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You’re Not Getting Faster Chip Cards for the Holidays

Nov. 3, 2016
Credit Card Basics, Credit Cards
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Major credit card networks have introduced new technology to speed in-store checkout transactions with EMV chip cards, but it won’t help holiday shoppers much this year.

“Quick-chip” software upgrades to merchant card terminals aren’t widespread enough yet to speed up checkout lines during the Black Friday to New Year’s shopping season, experts say.

The 2016 holiday shopping season will be the first in which a majority of U.S. credit cards contain EMV chips. The chips have been praised for their anti-counterfeiting security but criticized for slowing down transactions.

Visa, the world’s largest payment processing network, said in April that with quick-chip technology, a card would need to stay in the reader for just two seconds, instead of the 10 to 15 seconds that shoppers commonly experience with chip cards. Other networks followed with similar announcements:

Payment networkQuick chip nameAnnounced
VisaVisa Quick Chip for EMVApril 19, 2016
MasterCardM/Chip FastApril 27, 2016
American ExpressAmex Quick ChipJune 15, 2016
DiscoverDiscover Quick ChipJune 23, 2016

As of November, Visa has cited only one retailer as adopting quick-chip technology: a relatively small supermarket chain that implemented it near San Francisco and Portland, Ore.

A few other retailers are close to upgrading to quick chip in time for the holiday season, but shoppers will find it far from common, says Stephanie Ericksen, vice president of risk and authentication products at Visa. Some retailers are waiting until after the holiday sales rush to install quick chip, she says.

“It’s still pretty early days,” Ericksen says. “There are other vendors that we’re talking to that have been quietly rolling out different merchants across the country. … But from a direct impact of quick chip on this holiday season, it’s probably going to be at a few merchant locations.”

» MORE: The ABCs of EMV

How chips get quicker

In response to gripes about slow checkout times, each of the four major card networks — Visa, MasterCard, American Express and Discover — released quick-chip software upgrades for retail payment terminals. The upgrades promised to make the new credit card “dip” process at checkout as quick as the old magnetic-stripe “swipe” procedure but maintain all the added security the new cards provide.

A single software upgrade at a terminal offers quick-chip functionality for all the card networks, Ericksen says.

A big contributor to the speed boost is that quick chip allows a customer to “pre-dip,” or insert and remove a credit or debit card before the cashier scans all the items and rings up the transaction total.

That allows checkout-line multitasking. At the supermarket, it frees a customer to help bag groceries. At the coffee shop, it allows the customer to dip and remove the card and then step away from the register and join the drink pickup line. And it allows time to put away the credit card, allowing a quicker exit.

Early results suggest the process makes lines 13% faster, according to Visa.

The quick-chip pre-dip can also help with the perceived speed of lines. The customer isn’t forced to dip the card after everything is rung up and then stare at the machine until it finally approves the transaction.

Why retailers aren’t upgrading quicker

Like the rollout of chip cards themselves, implementing quick chip will be a process. This year, it’s generally not a priority for retailers, 86% of which will be EMV-ready by the end of the year but few of which will be adopting quick chip, according to the National Retail Federation.

“I don’t think the presence or absence of it is likely to have a  serious impact on the holiday season either way,” says J. Craig Shearman, spokesman for the federation. He says the group doesn’t maintain a list of retailers that have implemented quick chip.

How quickly merchants adopt quick chip depends not only on their interest but also on whether their supplier of checkout terminals and payment software offers the upgrade. The software isn’t a major change, but those suppliers must make it available, which can be as simple as an overnight download to the terminals, Ericksen says.

But many merchants hesitate to implement anything new as the holiday shopping season nears, and some still are trying to transition from swipe to dip terminals.

“A lot of merchants didn’t have the time from when quick chip was made available and their software vendors started developing it to really deploy it,” Ericksen says. “Some want to test it out in certain stores before they roll it out nationwide, for example. It might be that quick chip gets more of a groundswell after the holidays.”

» MORE: NerdWallet’s best credit cards for Black Friday and the holidays

Faster checkout lines anyway?

Even with the sluggish rollout of quick chip, checkout lines might be quicker this shopping season for a more human reason. Customers and cashiers are better at the new card-dipping procedure after spending more than a year getting used to new cards and terminals.

That’s different from last year, when Oct. 1, 2015, marked a soft deadline for banks and merchants to switch to chip cards and EMV-compliant terminals.

“The big stories that you heard about EMV slowing down checkout lines came from a year ago when it was brand new and both the sales clerks and the customers were unfamiliar with the technology and everybody was learning it at the same time — and there were still some technical glitches with the systems,” Shearman says.

Another reason some checkout transaction times have decreased is that large retailers have been tweaking their payment systems to speed transactions. In fact, some are satisfied with current speeds and might choose to skip quick chip, Ericksen says.

Checkout heartburn exaggerated?

A NerdWallet survey in October found that news coverage and social media frustration about slow checkout speeds might be overblown, with nearly 4 in 5 Americans viewing chip cards positively.

It’s not a primary concern of retailers either, Shearman says.

“The chip cards certainly take somewhat longer to process than swiping the card, but it’s debatable how much impact that has on how fast lines move in retail sales,” he says. Some customers are ready to be efficient, with their credit cards at the ready, while others are fumbling through a purse or wallet while making conversation with the cashier, he says. “Whether the credit card transaction takes five seconds or 15 seconds, it’s not necessarily the largest time factor to take into consideration.”

Quick chip eventually is likely to be widespread enough to address one of the problems — real or perceived — of switching to chip cards. You’re just unlikely to encounter it this holiday shopping season.

Gregory Karp is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @spendingsmart