Chip & PIN - the baseline
After fifteen years of stabilising (EMV) Chip & PIN, we the industry like to think we are on a winner. Indeed this should be viewed as the case and the reality, despite the global media and the occasional journal from Cambridge.
That said, the number of ongoing bulletin releases on the EMVCo website and the pro-longed migration to Chip & PIN does highlight that this is not always a straightforward exercise for those involved.
Now let's consider the payment Schemes themselves - international and domestic (where they still exist). Establishing an interoperable, consistent Chip & PIN environment has triggered much marketing on payment security for counterfeit, lost and stolen fraud activity.
Costs have decreased, but for many this is attributable to strategic sourcing of chip masks, operating systems and point of sale upgrades. Divergent activity to the main market solutions has and will continue to challenge stakeholders.
So now I don't need a PIN?...
Contrast to this is the parallel push for contactless payments and payments without the need for a cardholder verification - PIN or signature (CVM). Well, that is the media play anyway! See recent media backlash to FastPay in Australia for transactions less than A$35.
Depending on the market, the no CVM limit for contactless transactions can be as high as three figures as it is in Australia - set at A$100 for both PayPass and PayWave. It can be low, as in the UK at the new level of £15. Yet, this is not the actual limit for contactless transactions - transactions can still occur in excess of these levels, as long as a PIN is applied as well. Consider the current focus on mobile and the use of Near Field Communication (NFC) for tap & go with the phone.
It is not expected that up to A$100 you can use your phone, only to have to pull out the old fashioned plastic for transactions in excess of A$100.
Consistent payment experiences
So what of the experience of contactless. As a carrier of multiple PayPass cards, the experience in 3 key markets has been quite telling. The UK, US and Australia.
As a regular in the UK throughout 2010, I frequented a local coffee shop on Kingsway in London who has a contactless reader. Needless to say, coffee is not overly expensive, yet not once in 12 months was I directed to that device. Contactless in the UK was contained solely to Oyster transactions.
The US was markedly different, both in buying lunch at the MasterCard HQ cafe and making transactions in retailers in Ohio. Nothing overly stood out other than proving that my Australia PayPass cards did work effectively in the US markets Mag Stripe Defined (MSD) implementation model and were fast.
Now for Australia. With Chip & PIN consistency has always been the goal. Yet for contactless this is far from the experience.
Please hold sir...
Sydney has a mono-rail system which now has contactless payment acceptance. Depending on the station you from which you purchase your ticket the contactless experience could lead to missing the mono rail as it passes by. A CBD based station allowed me to wave my card - and after 2 goes we had success. A station at Darling Harbour required me to hand the card over as the reader was behind the secure glass and the attendant took 3 attempts to get the transaction to process - only by HOLDING the card in place. After waiting for the ticket and receipts etc; perhaps cash may have been a better bet had I not been conducting a mystery shop exercise. (The bank was advised to no avail.)
A chip card being used to its full potential...incredible
The trigger for today's blog was a McDonalds transaction yesterday. Perhaps hard to believe, but the receipt (yes not an option, we waited for all 30cm of it to be printed) actually had an Authorisation Response code of 'Y1' on it. This is fascinating - to actually experience an offline authorisation approval. Not even an electronic fallback transaction! As I still had to wait for the food, I watched the device subsequently commence connection procedures and submit an advice to its acquirer. (They know who they are - well done for using chip to its full potential).
Most clients question the transaction speed benefit! It is indeed hard to defend the speed benefit when devices are authorising online in most cases and receipts are being printed etc. It is extremely hard to defend when you know that the card more often than not needs to be held in range longer than expected. While merchant training can be resolved - a number did not know how the reader activated or worked. Delays in activation are also a problem.
Ubiquity in contactless...not so fast - but eventually
So with fifteen years to achieve the current state for Chip & PIN (and the US reaching an inevitable tipping point), the contactless and NFC advancement of main stream payments may yet continue to struggle. Perhaps the point should be not to compare to traditional main stream card payment methods of swipe/dock and PIN/sign.
Perhaps this is why contactless transit operations and innovative start ups like sQuid, Snapper and the like are accepted. Their attention is on cash and are separated from access to consumer banking accounts - credit or transactional debit.
So let's not rush deployments if we are to compromise brand consistency and trust at the point of sale. This is the moment of truth for a Customer of both the card issuer and the retailer/acquirer - and it is the greatest moment of trust!
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