By: Tim Taylor, Vice President; Steven Welling, Project Director; Jessica Tomlinson, Research Analyst
There have been a number of articles over the past several months related to the rollout of chip-enabled credit cards and how both retailers and consumers are reacting to them.
To better understand cardholder perceptions of this new technology, our Morpace Financial Services team posed questions to more than 1,000 U.S. consumers about their experiences with chip-enabled cards. Our results showed that customer perceptions are mixed.
Overall, more than one-third (37%) of cardholders prefer the EMV chip-enabled cards while another third (31%) prefer to swipe their credit/debit cards in the traditional manner. The remaining third (32%) stated they had no preference as long as their card works and is safe.
Interestingly, younger cardholders are more likely to prefer the traditional card (43% vs. 21%), while older cardholders are more likely to prefer the chip-enabled cards (48% vs. 30%). This finding took us by surprise given younger generation’s tendency to adopt new technologies quicker than older generations. As a result, we dove deeper into the data to see what is causing younger cardholders to resist this change.
We found that cardholders who report a preference for the traditional cards shared the following sentiments:
- Do not feel the time it takes to pay using a chip reader is satisfactory
- Are not always sure when to use the chip reader when making a purchase
- Do not understand why the traditional cards are being replaced
- Do not believe chip-enabled cards are more secure
- Do not feel the card provider sent information about the chip-enabled card
This data led us to believe that there are two major barriers to chip card satisfaction among those who prefer to swipe their credit/debit cards in the traditional manner. First, cardholders believe that it takes longer to complete a purchase when using a chip reader. Millennials are well-known for their fast-paced lifestyle so it is unsurprising that transaction speed is a top mentioned reason for disliking chip-enabled cards.
However, the data suggests there is more to the story than speed alone. A lack of understanding surrounding this new technology also acts as a major barrier. Cardholders who prefer the chip-enabled cards are more likely to understand why they are receiving the new cards and the added security benefits of the chips, and therefore appear to be more adoptive of the technology.
So what role should card providers play in improving customer perceptions of chip-enabled cards?
First, they will want to find additional ways to communicate the benefits of chip-enhanced cards–especially to younger cardholders. These communications should serve to educate cardholders on why chip-enabled cards are being adopted as well as how and when to use the chip readers at retail locations.
To appeal to the younger crowd, card providers should consider providing anecdotal examples in a storytelling approach of how these cards enhance security and reduce the number of data breaches or by using infographics in communications with easy-to-follow facts and figures.
Secondly, card providers and retailers must work together to address the perception of longer transaction times. It will be important that card providers set appropriate expectations regarding the time it may take to pay using a card reader in order to mitigate dissatisfaction.
Recently published articles by national media outlets anecdotally support these findings, both in terms of perceived longer transaction times and the proven security benefits. Even in today’s digital world, we feel ongoing communication and education will be a key factor in making this ongoing transition more widely accepted.