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Trend Watch: Instant EMV vs NFC

The future of POS transaction technology is bright.

June 27, 2017

EMV stands for Europay, MasterCard and Visa and is a global standard for credit cards using computer chips to authenticate and secure transactions. Whether you know them as smart cards or chip cards, EMVs store their data on integrated circuits and provide instant issuance.

NFC (near-field communications) is a contactless payment method that allows a smartphone to communicate with a payment reader when they are close to each other. The most recognized form of NFC is Apple Pay. To complete a transaction using Apple Pay, you hold your iPhone (or Apple Watch) up to an NFC reader. In just inches and seconds, the secure transaction is complete.

Why the move from magnetic strips?

Visa and MasterCard have issued a deadline to all card acceptors to replace magnetic strip card readers with Instant EMV technology by 2020 or they will face increased liability in the event of fraud. The move has been initiated because Instant EMV eliminates fraud at the point of sale. In the US alone, we see $8 billion in credit card fraud annually.

Both Instant EMV and NFC have pros and cons

EMV Pros

  • Security
    • EMV has proven to be one of the strongest technologies for fraud prevention. The chip authenticates the card directly to the POS terminal and the terminal to the card, often requiring a signature or PIN.
  • Broad consumer support
  • Liability shift
    • As of the 2020 deadline, liability shifts responsibility for counterfeit card fraud from issuers to acquirers, and ultimately, merchants, if EMV is not offered.
  • Backwards Compatible
    • Instant EMV can still accept the same magnetic swipe cards prevalent in the US for decades until EMV cards fully replace them.
  • Consumer marketing opportunities
    • Instant EMV cards can associate reward perks or promotions directly at POS.

EMV Cons

  • The cost of upgrading
    • Because Instant EMV hardware is not yet at the commodity level as the old magnetic strip readers, there is an investment to have them installed. This is expected to evolve as they grow in prevalence.
  • Consumer confusion
    • Change in checkout procedures and operations for your customers can cause some confusion. Be sure to choose the right Instant EMV readers for your business’ transactions and invest in consumer education.

 

Read more about EMV cards in the blog post, “What is an EMV Card?

 

NFC Pros

  • Security
    • Not only does the retailer no longer have physical access to an individual credit card, each NFC transaction is imprinted with a unique digital signature, making it difficult to intercept. Additionally, in the case of Apple Pay, your fingerprint is confirmed with your iPhone before the transaction is complete.
  • Convenience
  • Improved POS experience
    • NFC can speed up with checkout process making lines move faster.
  • Real-time
    • Customer loyalty programs can be immediately updated and communicated with the consumer on their smartphone.

 

NFC Cons

  • Slow conversion
    • Despite the growing popularity of Apple Pay, or the Android equivalent, Google Wallet, merchants have been slow to make it available.
  • Expensive
    • For a business to start excepting NFC payments, an investment of both money and time is needed to install the hardware and educate employees on its use. Starbucks, for example, invested $25 million in 2011 alone to kick off NFC in its chain.

Conclusion: EMV wins, but watch this space for NFC

At this time, only EMV will be considered compliant for the 2020 deadline, but as the market modernizes NFC may grow in unpredictable ways.

Traditional POS configurations will see new thinking in the years to come as other forms of payments – such as NFC – become more trusted and used. Imagine a future where there is no line to check out and pay. Where transactions happen securely behind the scenes and the customer’s interaction with staff focuses on needs and wants while the rest happens digitally.

This future state could see NFC revolutionize POS beyond what bar codes did in the ‘70s, ‘80s and ‘90s, changing the way we shop for all time to come.

 

Choose BLM Technologies as your Instant EMV hardware partner

For more than 40 years, BLM Technologies has been a leader in IT hardware and service solutions. We offer a full range of Instant EMV hardware options covering the most requested technology to financial, hospitality, retail, education, healthcare and government industries. Recognized as the largest third-party depot repair provider in the US, we’ve got you covered.

Our exceptional repair and maintenance services mean qualified and certified technical experts are on hand and on site representing your good name to your clients. Saving them from the frustrations of malfunctions and making you look good.

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