The introduction of EMV cards didn't significantly slow transaction times at U.S. retailers during the Black Friday shopping event, but there are still many wrinkles to iron out at the point of sale.
Mostly, consumers and merchants are both learning that timing – when to dip and when to remove an EMV card from a reader – is everything.
"Sometimes the terminal will time out if the cardholder inserts the chip card too soon. If the cardholder inserts the card while goods are still being scanned, the transaction will have to start over again," said Stephanie Ericksen, vice president of risk products for Visa Inc.
Before the card networks' Oct. 1 liability shift took hold this year, some retailers prepared for EMV by testing the new process and educating sales clerks about the best transaction sequence, Ericksen added.
Today, the party not able to handle EMV chip card transactions assumes the liability for counterfeit fraud on purchases. The liability shift marked the first time merchants potentially could be stuck paying chargebacks, a process that banks previously handled.
So it's in the merchant's interest to get the EMV payment right rather than fall back to less secure payment methods. One of the biggest issues they face is "tearing," which happens when a shopper takes the card from the reader too soon, nullifying the transaction.
This is happening because consumers think the payment has been accepted when the terminal prompts them to approve the amount, Ericksen said. But at that point, the transaction has not yet been sent to the bank for authorization.
"A smoother process occurs when showing the transaction amount first and having the customer confirm the amount, then asking the cardholder to insert the card," Ericksen said.
Another issue is that the customer-facing screen and the clerk's screen aren't always in sync with each other. "A lot of this is timing as to when you prompt the customer to do certain things," she said. "Sometimes, those screens don't match."
However, despite these issues, Visa's latest numbers on EMV transactions indicate that merchants and consumers are figuring out the process.
Visa merchants reported a 42% increase in chip-on-chip transactions from September to October, jumping to $8.9 billion from $4.8 billion.
Though numbers for chip transactions on Thanksgiving were not yet available, Visa noted that cardholders spent $1.5 billion overall on Thanksgiving, a 22% increase over last year's $1.2 billion.
That finding is important to Visa because it indicates shoppers are not waiting until Black Friday to do their spending, and thus there are smaller crowds in the stores on that vital day. Shorter lines make the learning process for EMV more manageable.
"We are seeing a lot of people opting to stay home and shop online on Thanksgiving and we should be seeing a lot more of that kind of activity," Ericksen said. "A lot more people are realizing how easy it is to shop through their mobile phones and apps as well."
Visa said its issuers have put 180.6 million EMV cards in the hands of customers through the end of October, while the number of merchants accepting chip cards rose to 592,000, a 49% increase over September. Visa projects that seven in 10 Americans now have at least one chip card in their wallets.
"On the merchant side, adoption has really been great," Ericksen said. "And we had many more enabling chip in the first weeks of November."
Small businesses have been slower to adopt EMV technology, but Visa reported that 50% of its EMV transaction volume was coming from smaller merchants prior to the start of the holiday season.
"There are a lot of chip- and Near Field Communication-capable terminals [for contactless payments] out there to help merchants future-proof their systems," Ericksen said.
Some smaller retailers have been put on a waiting list to get their terminals certified for EMV acceptance because of the late push leading up to the liability shift.
EMVCo, the standards body for EMV, is involved only in the Level 1 certification of the terminal as part of the hardware manufacturing process, said Randy Vanderhoof, director of the EMV Migration Forum.
"Once the make and model of EMV hardware is shipped and delivered to the merchant, EMVCo is done," Vanderhoof said.
Some of the testing logjam is likely occurring when Level 2 and 3 tests take place for terminal software through an acquirer or independent sales organization, Vanderhoof said.
"That is a legit bottleneck because the EMV terminal software comes from the acquirer for standalone devices and from the software vendor or ISO and then to the acquirer for semi-integrated or integrated merchant systems," Vanderhoof added.
