Oh, what a tangled web we weave when EMV data we receive. As more major retail chains fully accept EMV payments, Apple Pay is being dealt some serious experience setbacks, such as being asked twice for price verification and being asked for fingerprint biometric authentication and then, a few screens later, a signature. Neither of those steps were part of the Apple Pay process until merchants switched on EMV.
To be clear, those time-wasting moves are not part of the Apple Pay process at all, but are superimposed after the Apple Pay transaction is complete and customers think they are done. The reason this is now happening is due to very strict interpretations of EMV rules—and the fact that the nature of the payment mechanism (beyond that it’s contactless) is not always communicated to the POS. Hence, it must assume the worst.
When two retailers—Trader Joe’s and Whole Foods–last week made the switch through upgraded Verifone POS terminals, customers used to speedy Apple Pay experiences were literally being called back to the checkout lane to complete the additional keystrokes. Before, once Apple Pay’s screen said “done” and displayed an animated checkmark, they were free to leave. Not so in an EMV world.
Mohammad Khan is president/co-founder of OmnyPay and a longtime veteran of mobile payments (former president of Vivotech, former international sales director at VeriFone), finds the changes troubling. The ApplePay customer “is already authenticating himself so it does not make sense to have a signature. Somebody is going overboard on this amount permission. It creates a very bad experience. They have not thought through the way it looks to the consumer,” he said.
Jeff Wakefield, VP of sales enablement at Verifone and another veteran of mobile payments, said that the EMV rules have to be followed and different retail and customer interactions change what information is shared with the POS. For example, if the customer presents the payment mechanism at the very beginning of the checkout process—as opposed to waiting until all products have been scanned and entered into the POS—then can deny the POS the purchase amount. One way or another, EMV rules require an amount verification. If it’s not clear that that has happened, prudence dictates that it ask at the very end.
“Today, we simply don’t know if it’s an Apple Pay transaction,” Wakefield said, although his units certainly would know that it’s contactless.
This may not last forever, though. Apple is already experimenting with it’s next-generation of Apple Pay (“Apple Pay 2, but they don’t like us to call it that,” Wakefield said) “in a couple of pilot stores.” That next version will have mechanisms for dealing with coupons and loyalty and it will likely be able to tell POS that it’s in fact an Apple Pay transaction. In theory, Wakefield said, that could allow for the elimination of the signature request if retailers want to go that route.
As for price verification in the next generation of Apple Pay, that’s a bit trickier. Currently, the POS displays the price before Apple Pay is presented for payment, typically. Does that constitute a customer confirming the amount? Envision a discussion at a flea market. “How much for that toaster?” “$12.” “Here’s my Visa card.” There’s an argument that the presentation of payment credentials after hearing the price is an obvious confirmation of acceptance. EMV rules want a more explicit acknowledgement.
“To speed adoption of acceptance, the ‘Pays’ behave the same as either a mag-stripe card tap or an EMV card tap. This way, they will work in any terminal that supports contactless mag-stripe emulation or EMC contactless,” Wakefield said. “Anything else requires additional software on the terminal, which needs to be re-certified and installed in every terminal in the field.”
Another complicating factor, Wakefield said, is that the total of all contactless transactions today represent less than one-half of one percent of all transactions in the U.S.. That is making this issue a low priority to be fixed. “There are a lot of things that people are trying to solve right now,” he said. “It’s just not that big an issue right now.”
Wakefield’s right—and being practical—but that doesn’t factor in the industry harm if this starts to undermine all NFC payments. The best thing about NFC is its ease-of-use, it’s speed and it’s perceived convenience. These extra steps will make existing Apple Pay and Android Pay customers unhappy and will make plastic look better by comparison. It will also discourage NFC potential customers who will observe this behavior in the checkout line and be discouraged.
“EMV is screwing up Apple Pay, but it’s not EMV’s fault. It’s a poor execution of a well-thought-out spec,” said Todd Ablowitz, payments consultant and the president of Double Diamond Group. “To take a contactless payment and add an extra prompt, it’s crippling the value proposition of contactless and mobile. If POS companies implement the spec properly, this does not have to be so. Sadly, POS vendors didn’t do so, which is at best unfortunate and at worst lazy. We supported this at ViVOTech in 2008.”