's largest chip card market.
MasterCard on Thursday reported 68% of all U.S.-issued branded consumers credit cards carry chip technology as of the end of April. Active merchant locations increased to 1.4 million, including more than 1 million local and regional merchants—or 25% of that market.
Chip cards are also having a tangible impact, according to the card network, which reported credit card fraud basis points at EMV merchants decreased 39% in January 2016 compared to January 2015. Also, counterfeit fraud at those merchants decreased 27% in terms of overall dollar volume during the same period.