EMV is far from being a new technology. In fact, European countries have been using EMV chip-enabled credit cards and processing terminals for nearly 30 years.
Despite all the noise around the recent liability shift deadline for merchants to become EMV compliant, this payment technology could soon become a thing of the past, especially as it faces consumers’ increasing adoption of new payment technologies such as Near Field Communication (NFC)-enabled devices and mobile payments.
While focusing on EMV compliance solves a short term need for businesses across the country, here are three reasons merchants should now turn their attention beyond EMV to mobile payment processing:
Mobile Pay Preference is Outpacing EMV. The slow adoption of EMV technology by merchants and card suppliers has helped shift consumer preference toward the use of mobile payments.
In 2014 alone, the Federal Reserve’s “Consumers and Mobile Financial Services 2015” report found that 28% percent of smartphone users employed mobile payments. This figure will likely increase as industry leaders like Capital One, Apple, Samsung, Google and Chase encourage the use of mobile payment methods. We can expect to see the consumer demand and preference for NFC technology grow, especially among younger generations of shoppers. In a recent EMV survey, respondents between the ages of 18-24 were the least likely to use EMV credit cards (20.5% but reported the highest usage of mobile payments (42.1%), signaling current and future consumer sentiment toward these payment forms.
NFC Technology is More Secure than EMV. NFC technology offers three key security features – biometrics, secure element chips and tokenization. These elements are exponentially more secure than EMV because they are unique to a specific device and individual user.
Biometrics, for example, eliminate the need for consumers to enter a password on a device by incorporating user identification measures. These range from face, fingerprint, signature, and retina or voice recognition. Secure element chips found in NFC-enabled devices are a tamper-resistant platform that houses, processes and communicates data securely. Additionally, tokenization substitutes sensitive data with non-sensitive data, which masks a credit or debit card’s 16-digit card number and expiration date in order to help limit the impact of a data breach.
Mobile Pay is More Convenient for Consumers. In today’s mobile-first and on-the-go society, speed and convenience are everything. Timing is important to consumers, and merchants are discovering that EMV chip cards are not as quick to process as traditional swipe cards.
Luckily for merchants and consumers, the extended wait time of an EMV transaction can be solved with a simple tap of an NFC-capable phone. We are already seeing this convenience factor come into play at some merchants such as Starbucks, where a quick scan of the company’s mobile payment app sends morning java enthusiasts quickly down the coffee line. Starbucks has seen tremendous success as an early adopter of the mobile payment trend, reporting that mobile payments made up 21% of total sales and accounted for more than $200 million in total revenue.
With the industry expecting only 40% of merchants adopting EMV terminals by the end of the year, it is safe to assume an industry-wide transition to chip cards will continue to be slow. By the time most merchants are EMV-ready, there is a strong possibility the popularity and consumer preference of using mobile payment technology will have overshadowed chip-card technology – which is why for many merchants, it makes sense to focus on future tech, not what was popular in the past, and become NFC-enabled.
Jared Isaacman is CEO of Harbortouch