Slow EMV Readers May Spur Mobile Payment Usage

November 18, 2015, Written By John H. Oldshue
Payment screen against mobile payment

Adoption of EMV card readers has been slow. In September, only 22% of small retailers were ready for the October 2015 transition deadline. As more and more businesses switch to the microchip reader, though, they may be making credit cards somewhat obsolete, according to a November 16 Morgan Stanley note.

Credit card companies switched to the EMV credit cards in an attempt to make transactions safer. Not only does the switch to chip embedded cards decrease the opportunity for fraud, it also shifts the responsibility for fraudulent charges to the merchant.

One of the issues with this new reader is that the transactions are slow and involve several steps. In fact, just a few weeks ago, Walmart executive, John Drechny, predicted a more chaotic holiday shopping season due to the change. He felt the EMV transition would cause confusion and longer lines during the Christmas rush.

Since most EMV terminals are NFC capable, consumers may start switching to mobile payments since these transactions are much faster than those made with chip embedded cards.

“EMV cards take 15 seconds to process. That’s up from two seconds for a mag stripe swipe. What about ApplePay readers? That is micro-seconds,” the Morgan Stanley analysts said. “Watch for mobile payments to take off as retailers turn on NFC to enable mobile wallet payments and encourage you to use your phone to pay.”

Mobile payments are not very popular right now. Earlier this year, a study by Placeable showed that 90% of consumers have not used mobile payments when available.

Rurik Bradbury, Trustev’s chief marketing officer, said it may be that traditional credit card swipes take place very quickly, so Apple Pay and other mobile payment options do not seem to add anything new.

Now that credit card transactions will be slower, mobile payments may have an opportunity to change the way consumers pay.

The information contained within this article was accurate as of November 18, 2015. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.