2016 was a big year in payments. From evolving payment methods to the continued focus on security, it was a busy year for everyone involved in the industry. Of course, no matter how much happened, one story dominated the headlines: the switch to EMV. The chip card changeover may have started in 2015, but it hardly matters—in payments, 2016 was the year of chip cards.
EMV wasn’t the only story. Plenty happened in payments this year, and we’ve highlighted the biggest topics in this look back at 2016. But we’ll start with the biggest one.
1. The ongoing saga of EMV chip cards
. How can one summarize the year in chip cards? We’re now 14 months past the switchover date, and transactions time remain slow, not to mention the “insert-card-oh-sorry-I-swipe?-nope-I-was-right-it’s-insert” dance people still do when they get to the register. While transactions times have been slowly improving since the abysmal speeds of the October 2015 debut, many processors are still very noticeably slower than magstripe.
It goes way beyond slow times, though—it’s starting to affect the relationship retailers have with their customers. At the one-year anniversary, we conducted a survey of credit card users, asking them about various aspects of the chip card experience. The numbers were not pretty: many said that they’d consider completely abandoning a transaction if it took too long, and anger and frustration toward the whole process was only continuing to swell
. We did see, in our Black Friday data, that more consumers than ever are using chip cards in more places
, so it looks as if the “chip or no chip” dilemma may come to an end at some point. But the speeds still simply aren’t up to par at many terminals.
2. Security continued maturing, in both technology and protocols.
Security was the driving force behind EMV (more on that later), but it was behind more than that, too. Whether it was PCI certifications
or the growth of encryption technology, payments continued to work harder at fraud and breach prevention. The breaches of years past made plenty of people very aware of the risks involved in payments—some of us heard the list of breached major merchants so often we can probably recite it from memory. More and more, processors and merchants alike are working together to do everything they can to stop them.
3. New payments remain on the rise.
From the viral video of Amazon GO to Facebook’s In-App Payments
, there were plenty of reminders that payments will never stop evolving. Mobile payments, for their part, have been the “future” since Apple Wallet debuted (and even longer), yet they still haven’t seemed to fully arrive. The story of mobile payments in 2016 depends on your perspective, of course. For instance, our Black Friday Payments Index saw mobile pay use double—but it’s still a miniscule percentage of all transactions. It’s not the mobile pay era just yet, but there’s still plenty of time.
4. Consumers have changed. And they’ll change again.
After 2016, you know how important omnichannel is. Omnichannel is here, and it’s the future (until the next big change comes along).
Consumer demand has shifted constantly over the past decade, and omnichannel is now the best mode for appealing to today’s consumers. You need to be everywhere all the time, as Bloomingdale’s has found—Yahoo! Finance notes that Bloomingdales isn’t losing customers, but their customers are buying from them in different places and many are migrating online
Yet companies must remember to be adaptable, too. After all, few would have thought of omnichannel as the “future” five years ago—plenty of people offered dire predictions of the end of brick-and-mortar. Now, though, brick-and-mortar focused days like Small Business Saturday
have shown that consumer demand is not nearly as predictable as we all once thought. Omnichannel will certainly be as crucial in the coming year as it was in the last. But where it goes from there, we’ll see.
5. Fraud isn’t over (but EMV probably helped).
As we noted earlier, the promise of EMV was that it would create a more secure credit card environment in a world dominated by headlines of breaches. Early in the year, there were murmurs that EMV had created a new avenue for fraud, but these turned out to be false
. The final numbers are not yet in, but EMV seems to have helped. And the hope is that with more and more businesses using EMV, fraud will shrink in the coming years.