MARK, DO YOU HONESTLY THINK THAT CONSUMERS WILL HAVE A DIFFICULT TIME ADJUSTING TO THE DIP?
It’s not going to be everyone; in fact, most folks will make the change just fine, but yes, there will be consumers who have difficulty adjusting. Today, you go to an ATM (and some of them feature a dip), but instead of leaving your card in the machine, it’s a quick pull out and most machines tell you to “quickly remove your card”. This new process is a matter of retraining the psyche. If the card’s removed too quickly or prior to the transaction being complete, you’ll need to start over. Moreover, there’s confusion over ‘dip and …what.’ We’ll have multiple choices in the US—with chip and sig and chip and pin. And don’t forget the old standby—classic swipe. But wait, there’s also swipe and pin for those wacky debit card users who don’t believe in points programs. In the US, we all carry multiple cards, which means we could potentially have 4 different schemes in our pocket at once (including the debit), which is only ripe for confusion, especially for folks with a handful of plastic cards in their pocket.
WITH THE ROLLOUT EXPECTED FOR OCTOBER, DO YOU ANTICIPATE PROBLEMS WITH TIMING, CONSIDERING IT’S RIGHT AROUND HOLIDAY SHOPPING SEASON?
Without a doubt! You’re literally changing consumer behaviors right as stores are at their busiest. Any rollout of something new will have bumps at the onset and an expected learning curve. This is a two-sided problem—the consumer and the merchant both have some learning to do. According to Aite, one third of SMB retailers aren’t even aware of EMV, let alone the liability shift. Think about it, when the lines start getting longer at the retailer checkout counters, the cashiers are going to revert to old habits to get the lines moving as they encounter confused and flustered customers. Add to this the shiny new Apple Pay and the potential of a Google/Softcard alternative by then and you are going to have a plethora of new options. And with so many options at the point of sale—from gift cards to contactless payments—that confusion is inevitable. Actually, it’s not just confusion that’s inevitable; it’s the recipe for a pot ready to boil over.
SO WILL THE ADJUSTMENTS AND IRE RESULT IN CONSUMERS BYPASSING PHYSICAL STORES AND JUST SHOPPING ONLINE EXCLUSIVELY?
We’ll see a jump this holiday season in online purchasing, but I don’t think it’ll be related to the rollout. e-commerce continues to grow year over year and there’s nothing to indicate this will change or slow down. But I can say from personal experience, e-commerce will be front and center in the minds of consumers once they’re stuck at slow moving checkouts behind others who don’t understand the dip or are confused about a mobile payment option, or even worse, stuck behind those who try to split the payment among a few methods. Maybe I am just a pessimist, but I can’t see the initial rollout being a ‘huge success’.
DO YOU THINK THERE IS A WAY TO AVOID THIS FATE AND MAKE THE ROLLOUT A BIGGER SUCCESS?
Yes! I think that there is a huge opportunity for us to all get out in front of this. Financial Institutions have a chance to really start educating folks. Let them know WHY we need this as an industry, and start sharing with them HOW it works. I have gotten a few updated cards and there was nothing more than a note in the packets, a note, nothing more. I had to call to find out where my PIN was, only to be told the card would be chip and signature… and I am in this industry. If I am confused, I can only imagine what my parents are thinking as these futuristic looking cards show up at the doorstep.
WHAT IMPACT WILL EMV HAVE ON MOBILE PAYMENTS AND ON THE FIGURATIVE ‘GEORGE CONSTANZA’ WALLET?
There are two factors here: 1) the uplift of POS terminals will increase the number and availability of NFC-enabled terminals since most new terminals feature both EMV and NFC capabilities.
2) EMV has the potential of making the process of making a payment with a physical card onerous enough where a mobile payment actually does make life easier, contrary to Tim Cook’s statement from last year regarding swipe.
As for the mobile Constanza wallet, it’ll likely remain rotund due to the still-lingering split of loyalty in payments, though I am holding out hope that the wallet continues to get smarter…
SO THIS SPLIT IS KIND OF LIKE THE JETS AND SHARKS?
I feel compelled to do jazz hands and a little snap action… but yes, it’s territorial; I still need my Dunkin Donuts app, my Starbucks app, my Walmart app, etc. since they all are still looking at this data as territorial and the owner of that will win.
SO LET’S FAST FORWARD TO NOVEMBER 2016. WILL CONFUSION AND IRE SUBSIDE?
It will, but not completely. If providers try to shift from chip and sig to chip and pin, it once again opens a can of worms, albeit a smaller can. It’ll be interesting to see what happens with card not present fraud at that time, but that’s another story for another colleague.