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Ho, Ho, Ho, Lines May Be Slow

SMB Retail by Angela Diffly
Chip Card Transactions Inch Along

According to payments technology company Cayan, there are upwards of 26.2 billion credit card transactions annually, and EMV (chip card technology) is adding 116 million hours to the checkout experience each year. “Around the country, people are frustrated with the chip card experience, and that will likely impact retailers’ bottom lines this holiday season,” said Rachel Trueblood, Cayan’s senior VP of marketing.

According to Ingenico’s VP of payment solutions Allen Friedman, “While both cardholders and merchants have raised concerns that EMV transactions seem to take more time than traditional magstripe transactions, the slowness of the chip-card process is more perception than reality. In a controlled environment, EMV transactions only take 3-4 seconds longer compared to magstripe.”

But as they say, perception is reality. In a recent Cayan survey, nearly a quarter of customers say that a wait time of between 5-20 seconds means they would skip shopping at that retailer in the future. “That’s very bad news for retailers, as the average EMV transaction sits around the 14 second mark — and 71 percent of shoppers are planning to shop online during the holidays to avoid retail stores,” commented Cayan’s Trueblood.

In a recent survey by NerdWallet, 31 percent of Millennials had negative feelings about EMV chip cards, the highest percentage of any group, due to longer transaction times and confusion about when to use the technology. The study also found that, when paying with a card at a store, Millennials are more likely than other age groups to swipe their card’s magstripe first, as opposed to inserting the chip. They’re also more likely to start by asking the cashier which they should do. And they hate to get it wrong: Millennials are more likely than others to feel annoyed or embarrassed if they insert or swipe their card and then are asked to do the opposite.In an effort to speed up chip card transactions, all major payment brands have introduced versions of Quick Chip technology for the US, which reduces the time a card must remain in a point-of-sale (POS) terminal during a transaction. “The cardholder is able to insert their chip card into the payment terminal and remove it in a matter of seconds while the transaction completes,” noted Ingenico’s Friedman. But just how fast (or slow) are EMV transactions post-Quick Chip technology, and what do major payments players predict for the holidays given the potential for still-slow EMV checkout times?

Underwriters Laboratory (UL) initiated a research project to determine how long chip-enabled transactions actually take at the POS. It found the average transaction time to be approximately 11 seconds—with 4.4 seconds as the fastest recorded and 22.6 seconds as the slowest. However, according to First Data, an EMV transaction on the company’s popular Clover POS comes in at less than three seconds from the initial dip of the EMV card to the onscreen message instructing the customer to remove the card. Specifically, Clover Mini clocks in at 2.93 seconds, which can vary based on Internet speeds. “Even with a product like Clover that processes EMV cards quickly, with increased traffic, lines can build easily around the holidays,” admitted First Data’s Jim Allen, who heads up the company’s SMB solutions.

Why EMV Transactions Are Slower In The U.S.

In an interview with Banking Exchange, Sherif Samy, managing director for transaction security operations at UL noted multiple reasons why a transaction is typically slower in the United States than we observe elsewhere. Here are the three main reasons, according to Samy:

1) Many terminals in the U.S. still rely on old-fashioned dial-up connections.

“Replacing and ‘reterminalizing’ a market, adding different mechanisms, takes time,” Samy noted.

2) U.S. merchants generally require more conversation or more actions by the consumer during a given transaction (compared with global merchants).

These include asking customers to choose debit or credit, whether they want a paper or digital receipt, whether they’d like to contribute to some charity, and so on.

3) Current EMV coding could be improved.

Eventually the industry “will see a second release of EMV implementation in the market that is more optimized as experience grows in this market, and companies like UL push for more best practices in the market,” he noted.

Tips For Speeding Up Lines This Holiday Season

Speed Up EMV (As Much As You Can)

Some solutions offer faster EMV transaction times than others. Do your research. Merchants can enhance POS and payment terminals with a simple software update to process Quick Chip solutions, but Ingenico’s Friedman cautions these solutions offer a “perceived speed” since they allows shoppers to quickly insert and remove the card (but transactions are still processing). It may be too late to implement them effectively for 2016, he told us, but merchants can still make sure their POS systems are working correctly and that the staff is prepared to accommodate all forms of payment offered by their current terminals.

Adopt Mobile Solutions

“Implementing a handheld payment device can mean less time waiting in lines and more personalized shopping experiences,” Cayan’s Trueblood told us. She pointed to the fact that handheld options allow store associates to engage with customers away from checkout lines and “save the sale” in an out-of-stock situation, while also giving retailers the ability to reduce queuing via line busting.

Verifone’s Shan Ethridge, VP and GM of its North American Financial Services Group told us, “Fast tracking toward mobile POS solutions offers line busting options and the ability to check out customers from anywhere in the store.” They also recommend retailers adopt faster chip processing with one of the networks.

First Data’s Allen agrees that line-busting solutions go the extra mile. “A number of our clients employ line-busting techniques, equipping sales associates with mobile devices to take transactions around the store, vs. just at the main counter. It’s a great technique to keep lines down and can improve the customer experience during this busy time,” he explained.

Offer Other Ways To Pay

Ingenico’s Friedman suggests merchants should be open to accepting alternative forms of payment, such as NFC/contactless methods like Apple Pay and Samsung Pay. “Most, if not all, EMV terminals are capable of accepting NFC-based mobile payments, which provide the same level of security as EMV transactions, but with a simple wave of a smartphone,” he said.

Give Them A Sign

We’ve all seen the makeshift, ‘chip coming soon’ or the more clever ‘don’t blame us, it’s slow’ EMV makeshift signs taped haphazardly to payment terminals. But signage, when done properly, can speed things up considerably during what is sure to be a confusing time for busy shoppers.

Stores have lots of interesting ways of telling you a chip isn’t accepted. credit: Joanna Stern/The Wall Street Journal

“Signage reduces the customer’s need to ask the cashier or make multiple attempts to swipe, dip or tap, and therefore results in a speedier checkout experience,” noted Cayan’s Trueblood. She mentioned this signage comes in many forms, stickers, window clings and the dreaded hand-written signs. “Not every retailer is open to having physical signage at the checkout, so digital signage on the payment device is a great way to keep the countertop clean while also driving real consumer behavior change,” she noted. In a recent test with Apple Pay, Cayan saw a 500 percent increase in usage when consumers were presented with the Apple Pay digital signage on the company’s Genius device. Which proves that when reminded about payment options, consumers take advantage of the most convenient way for them to pay.

Ingenico’s Friedman agrees that signage can be helpful, but tells us that payment terminal companies are coming up with more sophisticated solutions. “Signage eliminates confusion at the point of sale, since shoppers may be wondering if they should swipe or dip. As this issue continues to be a problem for North American merchants, terminal solution providers, like Ingenico Group, have started to incorporate features to address the issue within the POS device. As an example, some terminals will automatically illuminate the EMV chip port when that type of transaction is required.”

Signage can also be used as a training tool, suggests Cayan’s Trueblood. “It can provide reinforcement for sales associates, especially during busy times with staffing turnover. It can help remind associates which payment options are available,” she told us.

Verifone recommends refresher training on EMV for checkout clerks, especially for those retailers hiring seasonal personnel. “Retailers should use their payment processor or card brands as a resource for the latest assets for educating in-store staff on EMV,” Verifone’s Ethridge suggested.

Ingenico’s Friedman agrees. “Merchants should educate their employees on the capabilities of their terminals and the types of payments they can accept. If an employee is able to guide a customer through the transaction from the beginning, the transaction process will be more streamlined, ultimately leading to a better customer experience.”