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No Easy Move: the Switch to EMV (Part I of II)

Over the past year, the fintech industry has been focused on the EMV liability shift. The deadline for all U.S. merchants and credit card processors to adopt Europay, Mastercard, Visa (EMV) standards passed in October 2015, meaning those that are uncompliant may be held liable as a result of any fraud losses. To support the shift, many merchants needed to upgrade or replace point-of-sale (POS) technology and consumers were issued new chip-enabled cards, which are more secure than traditional magnetic stripe cards.

Six months following the official EMV liability shift, we wanted to get a grasp on consumer sentiments toward the changes, so we surveyed 575 U.S. consumers to find out. In our study, No Easy Move: The Switch to EMV, we found chip card adoption to be anything but smooth.

In many cases, consumers faced hurdles with EMV cards right out of the gate -- from receiving the cards to first using them in-store, respondents did not hold back on reporting their frustrations. Here are some insights from the report:

Chip cards arrive with lack of instructions

With any new technology rollout, businesses should make it a priority to share detailed instructions to maintain a seamless customer experience. However, this hasn’t been the case with EMV. In fact, more than a quarter of consumers (27.3%) did not receive adequate instructions in the mail on how to actually use the cards, leaving many scratching their heads.

Consumers share common complaints with first-time transactions

In addition to not receiving instructions, many consumers faced challenges in-store when first trying to make a purchase with the cards. Many of the complaints were the result of faulty POS systems, rather than customer confusion. Some common complaints include stalled or delayed transactions or multiple attempts required to read the card.

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Online payments inconvenienced by new cards

EMV cards not only have an impact on in-store transactions, but also online for shoppers who store their credit or debit cards for faster Web transactions. Consumers value the convenience of storing account information with websites of apps they frequent, whether to make one-click transactions on Amazon or hail a cab via Uber. Countless others have their cards set up for recurring payments for things like Netflix or monthly electric bills.

Any stored credit or debit card information has to be manually updated each time a consumer gets a new card -- and the EMV shift is no exception. Unfortunately, this leads to wasted time going through and updating accounts or, in some cases, failed payments for consumers who are unaware of the need to make such updates. According to our study, nearly two in five (39%) respondents had to update online accounts or recurring billing with EMV card information. Additionally, nearly one in 10 (9.4%) experienced a missed or failed payment due to not updating the information, leading to additional frustration over damaged financial health.

With so many challenges out of the gate, consumers might be discouraged by EMV technology and continue trying to swipe their cards instead, putting themselves at risk for fraud. Adding friction leads to lost customers for banks and merchants, so card issuers, payment processors and other financial institutions need to work together and make the EMV shift as seamless as possible for customers to avoid upsetting the entire payments ecosystem.

To see the full findings, download The Switch to EMV and stay tuned for a follow-up post, where we’ll dive into in-store adoption rates and the EMV knowledge gap.