EMV rules ruining Apple Pay

Trader Joe's and Whole Foods are the latest retailers to see the Apple Pay experience bedeviled by EMV rules

Apple Pay sticker
Ryan Faas

The Apple Pay payment experience has been simple and elegant. No network connection needed. No need to find an app, launch an app or log in. Just hold the phone at the end of the transaction, place your finger ever so briefly on the button for a split second, and a comforting "Done" icon says you're finished. At least that was true until last week, when several major chains made their official EMV move.

Trader Joe's and Whole Foods were among the major retailers that switched on EMV last week, which instantly made the quick Apple Pay experience decidedly less so. Instead of the shopper being done when Apple Pay confirmed all that it needed to confirm (which is pretty much the purchase amount and that your fingerprint matches the one you are supposed to have), a series of new messages pop out on the POS screen.

The first message displays — again — the amount of the purchase and asks that the shopper confirm acceptance of that amount. The problem is that the shopper already saw that amount before paying with Apple Pay. Ah, but EMV rules require confirmation of the amount, not mere knowledge of it. One could argue that the fact that the shopper offered a payment device after seeing the amount was a pretty good indication of acceptance.

The second message insists on a signature. Note that this shopper has already provided a finger scan — which is a few billion orders of magnitude more secure than a signature — so it's a rather pointless request.

Why is this all happening? The answer lies deep inside the details of how retail payment transactions work. The problem here is that although POS systems know that an NFC transaction is contactless, those systems often do not know much or even anything beyond that. The POS has no idea if a biometric authentication was completed, so it needs to ask for the signature. The POS has no idea whether the shopper was shown an amount — and certainly not whether the shopper really thought about it — so it must show it again and demand a confirmation.

Those explanations — which came from some POS insiders I interviewed on Wednesday — are nice to know, but quite irrelevant. The only relevant detail here is that Apple Pay, Android Pay, Samsung Pay and other secure NFC payment wallets are going to have their customer experiences seriously degraded because of EMV rules and visibility limits within today's payments systems.

It's entirely possible that future versions of NFC wallets may be able to do a better job at shouting at POS systems what they are and what they are doing, but that doesn't help shoppers (or retailers) today.

There is so much irony here. Once retailers started to understand the downsides of EMV — such as needing to leave the card inside the card reader for the whole transaction, a problem that both Visa and MasterCard are trying to slightly reduce — they looked admiringly at mobile payments and started to see the mobile wallet light.

How amusing is it that EMV rules — which pushed interest in mobile payments — are now degrading mobile payments.

Also, the idea that future versions of Google Pay or Apple Pay may communicate better is also irrelevant. Mobile payments are just starting to grow right now. This is when shoppers are trying them out and deciding if they are open to changing how they pay. By the way, Walmart Pay and Target Pay will sidestep these issues, since they will control the programming of their POS systems. You can safely bet that a Walmart POS will know darn well when it's communicating with Walmart Pay.

Retail gains so much by embracing mobile payments, which is the gateway to comprehensive CRM and loyalty, far more effective couponing and the ability to improve the shopping experience dozens of ways. Retailers can't allow blind adherence to EMV rules — written by people who presumably hadn't thought through all of the mobile implications — to destroy the mobile experience.

Retailers can insist on changes at the POS and processor levels. If you're not sure if the effort is worth it, go ask colleagues at Trader Joe's or Whole Foods. They are just starting to learn this lesson.

Copyright © 2016 IDG Communications, Inc.

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