Commentary

Mobile Payments & the October EMV Deadline

Mobile payments may get a shot in the arm with the new credit cards coming.

But that boost may be delayed by the lack of adoption by businesses.

As anyone who recently received a new credit card may be aware, chips are now being embedded in the cards.

This is all part of the new liability standard with the terrible acronym of EMV, which stands for Europay, MasterCard and Visa.

In other countries, the cards also are referred to as chip and pin, since a card is inserted into a terminal and the consumer enters a PIN number to complete a transaction. The U.S. version is more like chip and sign, since the consumer will sign after the card payment is verified.

Starting in October, any merchant not set up for EMV cards assumes the liability for fraud, currently handled by the credit card companies.

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But based on a number of market-reads, consumers may not be using their new cards in the way they were intended at many places that they shop. For example:

  • Only about half (48%) of small businesses will be set up to take EMV cards by the October deadline, according to a survey by Cayan. However, more than a third (37%) has no plans to accept EMV cards at all. The study comprised a survey of 344 small business owners and managers at companies with fewer 50 employees.
  • More than half (55%) of business decision makers say the October deadline should be extended, according to a survey by Randstad Technologies. That survey of 84 execs in large-scale, national businesses found that 42% of companies have taken no steps or are unaware of any progress being made around EMV.
  • Almost a third (28%) of small business owners who process payment cads are not even aware of EMV, according to a survey of 1,600 small business owners by Manta.
  • About one in four (42%) small business owners have not heard of the EMV liability shift deadline, according to a survey of small business owners conducted by Ebiquity for Intuit.

You get the idea.

The reason EMV could impact mobile payments is not because of the technology but rather because of the behavioral change.

While not the most secure technology on the planet, a credit card swipe is lightning fast.

Consumers are used to this. One swipe, maybe a signature, and done.

Not so with EMV.

The chip card gets inserted into the payment terminal and the consumer waits. Then the consumer has to remember to take the credit card out of the machine. These are changes in how people will be required to pay.

And that’s the opportunity for mobile payments to kick in.

A tap of a phone with Apple Pay or Android Wallet suddenly may look more appealing than the new, insert-the-card process.

While a mobile phone payment may be slower than a credit card swipe, it likely always will be faster than an EMV card transaction.

But then again, EMV has to be widely deployed at merchants for the difference to be noted.

Consumers may be in the driver’s seat on this one. More than half (57%) of small businesses would adopt EMV if customers complained enough about not being able to insert their EMV chip card, according to the Cayan survey.

If consumers complain that they want to use their new cards, many may find using their phone is a better way to pay.

 

4 comments about "Mobile Payments & the October EMV Deadline".
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  1. Chris Munz from Mocapay, July 30, 2015 at 10:55 a.m.

    I do agree the change in payment behavior will thrust mobile payments to the forefront more so then what we are seeing today.  I also believe that once merchants realize that the EMV investment can be offset by incorporating mobile payments they can leverage the customer insight and drive incremental.  Mobile payments should not be just thought of as another way to pay but rather as a way to create a deeper conversation with their consumers.  The more merchants know about how customers interact with them the easier it is to have an open dialog in any channel the consumer chooses.  Consumers win with ease and timly rewards and merchants win in knowing more about who and what their customers are purchasing to help make better business decisions.

    Being able to close the loop without discounting has always been something that merchants have wanted to do but was only possiable online.  Mobile payments bridges the online instore experience.  To find out more follow me @cmunzproject or check out www.mocapay.com

  2. Chuck Martin from Chuck Martin, July 30, 2015 at 11:01 a.m.

    Aggree with that, Chris. But still will take some time for that hill to be climbed.

  3. Chris Munz from Mocapay, July 30, 2015 at 11:23 a.m.

    Chuck you are correct it will take time to climb the hill for sure, education and awareness are key to helping merchants and consumers understand this new mobile first strategy that is developing for brands.  Payments has largely been driven by IT but with mobile payments it is being recognized as a place for marketing to work closer with IT to plan out the mobile strategy. EMV seems to be a nice catlyst to get brands to realize that the investment of EMV can be offset by adding mobile payments but it will take time.  

  4. Chuck Martin from Chuck Martin, July 30, 2015 at 11:28 a.m.

    We are on the same page Chris.

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