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Time it takes to use new chip cards could usher in more mobile payments

March 8, 2016

While the technology has been around for years, many retailers across the U.S. have only recently begun to require consumers to use the microchips embedded in most credit cards these days to actually be used to make a purchase.

While the technology has been around for years, many retailers across the U.S. have only recently begun to require consumers to use the microchips embedded in most credit cards these days to actually be used to make a purchase. But experts say that this “new” payment method – which is intended to significantly tighten security for these transactions – might actually end up pushing consumers to start using mobile payments more often, simply because of how long they take.

One of the big stated problems with inserting a chip card into a point-of-sale device is that these transactions take a much longer amount of time than traditional credit card purchases, which simply rely on the card being swiped, according to a report from Ad Age. Instead of a near-instantaneous transaction being completed, cards now have to be inserted and left in a machine for 20 or 30 seconds, or more, which is a long time for a person trying to make their way through a line at the coffee shop or convenience store in a hasty manner. More problematic is that, as more people do it, lines get longer as well.

Chip cards are more secure than typical transactions, but much slower.Chip cards are more secure than typical transactions, but much slower.

Finding an alternative
Experts say that this issue could end up being a huge driver of mobile payments adoption, the report said. This is because it avoids the lengthy process of having to leave a card in a POS device, and instead brings true “tap to pay” transactions to the forefront. In fact, some consumers might even find these types of purchases will take less time than swiping their credit card in the traditional way. And in fact, anecdotal evidence suggests that the difficulties in making a purchase with a chip card are already starting to drive consumers in this direction.

Indeed, this could help mobile payment transactions reach new heights at the point of sale for this year, expectations for which came in at $27 billion, the report said. That’s more than triple the average seen in 2015, and could bring the average amount being spent by an individual using these platforms to about $700.

Who’s likely to do it?
Unsurprisingly, millennials and those in Generation X have already started to make this transition, and as more adults in these generations see the convenience such an option provides, that should further push adoption rates, the report said. That may become particularly true when it comes to retailer efforts to combine mobile payments with existing rewards programs and other incentives.

For these reasons, the more small retailers in particular can do to start adopting mobile payment platforms themselves, the better off both they and their customers will be. That’s because these payment options bring not only convenience, but even more security than a traditional or chip card transaction. And the earlier businesses can offer mobile payment transactions, the more likely they will be to establish themselves as early adopters in their areas.

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