As the calendar flips to November and visions of Black Friday dance in their heads, holiday shoppers using new, more secure chip credit and debit cards will be learning a new checkout procedure.
While the added security might be welcome, new cards could mean more frustration and slower checkout lines during the bustle of holiday shopping.
“The bricks-and-mortar retailers were already fighting an uphill battle against the e-commerce guys, so the last thing they need are more reasons for customers to be ticked off at them,” said Neil Stern, senior partner at Chicago-based McMillanDoolittle.
One Wal-Mart executive said he expects widespread checkout problems and “anarchy” during the holiday season because of confusion over how to use the new cards, which must be “dipped” into the machine and left there for several seconds, as opposed to a momentary swipe.
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While Wal-Mart was among the first to install and use new readers for chip cards and has become proficient over the past year, many merchants are just starting that transition and many consumers are baffled. Already, shoppers say they’ve witnessed: failed swipes, trying to follow the cashier’s instructions, fumbling with the card while trying to insert it correctly into the reader slot and remembering to remove the card at the end of the transaction.
“I’m a retail consultant, and I still put it in the wrong way and yank it out too soon,” Stern said. “It takes a long time for people to change habits.”
Credit and debit cards are likely to be a big deal for the holidays, with 76.4 percent of consumers saying cards are their primary payment method, split about equally between debit and credit cards, according to the latest National Retail Federation numbers from 2014. That compares with 21.6 percent paying cash, and 2.1 percent paying by personal check.
Oct. 1 was a soft deadline for banks to issue new credit and debit cards with microchips and for retailers to install readers that can use the new chip technology.
However, it turned out that the Oct. 1 date was more of a starting gun than a checkered flag in the race to add security to card payments. Far from all banks and retailers were ready, and many still aren’t. Most Americans don’t even have the new cards yet, as banks and credit unions have been slow to replace old ones.
Among U.S. merchants, just 27 percent were expected to be ready to accept chip cards by the deadline a month ago, according to management consultant The Strawhecker Group. By the end of the year, that’s expected to rise to 44 percent and not hit 90 percent until 2017, a Strawhecker survey showed.
The new cards, with both the new microchip visible on the front and the old black magnetic stripe on the back, are only safer when used with a new chip-card payment terminal. Chip cards make every transaction at a payment terminal and ATM unique. Old machines read the old-tech magnetic stripe, and are no safer with the new cards.
While it’s true that avid shoppers of big retailers will be skilled at the new card “dipping” checkout process — and checkout employees adept at helping customers — everything changes during the crush of holiday shopping.
“We haven’t seen it yet when it’s a stress point, and the holidays are a stress point,” Stern said.