The Real Lesson of EMV

The influence of fraud prevention on checkout and customer experience is often underestimated because the two priorities seem unrelated. But as EMV has shown, that’s not the case.

EMV adoption is progressing, but there’s still a long way to go, particularly as regards customer experience. In fact, the shift to EMV has highlighted all along the importance of a smooth, swift, and seamless customer experience, both online and offline. It’s something to which merchants are devoting increasing attention in a world where one-click payments are both popular and possible.

The official adoption date for retailers to make the move to EMV (microchip) cards was October 2015. That deadline came and went nearly a year ago, and many merchants still haven’t completed the shift. One of the reasons for this, at the start, was actually related to customer experience. Merchants feared disrupting their checkout process in October, the start of the busy and financially crucial holiday period.

This concern was justified, since from the beginning complaints flowed in about the length of time customers had to wait at checkout using the new “dipping” method of payment in place of the familiar old “swiping” mechanism. Standing for 20 seconds waiting for your card to be authorized isn’t much time in the scheme of things, but it can feel like an eternity to a shopper on the go.

This problem was so notable that Visa, MasterCard, and American Express have all recently announced moves designed to mitigate this unpleasant side effect of the microchip cards.

Voting With Virtual Feet

Customer experience matters. The smoother, the easier, the more pleasant it is, the more likely a customer is to complete a purchase, and the more likely they are to come back.

One solution to the EMV customer-experience challenges is to encourage customers to try out mobile payments in store—effectively taking the business omnichannel by default. Prioritizing speed and simplicity, this approach enables the merchant to design a streamlined experience in a way that is not possible with EMV technology. But it means that getting every detail right for both e-commerce and mobile checkout is even more essential than it used to be. Now, your mobile process might be the preferred payment method of your in-store customers, too.

Of course, providing an ideal customer experience through mobile apps or other options requires merchants to have all their payment ducks in a row. One that often falls between the cracks is fraud prevention. Because of its role in the checkout process, fraud prevention can be a chokehold on commerce.

The influence of fraud prevention on checkout and customer experience is often underestimated because the two priorities seem unrelated. But as EMV (created to cut down on card-present fraud) has shown, that’s not the case. And with card-present fraud harder to commit, and so less attractive to fraudsters, they’re turning to card-not-present channels instead.

EMV has proven itself valuable in the fight against card-present fraud. What’s less clear is how retailers can benefit from that advantage without compromising customer experience. This is a challenge in the physical world, but it’s an even greater challenge online.

Here, too, EMV has drawn attention to how crucial good customer experience is to both merchants, which understand the impact it has on sales, and customers, who vote with their virtual feet if they’re not satisfied. Microsoft reports that, while 66% of US consumers are willing to spend more money with a company that provides them with excellent customer service, 60% of consumers say they have not completed an intended purchase due to a poor customer-service experience.

One of the unintended but probably inevitable consequences of the EMV migration is the increase in online fraud. The Global Fraud Attack Index reported that online fraud attacks spiked 215% in 2015. EMV isn’t the only reason for this rise, but it’s a contributing factor. Fraudsters were discussing the move well in advance. In fact, with eyes firmly on their personal bottom lines, they were ahead of the card networks in adapting to the shift.

Unfortunately, when retailers know that online fraud is increasing, they tend to focus on blocking bad orders. While that’s understandable, it’s almost always an approach that punishes good customers for the actions of the bad ones, as merchants add extra demands for information and more delays into the checkout, confirmation, and fulfillment processes. That isn’t good for customers, and it isn’t good for sales, either.

Quick, Easy, Friction-Free

The solution is a radical shift in fraud-prevention attitude. Rather than being fraud-focused, the point of view should get in line with the rest of the company’s goals and become customer-centered instead.

The emphasis should be on providing a smooth, fast checkout with absolutely no delays and no demands for information beyond what is necessary to fulfil the purchase. A few years ago, this wouldn’t have been possible. But now a combination of machine learning and the guidance of fraud experts have made this form of fraud prevention a reality.

Full automation means decisions can be instant. Moreover, fraud prevention can now be dynamic. New technology and techniques, in concert with continual research into behavioral patterns, buying trends, payments norms, and the fraudster ecosystem, have opened the door to fraud prevention that is accurate, not risk-averse. That means good customers are never even aware that they were analyzed, and mistaken declines are dramatically reduced.

The transition to EMV may have been a bumpy one so far, both online and offline. But that doesn’t have to be a sign for the future. By embracing a customer-centered approach to fraud prevention, merchants can use the EMV experience as a catalyst to genuinely improve the buying experience, making it what the EMV shift has taught us customers really want: quick, easy, and friction-free.

—Bill Zielke is chief marketing officer at Forter Inc., San Francisco.