The EMV numbers tell a compelling story.
In the six-plus months since the EMV liability shift deadline hit the U.S. payments market, the continued momentum of EMV adoption has surprised just about everyone. As part of its six-month EMV checkup, MasterCard said that more than two-thirds (67 percent) of its branded consumer credit cards in the U.S. have chips in them and that roughly 1.2 million U.S. merchant locations now accept chip cards.
That’s a lot of growth in such a small period of time.
Although the numbers may lead you to believe most U.S. consumers and merchants are adjusting well to the post-EMV world, Ajay Bhalla, President of Enterprise Security Solutions for MasterCard, assured us that there are still a few “not-so-happy campers out there.”
The migration to EMV in the U.S. was one of the biggest events to happen in the country’s payments ecosystem — in fact, the largest EMV conversion in history, Bhalla explained. So, given the scope and magnitude of this deployment, no one was surprised that the move would come with a few growing pains.
One of them being, of course, the switch to dip from swipe and, in particular, the friction that is now created at the point of sale, which, Bhalla said, has caused some very mixed reactions to EMV among merchants.
For those merchants feeling the brunt of frustrated consumers, jammed-up lines and painstakingly long transactions, MasterCard is introducing M/Chip Fast, intended to shave precious seconds off the current EMV transaction time.
Bhalla said the M/Chip Fast solution allows a consumer to dip an EMV chip card into the terminal and replicate what happens with a magnetic stripe transaction. He explained that M/Chip Fast is actually a fairly consistent EMV transaction that MasterCard does globally; the only thing that is different is changing the process flow so that the card authentication happens in just one step instead of two, allowing for the consumer to remove the card before the transaction is completed. Consumers, Bhalla said, can “take care of the transaction in seconds.”
While shortening EMV transactions will be music to many merchants’ ears, Bhalla emphasized the fact that MasterCard has gone to great lengths to make it known that not every merchant should feel compelled to rush into implementing M/Chip Fast.
Though the payment behavior has changed drastically, in many cases, merchants are just chalking it up to something that will improve as consumers get more comfortable with the process. Some say that consumers are getting used to it and not complaining. For those merchants, Bhalla says, merchants shouldn’t feel forced to solve for a problem that they may not have.
“We think that [M/Chip Fast] should only be used by institutions that actually see it taking much longer to process a transaction than standard EMV,” Bhalla made clear.
Basically, if it isn’t broken from the consumer’s standpoint, don’t fix it.
Where Bhalla thinks that the M/Chip Fast solution might be particularly viable is with merchant establishments where time is truly of the essence for both the business and consumers — think coffee shops, fast food and even transit — because quick throughput is essential.
The M/Chip Fast specification is available, and testing has already begun. Bhalla believes merchants will be utilizing models and prototypes within the next 90 days.
Bhalla also discussed MasterCard’s big picture for EMV on a global scale: consistency.
There are, today, 1.3 billion EMV cards globally supported now in 150 countries. And though the progress that EMV adoption in the U.S. has made thus far may be beyond what many expected, Bhalla sees the growth only moving faster in the coming years.
Soon, the U.S. may very well reach its “EMV tipping point,” which Bhalla described as the moment where a country shifts its EMV adoption in a very big way. By 2017, he said it’s expected that the market will see more than 97 percent of cards being chip-enabled, with significant growth in the number of merchants accepting EMV as well.
“The minute the merchant numbers cross 50 percent, we will have a market that is truly EMV,” Bhalla said. “I think that will happen at the end of next year.”