Why C-stores Should Move Beyond EMV
Implementing EMV payment terminals is an ongoing effort and colossal undertaking for convenience store chains and single-store owners alike.
The real problem is this widespread rollout may actually be missing the point since EMV — an acronym for Europay, MasterCard and Visa, the three companies that originally created the security standard — is far from being a new technology. In fact, European countries have been using EMV chip-enabled credit and debit cards and processing terminals for nearly 30 years already.
Despite all the commotion around last year’s Oct. 1 deadline for merchants to become EMV compliant, this payment technology could soon become obsolete, especially as it faces consumers’ increasing adoption of newer payment technologies such as near-field communication (NFC) and other mobile payments.
While focusing on EMV compliance is a short-term solution for c-stores across the country, here are three reasons why c-stores should start focusing on accepting mobile payments now rather than solely focusing on EMV.
1. SPEED & CONVENIENCE
The speed of transactions at convenience stores is remarkable, with the duration it takes a customer to enter, purchase an item and depart averaging between three to four minutes, according to research from NACS, the Association for Convenience & Fuel Retailing.
This is especially impressive given the sheer volume of transactions convenience stores handle. For c-stores that sell fuel (about 84 percent of them in the country do), there are roughly 1,100 customers per day, or more than 400,000 annually. Altogether, the U.S. convenience store industry alone accounts for serving about 160 million customers every day and 58 billion customers per year, as reported by NACS data.
Unfortunately, merchants are finding that EMV chip cards are not as quick to process as traditional swipe cards. In fact, EMV payments can take up to 10 additional seconds, which may not seem like much, but can quickly add up in a high-traffic location. In fact, EMV users are nearly four times more concerned with long transaction times than with card security, based on a recent Harbortouch report.
Luckily for merchants and consumers, the extended wait time of an EMV transaction can be solved with a simple tap of an NFC-capable phone. We are already seeing this convenience factor come into play at some merchants such as Starbucks, where a quick scan of the company’s mobile payment app quickly sends patrons down the coffee line. Starbucks has seen enormous success as an early adopter of the mobile payment trend, reporting that mobile payments make up 20 percent of total sales and account for more than $211 million in revenue.
2. CONSUMERS LIKE MOBILE PAYMENT
The sluggish adoption of EMV technology by merchants and card suppliers has helped alter consumer preference toward the use of mobile payments.
In 2014 alone, the Federal Reserve’s Consumers and Mobile Financial Services 2015 report discovered 28 percent of smartphone users employed mobile payments. This figure will likely increase as industry leaders like Capital One, Apple, Samsung, Google and Chase encourage the use of mobile payment methods.
We can expect to see consumer demand and preference for NFC technology grow, especially among younger generations of shoppers.
In a recent EMV survey, respondents between the ages of 18-24 were the least likely to use EMV credit cards (20.5 percent), but reported the highest usage of mobile payments (42.1 percent), signaling current and future consumer sentiment toward these payment forms.
3. NFC IS MORE SECURE
While added security is the main reason banks and credit card companies are pushing merchants to adopt EMV, NFC technology offers even more security. Its three key security features — biometrics, secure element chips and tokenization — are exponentially more secure than EMV because they are unique to a specific device and individual user.
Biometrics, for example, eliminate the need for consumers to enter a password on a device by incorporating user identification measures. These range from face, fingerprint, signature, retina or voice recognition. In addition, secure element chips found in NFC-enabled devices are a tamper-resistant platform that houses, processes and communicates data securely. Finally, tokenization substitutes sensitive data with non-sensitive data, which masks a credit or debit card’s 16-digit card number and expiration date in order to help limit the impact of a data breach.
With only 40 percent of merchants reportedly adopting EMV terminals by the end of 2015, it is safe to assume an industry-wide transition to chip cards will continue to be slow.
By the time most are EMV-ready, there is a strong possibility that the popularity and consumer preference of using mobile payment technology will have overshadowed chip-card technology.
EMV appears to be the short-term answer, but that doesn’t change the fact that it is really a thing of the past. That’s why merchants should start readying for the time when NFC and other mobile-pay technologies will be the dominant payment methods.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.