Tuesday, May 10, 2016
The uneven rollout of Europay, MasterCard and Visa (EMV) solutions in the United States has triggered an array of initiatives designed to accelerate EMV adoption and transaction speeds. Challenges associated with early implementation, combined with high costs of equipment upgrades, have discouraged many small to midsize retailers from installing chip card readers. Payments analysts have recommended harmonizing processing hardware, software and back-end systems to remedy inefficiencies in POS systems and processing hosts.
"There is nothing inherently slow about processing a transaction with an EMV chip card,” stated Henry Helgeson, Chief Executive Officer and co-founder of Cayan LLC, a Boston-based payment technology provider. “Unfortunately, many retailers are experiencing slow processing times because they are the recipients of poor EMV implementation, and it may be difficult for them to solve that prior to the Q4 holiday season.”
Retailers have been generally supportive of any and all efforts to speed consumer traffic in checkout lanes; many have participated in early trials of new software introduced by the card brands and payment technology providers, participating stakeholders have reported.
The Oct. 1, 2015, liability shift marked the official start of the U.S. migration to the EMV protocol. Consumer and merchant complaints in the early adoption phase prompted Visa Inc. and MasterCard Worldwide to redesign EMV transaction flows, which in some cases, has reduced chip card transactions to as low as 4 seconds from card entry to authorization.
Both card brand initiatives focus on enhancing communication between chip cards and chip card readers to make transactions more efficient and less time consuming.
MasterCard M/Chip Fast is a new technology designed for high-volume, high-security retailers. M/Chip Fast-enabled terminals assign a unique code to each transaction. Payment cards can be removed from the card reader as soon as the code is generated, speeding processing time and improving the cardholder checkout experience.
Visa Quick Chip for EMV is a software upgrade that enables chip cards to be inserted and removed in the checkout lane, while items are being rung up. The interoperable program works with all cardholder verification methods, including PIN and signature, and requires no additional modifications to routing or transaction handling. Merchants who add Quick Chip to EMV-enabled POS systems will not need further testing or certifications, Visa representatives stated.
Helgeson praised the Visa and MasterCard initiatives for enhancing communication between chip cards and terminals, but he suggested additional improvements are needed to fully solve the root causes of slow EMV transactions. Another, equally important component of the transaction is the response time for purchase authorization, he stated.
Cayan adapted its Genius platform and Level 2 kernel, using a proprietary technology the company calls ChipIQ to create a 3.66-second EMV transaction, which includes 1.60 seconds of interaction between chip card and reader and authorization speeds that average 1.92 to 2.56 seconds. Company engineers and participating merchants have clocked transaction speeds in the range of 4 seconds. Cayan noted that the solution has been deployed at participating retailers, where it has received positive reviews. The company also posted a video on YouTube that demonstrates a fast EMV transaction at a live merchant location.
“We’re going to get better at using EMV,” Helgeson stated. “Cayan has sent teams into the field to watch consumers and merchants; our engineers are collaborating to create a better user experience.”
The EMV Migration Forum, a cross-industry organization focused on addressing issues related to EMV adoption, predicted approximately 400 million EMV chip cards would be issued by the end of 2015. A recent MasterCard study found a 121 percent increase in merchant adoption of EMV in the United States. The company reported 67 percent of its consumer issued cards are chip-enabled, and 1.2 million merchant locations are prepared to process EMV transactions.
Helgeson noted the need to educate consumers about the various nuances of EMV, as procedures may vary by merchant location, POS device and card brand. He went on to say that the payments industry rushed out EMV implementation in the United States, using shoddy code in many cases to drive the transactions. He expects merchants to continue to push back until EMV is implemented well.
“It’s funny to imagine seeing a 25-second transaction and saying, ‘That’s good enough; let’s roll it out,’” he said. “Considering the many inefficiencies we’ve had to overcome, I’m surprised that we’ve gotten to this scale.”
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