POS Transaction Speed Optimization: 4 Ways to Go Beyond “Faster EMV”

It has been more than a year since the October 2015 fraud liability shift date and the EMV migration began in the U.S. market. Merchants, acquirers, brand networks and issuers are all involved in this transition. It seems, however, that the most important stakeholder in the process was least represented — the cardholders. There is a perception that EMV transaction speeds are much slower than the mag stripe. This noticeable difference in transaction speed has led to customer complaints about chip payments and could potentially lead to long lines at stores.

Consumer dissatisfaction is one of the reasons less than 50% of U.S. card-accepting merchants have transitioned their terminals to EMV. Additionally, merchants that are EMV-ready are likely experiencing slowdowns in their speed-of-service. There is a clear need among retailers to determine how one’s POS solution performs versus comparable market vertical norms. Most importantly, there’s a need to understand what factors can affect the speed of EMV transactions, and find ways to optimize existing solutions to speed up chip transactions without jeopardizing transaction security.

Current Efforts Tackling EMV Speed

EMV provides security features to enable card-terminal authentication. However, all of these features add to the total transaction time, leading to the perception that EMV is slow. Technically speaking, EMV addresses chargeback and other liabilities caused by counterfeit and replay attacks by enabling a more active role to be played by the card. This requirement is a departure from the legacy mag stripe swipe and approval/denial process.

Brands responded to complaints about transaction speeds with “faster EMV;” AMEX, Visa and Discover with Quick Chip and MasterCard with M/Chip Fast. This so-called faster EMV mimics the traditional mag stripe swipe by allowing for pre-dip and early card removal before the final amount is known, while maintaining most of the security advantages introduced in EMV. It improves the perception of the EMV transactions, at least within the checkout flow, and addresses the lowest-hanging fruit from an end-to-end view of retail payment applications.

EMV Transaction Speed Study

In continuing the work around POS optimization best practices, UL recently initiated a study to identify trends in transaction speed at a variety of merchants across North America. The company, which has been closely tracking the global EMV migration shift and has been working on EMV POS optimization since 2002, evaluated transactions in different stages:

• Card Insertion: Here a cardholder may select an application (Debit/Credit) and terminal POS may read records for transactions.

• EMV Processing: Once the application is selected, this stage includes risk management for both the card and terminal, which is a conversation that occurs to assess processing conditions to be considered for the transaction.

• Online Authorizations: This stage includes security protocols in requests and responses to and from the host as well issuer updates. For the purposes of this article, the following recommendations are applicable to the U.S. as it is an online-only market.

Each of these stages represents the communications that may happen from PIN pad/terminal and electronic cash registers and hosts which make up a payment application, regardless of how it is set up.

In comparing transaction speeds, contact and contactless transactions covered a range of factors, including region, network connection, terminal manufacturers and acquirer front ends. The aim was to identify factors that may contribute adversely to the speed of an EMV transaction.

Once analyzed, two factors stood out — network connection and human interaction (steps that required cardholder intervention like PIN entry and transaction type selection). The results also revealed that the network connection method played a major role in transaction speed.

Other Ways to Optimize EMV Speed

1. Migrate network communications to IP: With more than 60% of terminals in the U.S. still using dial-up connection, migrating network communications to IP-based, in addition to faster EMV, can provide a quick improvement in EMV transaction speed. The comparative study confirmed that EMV transactions, irrespective of manufacturer, performed faster over IP- and broadband-based communications, ranging on average of 20 seconds faster than dial-up connections. The significance of having cardholders leave the card inserted in the terminal until the online authorization is completed contributes to the perception that EMV processing is slow.

2. Adopt a contactless strategy: This approach can help move transactions along quickly by minimizing cardholder participation. This can be helpful specifically in a market segment where lower value transactions are the majority. Strictly from a card-terminal interaction stand point, the duration for contactless transactions is less than 500ms, whereas for contact that’s 4 to 5 seconds.

3. Further collaboration among all stakeholders: This includes terminal manufacturers, acquirers and merchants to streamline implementation, which may prove fruitful to reduce the negative feedback of cardholders because of slow EMV speed.

4. Utilizemore mainstream features: Depending on the market segment, exploiting more mainstream features such as biometrics (fingerprints) will enhance cardholder verification methods (CVM) and create opportunities to promote efficiency.

As the payments industry changes and adapts to the specific needs of the cardholders, it is clear that more needs to be done to create a smoother payment experience from the cardholders’ viewpoint. Reducing the friction to the cardholder experience is one of the top priorities for any merchant looking to boost revenues and ease integration into new payments channels. However, each payment application is unique. For merchants, the answer to this question starts by looking at their specific implementation of retail POS, understanding where they fall within their market segment, and uncovering distinctive pain points and challenges that can negatively affect the speed of EMV transactions and thus the overall cardholder experience.

Jide Laoye is an Advisor at Underwriters Laboratories Transaction Security Division. As part of the North America Advisory and Education Services (AES), Laoye focuses on next generation payment innovations and EMV migrations for all verticals. His current focus is on distributed ledger technology (blockchains) and mobile wallets. Laoye brings over 10 years of experience in technology consulting in payments and mobile services delivery including IoT and MVNO deployments.