Way back in July 2013 I wrote the blog; “Why the US Will Not Adopt EMV (Chip & PIN)“, which, given the current state of EMV adoption in the US, was wayyyy off the mark.
My broken crystal ball aside, – hey, if I was any good at predictions I’d be blogging from my yacht anchored in the Med, not from my kitchen in Barnes – I still can’t figure out why the US would spend billions upon billions of dollars on EMV without demanding that those players with the greatest vested interest in ‘plastic’ build in a more permanent ROI.
Those player are:
- The Card Brands: This one is a given, any move away from plastic and towards mobile is one step closer to obsolescence (yes, I am ignoring EMV tokenisation, for many reasons).
- Issuers: Also a given, what ELSE are they going to do?
- Acquirers / PSPs: They have the best chance of segueing their current position into bringing their merchant-base future-proofed payment innovations and value-add services designed to improve the ‘consumer journey’.
- Terminal/PED Manufacturers: Once the US has spent billions replacing their mag stripe PEDs with Chip / Contactless, what is left for PED makers to do? When the whole world finally works out that mobile phones and wearables only need something to read them (e.g another bloody phone), why buy crappy, massively expensive, devices that do next to nothing to improve the customer’s shopping experience?
These players have been around for so long that they are seen as the de facto standard, while all along they have been intermediaries designed only to make non-cash payments safe. To make them trusted. And they did a superb job, so superb in fact that it has taken technology almost SIXTY years to find something better! We went from the first production car to landing on the bloody MOON in the same time!
But it’s here now, and it’s been here since Apple created the iPhone. A device capable of so many modes of every factor of authentication, that we can really start calling it Identity Assurance, which is the foundation of only thing on which a payment is truly based; trust.
A credit card number, regardless of where it’s stored, how it’s stored, or even if it’s tokenised, will never be able to match what my phone can do.
For years now, the functionality of mobile devices has been perfectly placed to provide alternatives to plastic; e-wallets, direct debit, merchant-side tokens, even block chains, but here we are, in 2015, and we are still spending billions on the same technology our parents or even grandparents first used back in the 60’s.
Let me answer that with another question; How do YOU want to pay for things in a store? If whatever you wanted in payment technology could come true tomorrow, what would it look like?
The odds are that unless you’re in the payments innovation line of work, you really have no idea. You just want it to be painless, convenient, and if you’ve had issues in the past, safe. Payment cards are so much part of our lives that we cannot even imagine anything simpler. It’s only when you know what goes on in the background that the true cost of plastic comes to light.
From interchange fees, to PCI compliance, to fraud, to PEDs, to the plastic cards themselves, taking card payments is a massively expensive undertaking, and if you think those costs are not passed down to us, the consumers, then I have a bridge to sell you.
But you really can’t blame the consumer, we are not the ones who live and die at the whim of consumers in general …but retailers do. Would Walmart be as big if they only took cash? Of course not, they NEED non-cash payments, but what if the top TEN retailers in American had told the card brands that the first one to negate the need to EMV got ALL their business, can you imagine what would have happened?
Top 10 Retailer’s Revenue in 2013
|Rank||Retailer||Rev. (USD Millions)|
|5||The Home Depot||$ 69,951.00|
|7||CVS Caremark||$ 65,618.00|
That’s close to 1 TRILLION USD, the lion’s share of which was accepted through plastic.
And what could Target have done with the $100M they spent on new PEDs, or the millions they are paying in fines and reparations for their 2013 breach? I point not to their ridiculous back-end processes as the cause of their woes, but their inability to focus on the true cause of their vulnerability; their inability to innovate collaboratively.
I guess, in retrospect, EMV in the US was inevitable, without consumer pressure for alternatives the retail industry just followed along like sheep, perhaps assuming payment cards were some kind of ‘official’ mandate. They are not, and the retail industry in the US missed an incredible opportunity for change. Now all they’ve done is set themselves up to not only pay for the ‘new’ infrastructure (at least up front), but to pay for the fraud as well.
While not entirely appropriate, it’s one of my favourite sayings, and applies to every level in payment food-chain, including the consumer.
“You are not entitled to your opinion. You are entitled to your informed opinion. No one is entitled to be ignorant.”
― Harlan Ellison