Though the EMV shift last year was meant to improve the payments industry and make transactions more secure, the change has had its fair share of drawbacks.
Though the change happened about 9 months ago, nearly one-third of consumers still don't have the updated cards in their wallets, Payment Week reported. Additionally, not all stores are equipped with upgraded terminals. Some of those that have new terminals don't have them set up to accept EMV payments.
In those instances where a consumer who has a chip card is shopping at a store with an upgraded terminal, confusion about how to make the transaction under the new system slows down lines and frustrates shoppers. Furthermore, the transactions themselves are naturally slower than the previous swipe method.
Concerns like these have many merchants feeling like they would rather take the risk and have fraud liability placed on them than upgrade to a system that could steer away their consumer base. However, this is not the right solution to the problem. Not only will this create problems for a merchant, but it could put its customers at risk for fraud.
Lines speed up with contactless payments
A better solution, and one the payments industry is already seeing take hold, is to offer contactless payment options. Payment Week explained they are faster and more convenient, and aren't as confusing as the new "dip" method that came with the chip cards.
This may be easier for retailers than it sounds. Many of the new EMV-ready terminals are also equipped for near-field communications, CU Today pointed out. NFC technology is what most contactless payments use to process transactions.
While adoption of NFC capable terminals was slow before the shift, many merchants have already installed them since last year. Now that so many merchants have this capability, those consumers who don't like the experience of dipping their chip cards may begin to naturally choose contactless payments instead.
"There is a cool factor with tapping the phone," Dean Young, the senior vice president of industry engagement at Florida-based PSCU, said, according to CU Today. "But at the end of the day if consumers decide dipping is not a great experience, absolutely EMV could drive adoption of other digitally enabled services."
Contactless cards could gain momentum
NCR, a global technology company, noted that currently, Apply Pay has the most market share of contactless payments in the U.S. However, this may not necessarily always be the case. Though they are largely regarded as pioneers in the U.S. for this market, competition by way of Samsung Pay, Android Pay and even cards with contactless capabilities could begin to claim some business.
Across the Atlantic, many European consumers prefer contactless cards to mobile wallets like Apple Pay. NCR reported that countries like Poland, the Czech Republic and Slovakia are leading the way with many transactions being made with contactless technology.
Additionally, many other countries are outpacing the U.S. in issuing cards with contactless capabilities. More than two-thirds of payment cards in Poland can be used to make contactless payments, as well as 62 percent of cards in Italy and 47 percent in Singapore.
In the U.S., fewer than one-fourth of cards issued can be used to make contactless payments. However, NCR predicts this will soon grow. As credit unions, banks and other card issuers continue to update their consumers' cards with EMV capabilities, it's likely they'll also include contactless functionalities as well.
When more consumers have contactless cards, and more merchants have terminals with NFC capabilities, the transition to tapping the card may come naturally. It's important for credit unions to be prepared for this shift. Getting out ahead of this trend can help to ensure members that their financial institution is up to date on the latest payment and security trends, which can help to retain members. Plus, offering a sought-after technology early on is a great way to bring in more members.
Likewise, merchants would also do well to be prepared. Though adopting a new terminal for EMV payments may cause longer lines, these retailers can also educate people about contactless options, whether they be Apple Pay, a contactless card or another payment method.