SAN FRANCISCO—Here’s a twist: Millennials are the only demographic that prefers old-fashioned mag stripe over EMV, notes one expert who is suggesting credit unions take steps to ensure young members keep using the credit union’s new chip cards.
A new report from NerdWallet shows that 43% of Americans favor chip over mag stripe due to the increased security. But breaking the data down by demographics reveals that only 31% of Millennials prefer EMV, while 36% prefer mag stripe.
“After hearing about all the data breaches in the last few years, Americans prefer EMV,” said Sean McQuay, credit and banking expert for NerdWallet. “They have been made aware of the need for better data protection. And if they don’t understand anything else about EMV, they do get that the chip card is safer to use.”
Despite knowing EMV means greater security, Millennials have a difficult time getting past the additional time it takes to check out in stores with EMV, compared to mag stripe, said McQuay.
“I think the rub is that Millennials are a tech generation, and they are used to technology always improving things—like Uber, it makes everything better,” said McQuay. “Strangely, EMV is two steps forward and one step backward. Even though it is an improvement in security, it takes just a little bit longer to check out, and that is obviously a point of frustration with Millennials.”
Only Few Seconds Longer
As many experts have pointed out, an EMV transaction takes only a few seconds longer than mag stripe. But it’s how those seconds pass, said McQuay, that troubles some consumers.
“How the seconds pass at POS with EMV is very different from how they pass when you swipe your mag-stripe card,” said McQuay. “With mag stripe you swipe, take a few seconds to put your card back in your wallet, maybe look at the magazine rack . . . But with EMV your card is stuck in the terminal and it’s a very awkward social interaction. You are sort of stuck looking at the cashier—you can’t really look away as your card is in the terminal. You feel as if you are tied to the machine, which makes the transaction seem much longer.”
More than just Millennials have complained about the new checkout experience, and measures have been taken by the payments networks and card makers to address the situation.
Quick chip and M/Chip were created by Visa and MasterCard, respectively, to improve EMV transactions. Instead of keeping the card inserted in the POS terminal until the transaction is complete, cardholders will insert and quickly remove the card, similar to swiping in the old mag-stripe environment. The solutions are currently being tested in selected markets in advance of their nationwide rollout.
McQuay thinks that Apple Pay and other NFC-enabled digital wallets will see more use from Millennials as they gravitate toward faster tap-and-go payments.
McQuay sees slower EMV transactions also driving demand for dual interface chip cards, where consumers can either tap-and-go or dip their plastic.
Good Solution
As CUToday.info reported, these NFC-enabled cards are being ordered by issuers in greater numbers in the year since the October 2015 EMV liability shift took place.
McQuay said the cards are a good solution for Millennials who are dissatisfied with chip cards, and predicts that contactless plastic will become more appealing in the next year or two as many more merchants install NFC-enabled POS devices.
“It’s a good marketing play,” said McQuay. “It’s an easy PR win for issuers. Issue contactless cards and let members know you are giving them greater security with EMV but also reducing their checkout time.”