Quick Chip to Help Speed Up EMV Transactions
OS systems and credit card machines that accept chip cards have been practically mandated since October 2015, yet adoption isn't nearly as prolific as it should be. As of March 2016, only 50% of businesses have implemented these new chip readers, despite card issuers shifting fraud liability to the business if this system isn't in place. Additionally, in locations that have implemented chip card machines, customers are often frustrated or want to swipe their chip cards through the magstripe reader. The primary complaint is that chip card transactions are painfully slow.
Unlike magnetic stripe cards, chip cards inserted into the reader must stay there until the transaction is complete. In some cases, customers wait 15 seconds or longer for the authorization to go through once the cashier has hit the appropriate payment button. This creates a lot of friction, slowing the checkout process, increasing wait time in lines, and deterring both consumers and business owners from utilizing the technology.
It would appear the EMV standard was focused entirely on security with no thought as to the needs of consumers and businesses. Card issuers were so intent on removing fraud liability from themselves that they didn't consider how transaction speed could affect businesses.
Thankfully Visa, Discover, MasterCard and American Express are now leading the charge to correct this gross oversight with a new EMV software update called Quick Chip (M/Chip Fast for MasterCard), which we'll be taking an in-depth look at in this article.
Common Problems with EMV
A typical chip card transaction won’t begin processing until your cashier is finished ringing up the sale. Customers that are accustomed to swiping a card while the cashier is ringing up items will find that they can insert their chip cards instead, but it won’t begin processing. When the cashier finishes and the card does begin to process, there's an average 15-second delay as both parties wait to find out whether or not the transaction will be successfully authorized.
This extra time is due to the encryption and decryption processes necessary with EMV cards. On top of this, not every POS machine is configured the same way. The processing power, software, and connection speeds that would only add an extra second or two to a magnetic strip transaction can extend a chip transaction by 10 seconds or more.
If the chip transaction fails, the customer is then forced to swipe the card and use its magnetic strip. By this time, a minute or more could have passed to process a transaction that should only take a few seconds, especially when you factor in time spent determining which payment method to use.
The primary issue is that the card must be left in the reader until the authorization is completed. This is a huge step back from older technology, which (depending on your POS equipment and card processor) allowed you to swipe the card and put it away while the transaction was finishing. Magstripe cards were quickly swiped and transaction authorizations happened within seconds.
What Is Quick Chip?
Quick Chip is nothing more than a software update, although it's an important one. It has been introduced by credit card companies as the next iteration of EMV technology.
With Quick Chip, one of the biggest changes is that the POS system retains the chip data when it requests an authorization, known as an Authorization Request Cryptogram, or ARQC. Once the ARQC is returned by the chip, the terminal will prompt the user to remove their card.
Because the chip data is retained, this process can occur at any point during the transaction. When done in the middle of the transaction, the authorization is for a provisional transaction amount of what has been scanned at that time. This amount will not display to the customer, nor will it affect the final transaction authorization.
Once the final transaction amount is known, the POS terminal will build the authorization request message. The authorization request will include the relevant transaction amount.
Are there any drawbacks to Quick Chip?
Since the card is removed prior to the authorization completing, the post-authorization card processing (including Issuer Authentication and Script Processing) isn't completed. These post-authorization steps were originally included as an extra layer of fraud detection where the chip embedded in the card is used to verify that the issuer response is indeed genuinely from the issuer.
So, essentially, a layer of fraud-prevention security that was initially implemented into the cards has been removed in order to facilitate faster transactions. Quick Chip transactions take only two to three seconds to complete, which greatly reduces customer friction at checkout, but does come at the expense of a little bit of security.
How Can It Be Implemented?
If you're interested in implementing this new update, the good news is you can use your preexisting equipment and card processor. However, there are a few limitations – at this time it's only available in the U.S., and you'll need to update your POS software for each individual credit card company. In addition, the system only works online, so if your terminal goes offline, you'll be unable to accept chip card payments.
Network recertification will be necessary when switching, and this will need to be completed by your card processor. Here are the links to learn more about each credit card company's Quick Chip update implementation:
American Express and Visa in particular have downloadable FAQs and specification guides explaining the technical details behind the switch. I'd highly recommend checking them out before making any decision to upgrade.
Although chip cards have been hailed as a more secure method of processing credit card transactions, adoption from both consumers and businesses has thus far been slow. While the digital encryption present in the card chips does make things more secure, it comes at a cost of speed.
The solution credit card companies have implemented is to update EMV POS terminals to allow chip cards to be used at any time during the transaction, pre-authorizing a temporary amount and retaining chip information to send final authorization much quicker at the end of the transaction.
Because this feature was initially overlooked, you'll need to update the software of your existing EMV equipment to utilize it for each individual credit card company. Once upgraded, transaction times are noticeably decreased, leading to faster checkouts and much less customer friction at checkout.
Brian Penny is a former Business Analyst and Operations Manager at Bank of America turned freelance writer focused on business and technology. His work appears in Huffington Post, Fast Company, and The Street.