Credit Card Confusion at the Cashier?

You’re standing in line at the supermarket while a customer ahead of you is grappling with how to pay for her week’s worth of groceries. For a moment, credit card in hand, she stares at the card reader, but it offers no clues—should she swipe or dip? She swipes her credit card through the reader and nothing happens.

“Insert it,” says the cashier. The shopper inserts the card and yanks it out. “Insert it again and leave it there,” says the cashier.

This time, the card is authorized and the transaction goes through. Relieved, she takes her card and after figuring out whether she needs to sign a piece of paper, sign on the screen, or maybe not sign at all, she leaves. The whole process takes perhaps 30 seconds to complete—about 15 times longer than just a year ago, when the only choice was to swipe.

The confusion started over the past year as credit card issuers began updating their customers' magnetic-stripe-only card to those that have both the stripe and what's known as an EMV chip. (EMV stands for the three companies that came up with the standard: Europay, MasterCard, and Visa.) By storing personal data on a chip, instead of a magnetic stripe, it’s harder for thieves to steal the data and replicate a credit card.

Despite the improved security, according to a study by Ingenico Group, the world's largest maker of payment terminals, more than half of 1,000 consumers surveyed said they preferred swiping because it was faster.

Alex Johnson, Director of Credit Advisory Service at Mercator Advisory Group, says it takes up to two seconds to swipe and authorize a credit card but as long as 10 to 12 seconds to dip the card and wait for the authorization. And the confusion over which option to choose can add another 10 to 20 seconds. 

Checkouts May Take Longer

Visa and MasterCard are trying to speed up the time it takes to authorize a chip card. The new Visa Quick Chip software, for example, promises to reduce the time it takes to dip to just 1 to 2 seconds—about the same as a swipe. Walmart says it has optimized its payment system to significantly shorten transaction time.

But while the technology improves, the confusion may only get worse. Starting in 2017, chip cards will start coming with personal identification numbers—PINs—that will replace signatures, according to James Wester, research director of worldwide payment strategies at IDC Financial Insights. Wester says that while PINs, which are widely used in Europe, provide greater security than signatures, there will be a learning curve as consumers begin to use them.

Looking further ahead to some time between 2017 and 2020, shoppers will have another payment option, says Randy Vanderhoof, executive director of the Smart Card Alliance, a trade association. Instead of dipping or swiping, they’ll be able to tap or wave their cards over the card reader. While the technology, known as Near Field Communications, exists today, few cards incorporate it. But that will likely change as merchants upgrade their card readers to work with digital wallets such as Apple Pay and Google Wallet.

If swiping, dipping, tapping, and waving is too much to think about, there’s one tried-and-true option that’s still pretty quick and accepted almost everywhere. Pay with cash.

How to Pay With a Credit Card

Swipe: If you have a card with a magnetic stripe and no chip, you’ll have to swipe. Just slide the card through the reader so it can read the data stored on the stripe. Note that even if you have a chip, you may still have to swipe if the card reader hasn’t been set up to read your chip. Total time: About 1 to 2 seconds.

Dip: Just insert your card into the slot at the bottom of the reader. The key, here, is to leave the card inserted until you are notified by the reader that you can remove it. The reader retrieves encrypted data off the chip to authorize the payment. Total time currently: About 10-12 seconds.

Tap: While few cards let you pay by tapping or waving today, cards with Near Field Communications technology are expected to become more common next year. To use these cards, you simply tap the card on the card reader, or wave the card in front of it, to authorize a payment. While this is expected to be significantly faster than swiping or dipping, the extra payment option will likely lead to more confusion at the cashier. 

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