the calendar flips to November and visions of Black
Friday dance in their heads, holiday shoppers using new,
more secure chip credit and debit cards will be learning
a new checkout procedure.
the added security might be welcome, new cards could
mean more frustration and slower checkout lines during
the bustle of holiday shopping.
bricks-and-mortar retailers were already fighting an
uphill battle against the e-commerce guys, so the last
thing they need are more reasons for customers to be
ticked off at them," said Neil Stern, senior
partner at Chicago-based McMillanDoolittle.
Wal-Mart executive said he expects widespread checkout
problems and "anarchy" during the holiday
season because of confusion over how to use the new
cards, which must be "dipped" into the machine
and left there for several seconds, as opposed to a
Wal-Mart was among the first to install and use new
readers for chip cards and has become proficient over
the past year, many merchants are just starting that
transition and many consumers are baffled.
timing of the shift "wasnít necessarily optimal,
given that weíre going into the holiday season,"
said Wal-Mart spokesman Randy Hargrove, elaborating on
recent comments by John Drechny, senior director of
payment services at Wal-Mart, during a panel discussion
at the Money20/20 payments conference in Las Vegas.
"There could have been a better time,
shoppers have already witnessed the confusion at
retailers widely accepting chip cards, perhaps at
Target, Wal-Mart or Walgreens.
involves failed swipes, trying to follow the cashierís
instructions, fumbling with the card while trying to
insert it correctly into the reader slot and remembering
to remove the card at the end of the transaction.
a retail consultant, and I still put it in the wrong way
and yank it out too soon," Stern said. "It
takes a long time for people to change habits."
without confusion, the so-called push-and-pause method
generally takes longer than the swipe. Although that
difference can be as little as about 1 second longer, a
Wal-Mart spokesman said.
a retailer standpoint, itís really bad because it
slows down productivity at the front end," Stern
will likely be more problematic for retailers whose
customers expect a quick checkout, like Walgreens.
"People donít like waiting," Stern said.
"At Macyís, customers might be a little more
patient with the transaction process."
and debit cards are likely to be a big deal for the
holidays, with 76.4 percent of consumers saying cards
are their primary payment method, split about equally
between debit and credit cards, according to the latest
National Retail Federation numbers from 2014. That
compares with 21.6 percent paying cash, and 2.1 percent
paying by personal check.
1 was a soft deadline for banks to issue new credit and
debit cards with microchips and for retailers to install
readers that can use the new chip technology.
it turned out that the Oct. 1 date was more of a
starting gun than a checkered flag in the race to add
security to card payments. Far from all banks and
retailers were ready, and many still arenít. Most
Americans donít even have the new cards yet, as banks
and credit unions have been slow to replace old ones.
U.S. merchants, just 27 percent were expected to be
ready to accept chip cards by the deadline a month ago,
according to management consultant The Strawhecker
Group. By the end of the year, thatís expected to rise
to 44 percent and not hit 90 percent until 2017, a
Strawhecker survey showed. Banks and merchants have said
they will likely make the conversion to issue and accept
credit cards first and debit cards later.
good news about the relatively slow rollout is that many
consumers wonít be affected this holiday season ó if
they donít have chip cards yet or they shop at
retailers that donít accept the new cards.
Target, which can accept chip cards at all its stores,
recently made the bold move to accept yet a different
card payment procedure. It started issuing new Target
store credit and debit cards, called REDcard, that are
more secure because they not only have microchips
embedded but require users to enter a personal
identification number at checkout instead of signing.
chip-and-PIN is a process used in most other countries
that have switched to chip cards, but is not typical in
the U.S. so far ó a point of conflict between banks
that issue cards that require signatures and retailers
who want the added safety of PINs.
realize that data security is top-of-mind for American
consumers, so we wanted to offer them the solution that
really is most secure in the marketplace today,"
said Target spokeswoman Molly Snyder. "We
recognized that would be on the early side, both on the
issuance and acceptance (of PIN-enabled cards), and so
we put a ton of effort into making sure our team
members, people who are engaging with guests on the
frontline, are equipped to answer questions. What weíre
seeing is that is going really smoothly."
officials might be especially sensitive to security
concerns because of the retailerís massive data breach
during the 2013 holiday shopping season, in which some
40 million cards were compromised. The breach likely
expedited the change to new card technology in the U.S.,
which had been sluggish to switch compared to other
developed nations, experts say.
the switch to new checkout habits is a significant
change for shoppers, "putting additional financial
pressure on financial institutions and confusing
consumers, many of whom donít even know why the
transition is happening and have no idea how to use an
EMV chip, or Ďsmartí card," said a report by
Chicago-based Arroweye Solutions, which manufactures
payment cards and sends them to consumers on behalf of
issuers. EMV stands for Europay MasterCard Visa, the
coalition that developed specifications for the system
in the 1990s.
still very much a work in progress," said Arroweye
CEO Render Dahiya. "There will be a lot of
on-the-job ó or on-the-shopping ó learning."
new cards, with both the new microchip visible on the
front and the old black magnetic stripe on the back, are
only safer when used with a new chip card payment
terminal. Chip cards make every transaction at a payment
terminal and ATM unique. Old machines read the old-tech
magnetic stripe, and are no safer with the new cards.
itís true that avid shoppers of big retailers will be
skilled at the new card "dipping" checkout
process ó and checkout employees adept at helping
customers ó everything changes during the crush of
havenít seen it yet when itís a stress point, and
the holidays are a stress point," Stern said.
new cards could cause in-store checkout woes on Black
Friday and throughout the season, but they wonít
affect Cyber Monday and other online holiday shopping.
Customers make online purchases with the new cards the
same way they always have, by typing in the card number,
expiration date and security code. Those transactions
are no more secure with the chip cards.
payment-terminal slowdowns alone probably wonít force
holiday shoppers to abandon stores for websites.
suspect weíre going to see some frustration, but it
probably doesnít elevate to the point of customers
saying, ĎIím not going to the store. Iím just
going to do this online,í" Stern said. "More
people are going to shop at home, but not because of
this. But itís certainly not going to help physical
shoppers become frustrated enough with chip cards, it
might speed adoption of yet another payment method:
mobile payments with a smartphone using such services as
Apple Pay, Android Pay and Samsung Pay.
EMV does slow down the transaction process, if people do
leave cards in the machine, then you have a scenario
where mobile does become a value-add, if that
transaction is quicker," Dahiya said.