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Mobile payments the solution to EMV growing pains

December 4, 2015

Unfading optimism among supporters has not disguised the fact that the transition in EMV liability over the last two months has had a number of problems. An obvious solution would seem to be a switch to proximity mobile payments. 

Optimism among supporters has not disguised the fact that the transition in EMV liability over the last two months has had a number of problems. Under the new rules, the liability for some types of unauthorized or fraudulent credit card activity – once the burden of the issuing bank and the credit card networks – shifted to the party that adopted the lowest level of EMV technology. As many industry experts expected, it has not been a seamless shift.

Banks and retailers continue to argue over payment methods, with chip-and-signature backers doing their best to drown out chip-and-PIN adherents. Meanwhile, issuers continue to distribute cards with chips and merchants continue to face issues over chip acceptance despite upgrading their payment terminals. It will likely be up to consumers to decide the path forward.

How consumers have responded
According to a recent survey of more than 5,000 U.S. adults conducted by Harbortouch, a point of sale systems provider, one in five consumers regard transaction time as their biggest concern when using an EMV-enabled debit or credit card. The majority of those polled – 67 percent – said that swipe cards were still the quickest form of payment, though only 21 percent acknowledged having used an EMV card. 

“On average, it takes between seven to 10 seconds to pay using a chip card versus two to three seconds to pay using a traditional swipe credit card,” said Jared Isaacman, Harbortouch’s founder and CEO. “While seemingly small, during busy times like the holidays, these increased processing times could add up quickly.”

Mobile payments are the obvious solution to a rocky EMV liability transition. Mobile payments are the obvious solution to a rocky EMV liability transition.

Isaacman stated that, in the face of the serious challenges posed by consumer sentiment around chip-enabled cards, brick and mortar retailers could be turned down in favor of online shopping in greater numbers than usual. “But there is the opportunity for them to get ahead of the issues by implementing ‘line-busting’ programs or even mobile payment options,” he said, “which could help retailers cut back on wait times and long lines.” 

Smartphones over EMV cards
With the transition to EMV cards proving rocky, so called tap-and-pay options – the sort enabled with smartphone proximity mobile payments – seem a much more enticing option, especially now that Google, Apple and Samsung have stepped up their advertising campaigns for their respective services. As the holiday season moves into full swing, it seems likely that consumers will take out their frustrations with EMV cards by using their smartphones instead. 

According to Mobile Payments Today, the rapid pace of technological innovation is another factor to consider. By the time the new wave of smartphones release next year, many will carry NFC as standard fare. This will encourage consumers, particularly younger millennials, to use their smartphones as mobile, digital wallets to pay for just about everything. As more make the switch, companies will increase their rewards for using proximity mobile payments – some, like Starbucks and Dunkin’ Donuts have already done so – and the movement will truly take off. 

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