Did the EMV Liability Shift Give a Big Boost to Mobile Payments?

In a recent blog highlighting the liability shift in hindsight, we talked about the change’s effects on retailers, and what could be expected in the future. While retailers continue to implement chip-ready terminals and await backlogged certification, there is another equally important force to pay attention to: EMV could be a boon to contactless NFC.

Technologically-savvy consumers were early adopters into contactless NFC, but a majority of consumers took a ‘wait-and-see’ approach, continuing to swipe while the competition between Apple, Samsung, Google, and so many others continued to heat up.

When the liability shift occurred, however, this brought about two notable changes:

• Retailers needed to update their terminals, which led to the proliferation of terminals accepting contactless NFC-based payments.
• Consumer reaction to new cards was lukewarm at best—excited for the enhanced security, slightly frustrated by the slower processing times and uncertain of whether they need to dip or swipe.

These trends, combined with the market penetration of phones capable of transmitting NFC, has made for one big development: Consumers are leapfrogging EMV.

EMV Pain Creates NFC Proliferation

In The Transition to EMV Presents New Opportunities for Mobile Payments, Forrester author Brendan Miller discussed how this development has created a new opportunity for merchants and a new option for customers:

• Tap and Pay Removes Friction Points Created by the EMV Experience: Customers are finding that tap-and-pay with a phone is just as frictionless as swiping, compared to the process of dipping their card in an EMV terminal, waiting for it to read the card, remembering a PIN and then pulling it out of the reader.
• Consumers Adapting In-Store Mobile Payments Will Become More Likely to Use Mobile Payments Platforms on E-Commerce Transactions:  As consumers become more habituated to paying with their favorite NFC mobile payment scheme they are also more likely to use the same scheme to pay online for goods and services.  Their card will already be securely stored on their phone and using it to frictionlessly pay online will be a natural extension.
• Loyalty Integration Makes for Increased Mobile Payments: If consumers are going to upload payments cards to their phones, providers need to roll out loyalty card integration to speed the process and minimize clutter, allowing for the app to become top of mind.

NFC Moving from ‘Cool New Process’ to ‘Convenient Staple’

Faster, and even more secure than chip dipping, the predictions of the rise of mobile payments (14.8% of all transactions completed by mobile device by 2019 and $1.2 Trillion flowing through digital wallets by 2020) don’t seem as fantastic as they did even a year ago.

Merchants—especially quick serve restaurants, fast casual restaurants, and coffee shops—rely heavily on their ability to get customers into the store, served, and out of the store as quickly as possible, and while the few extra seconds do not seem overbearing, each dip adds up.

This is why McDonald’s, Panera Bread, and Starbucks have all been heavily invested in mobility, with McDonald’s being one of the first to adopt NFC-based mobile payments, and Panera and Starbucks working to revolutionize the process in their 2.0 models.

Convenience is the name of the game, and tap-to-pay is picking up steam, becoming the ‘better mousetrap’ in in-store payments.

Looking forward, payments could become even more vast, with some believing that there soon will be contactless-only supermarket checkout lanes, and others pointing to the future of pay-by-car at drive-thrus.

For more information on the rise of digital wallets and mobile payments, see the following resources, including our newest infographic, 2016 Mobile Payments State of the Industry.

• Biometrics in Payments
• Samsung Pay and Android Pay Rise to Answer Apple Pay
• Enabling Mobile Payments for Closed loop Private Label Cards
• In-Store Digital Wallet Payments: The 3 Things Consumers Are Waiting For