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One of the store managers at a Walmart store in Fairfax, Va., stood next to me as we watched a sales transaction fail—again.
This was the third time I’d tried to pay for a phone charger using a debit card equipped with an EMV chip, and for the third time it failed. Each time the message on the screen of the point of sale (POS) terminal said the same thing, “Cancelled.”
Next I slide my American Express card into the EMV slot on the terminal, and the sale went as it should have to complete the purchase of the charger I needed to replace the one that I’d left on a United Airlines 777 a few days before as I returned from Germany.
My EMV troubles actually started while on my Germany visit. A few days before my Walmart visit, I had to visit a T-Mobile store in Hannover, Germany, to replace a cell phone that had, in technical terms, “died.” My EMV-equipped MasterCard had not been able to complete the purchase, although the error message was different from the one I experienced in my local Walmart (perhaps because it was in German instead of English).
Again, I was able to use an alternate card. This turned out to be a harbinger of future behavior as the chip and PIN card the bank had told me so confidently would work in Europe didn’t actually work.
A second test in Germany came at the Frankfurt airport when my newly acquired EMV-equipped card failed in its critical mission of helping me obtain a particularly interesting single malt Scotch whiskey at the duty-free story. This time instead of saying it was canceled, the POS terminal just said the chip was invalid.
Fortunately, I’d taken several chip cards along on the trip to Hannover, so I had a backup that did work. But by the time I’d reached the Walmart to purchase the phone charger, I’d had occasion to try to use six different EMV-equipped cards, of which two failed to function as they should have. Both of the failed cards were of the chip and PIN variety.
Once I’d returned to the U.S., I called the banks about the problems with their respective cards, and in both cases the customer service representatives seemed unsurprised. One said that he’d experienced this problem before.
“This is what happens when the chip is defective,” he’d explained while ordering a replacement card for me. At the other bank, the response was similar when the agent said he’d send the replacement even before I’d finished describing the failure.
While I don’t have any numbers to prove it since the banks aren’t sharing information about failure rates or related problems, it was clear from the response of the support staff that my experience wasn’t rare or unusual.
During this time I heard from others via social media of similar problems at other stores. A friend of my daughter was having trouble using her chip card anywhere that accepted the card.
Poor Reliability Threatens to Slow EMV Card Adoption in U.S.
From her description, the mag stripe would work fine in stores that have POS terminals that don’t accept chips, but not at stores where chips are accepted, even if she tried to use the mag stripe.
While I realize that my experience and the experience of a few other people who I know aren’t representative of the population at large, this still seems to be a lot of defective cards.
I also realize that some of this is likely due to growing pains, and that card reliability will get better as the industry gets used to making these cards. But even so, for an industry that’s trying to drive adoption of a more secure means of payment, it would seem that making sure the payment cards work reliably right from the start would be a priority.
Of course, I should also mention that I know I was tempting fate by heading to Walmart with a pocket full of EMV-equipped cards, since the more cards I have, the greater chance there is that one will be defective. But even so, isn’t a failure rate of one-third pretty high?
If the situation really is that one-third of all cards are defective, this doesn’t bode well for a nationwide move to cards with EMV chips as a way to improve credit card security. But there’s more to it than just customers having to use their mag stripes. This has serious implications for businesses that accept cards.
By issuing payment cards that fail repeatedly, some shoppers will start to distrust them so much that they may stop using them and will persist in using the highly insecure mag stripe cards for as long as they can. Or they will gravitate to retailers who have POS systems in place that can reliably process EMV card transactions.
But what’s worse will be the potential problems when the liability shift comes on Oct.1, 2015, and accepting a card with a mag stripe carries more financial risks. Would you as a merchant accept a payment card that puts the liability on you for fraudulent sales transactions?
Right now it’s unclear exactly what will happen when the EMV chip on a card doesn’t work. Will a merchant assume that the card is bogus? Will they let the shopper use the mag stripe, knowing that they as the merchant are liable for any counterfeit use? I don’t know the answer to these questions and, as far as I can tell, neither does anyone else.
Unfortunately, for secure payment cards to be accepted by both merchants and buyers, they must prove their reliability. Buyers must be confident that their purchases will go through. The merchants, for their part, need to be confident that the cards are good and that they won’t be saddled with thousands of dollars in debt or worse for accepting a card that turns out to be counterfeit.
The rollout of secure payment cards has gone well everywhere else in the world so far. To be accepted in the U.S., security and reliability are critical. Without those, acceptance in the U.S. may be a very long process indeed.