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New EMV card requirements could spur more mobile adoption

November 20, 2015

In recent months, the major credit card processing companies finally started to require merchants and other companies that accept such transactions to adopt a more secure method that has been in use globally for years.

In recent months, the major credit card processing companies finally started to require merchants and other businesses that accept such transactions to adopt a more secure method that has been in use globally for years. And while many businesses aren’t quite caught up on the requirement, the rollout of this new processing system has been bumpy enough to give lenders pause about how people will like it.

The problem for this new payment method, which requires consumers to insert their chip-and-pin enabled credit cards into a relatively new type of scanner, is that it takes quite a long time, according to a report from Business Insider. In some cases, the system takes a while longer than the few seconds for traditional credit card swiping. However, given that many Americans will no longer have the option to swipe their cards the way they always have, that could provide them the impetus to jump to the faster options afforded them by mobile payment processing technologies.

Mobile device readers could soon gain a foothold.Mobile device readers could soon gain a foothold.

What’s the issue?
Right now, though, the options to use mobile wallets to make a purchase are going to be pretty limited for consumers, so they might just have to grin and bear it with the new, slower option for a while, the report said. The good news is that adoption of the new card readers has been sluggish, particularly among small businesses, and so if they are given a choice some time in the next several months, they might take into account the frustrations with the new card readers and instead opt to start accepting mobile payments.

That, in turn, would potentially be a huge boon to the industry as a whole, simply because it would give the new payment platforms more visibility in a larger number of retail locations nationwide, and therefore increase consumer interest, the report said. That, in turn, would likely serve to fuel more adoption from both businesses and individuals going forward.

“EMV cards take 15 seconds to process,” analysts for Morgan Stanley wrote in a client note earlier this week. “That’s up from two seconds for a mag stripe swipe. What about ApplePay readers? That is micro-seconds. Watch for mobile payments to take off as retailers turn on NFC to enable mobile wallet payments and encourage you to use your phone to pay.”

How soon?
Right now, data suggests that only about 1 in 3 businesses of any size are using the new chip-and-pin card readers, meaning that there’s a lot of wiggle room, the report said. However, there’s no clear timeline for when widespread adoption of mobile payment technologies reach their long-expected “tipping point.”

The best guess many experts can come up with here is that these platforms will be more or less ubiquitous within the next year or two, especially as more consumers get smartphones capable of completing such transactions and find mobile wallets easier to use than traditional credit cards. That might also help to allay any lingering fears they may have over security.

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