Fintech Payments UX

The diversity of payments in the US

The diversity of payments in the US. Main photo: Denis Rozhnovsky, Shutterstock.com

Zilvinas Bareisis reflects on his payment experiences while visiting the US recently, including EMV, mobile and cash-only.

As a payments geek, I’m always curious about payment experiences in various parts of the world. In the last month, I had a couple of trips to the US (New York and New Orleans) and they just reminded me how diverse the US payments environment is – and I’m only talking about the physical POS; I haven’t really ordered anything online or in-app while in the US.

First, a few observations around EMV. As I live in the UK, all my cards are Chip and PIN, and the US market has been migrating to EMV for a while now. Of course, the migration can’t happen overnight – some merchants have already upgraded their terminals, but many still haven’t. Also, there’s no mandate in the US to use offline PIN, so ‘chip and signature’ EMV cards are common among US issuers. As an end-user, I experienced a full gamut of payment scenarios:

  • The majority of merchants would simply take my card, swipe it and give it back to me straight away. Not one of them checked if my card is even signed, let alone if the signatures matched.
  • On a few occasions, I was asked to insert the card into an EMV terminal and enter my PIN. And then we waited. And waited more. And a bit more. I knew EMV transactions take longer in the US, but I didn’t realise just how much longer. Not surprisingly, the networks had to do something about it and have announced software updates (eg Visa’s Quick Chip for EMV and MasterCard’s M/Chip Fast) to speed up transaction processing.
  • Not a single eating establishment I visited had a handheld EMV terminal. All of them just took my card and disappeared for a while in the ‘back of the room’ – a practice that sends shivers down the spine for most Europeans!
  • On at least one occasion, I entered the PIN, yet the salesperson was still looking for a signature box on the receipt and wanted me to sign it. I had to explain that PIN replaces the need for a signature. Of course, these things will disappear once merchants learn more about EMV cards.

A number of merchants in New Orleans had a Clover POS station. It looked really sleek on retailer desks, and transactions seemed fast and easy. I asked a couple of them what they thought of it, and they all said they were very happy with the device, its looks and ease of use. (As a side note, American Express cards seem to be far more widely accepted in the US. In Europe, I got into a habit to double-check at new places if they take Amex, while in the US, this seems unnecessary.)

Of course, it’s no longer just cards. US was the first market in the world to see the launch of Apple Pay, Android Pay and a number of other digital wallets. The challenge for many of these wallets is the lack of places where they can be used, as contactless terminals remain relatively rare, albeit growing. However, when they can be used, they work very well. The biggest advantage that I can see as a UK user of Apple Pay is that, in the US, I can use Apple Pay for any transaction, whatever the amount (as long as my issuer is happy to authorise it). I had no problem paying for a taxi ride from New York’s JFK Airport to downtown Manhattan by Apple Pay ($70+ fare with the tip). In the UK, Apple Pay and Android Pay (just launched this week) are subject to the same contactless card transaction limits and can only be used for transactions of £30 or less. Again, we expect this to change as contactless terminals are upgraded.

I was also intrigued to see a PayPal acceptance badge at one of the POS terminals I came across. I asked the cashier if it was a popular payment method among customers. The cashier said that it seemed new to him, and that he personally had yet to see anyone try to use it. I must admit, I’m a fan of the PayPal wallet and use it whenever I can, but nearly all of my transactions are online or via a mobile app. This time, I only noticed the PayPal sign after I already started paying by card, so can’t quite report on the actual experience.

Cash-only in New Orleans. Photo by Zilvinas BareisisYet, cash remains hard to beat, with many places only accepting cash. I refrained from visiting any of the dodgier establishments on New Orleans’ Bourbon Street, but I didn’t even have to in order to experience the power of cash. Most sellers in the French Market clearly prefer cash; getting into (jazz) Preservation Hall is ‘cash only’ at the door, and while not every place has the sign as artistic as the one in the picture you see here, ‘cash only, one drink minimum’ was a common mantra of many bars with live music.

Clearly, there’s a lot of payments innovation in the US. Various wallets and innovations in POS contribute to the diversity of end-user experiences. Such diversity is a good thing, and if anything, it will only increase, as customers will have increasingly more ways to pay. As the migration to EMV continues, the undesirable kind of diversity should reduce as well.

– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Main photo: Denis Rozhnovsky, Shutterstock.com

About the author

Zilvinas Bareisis

Zilvinas Bareisis is a senior analyst with Celent's Banking practice and is based in the firm's London office. His research focus is on retail payments, including cards, ecommerce, and mobile payments.

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