Hockey legend Wayne Gretzky is famous for saying that he never skated to where the puck was, but instead to where it was going next.

As we mentioned in a previous blog post, if EMV chip and pin cards is where the puck is now, then mobile payments is where it is going next.

The new POS terminals that are required to read the new chip and pin credit cards are also equipped with the NFC (Near Field Communications) technology which allow them to communicate with smart phones using mobile payment apps. Here’s why mobile payments via smart phone apps makes more sense long-term than the continued use of the new chip and pin cards.

1. Mobile Wallet Apps Cost Less To Create and Deploy

For starters, chip and pin cards are costly to produce. Depending on who you talk to, that cost can be anywhere between $5 to $12 per card. So let’s say the average cost is $8.00 per card. When you figure that VISA was targeting to have 525 million cards in circulation within the United States by the end of 2015, that’s a total cost of $4.2 billion. Now add in the cost for the other major credit card providers like MasterCard and AMEX. Wow … that’s a lot of nickels! And, that cost needs to be incurred over and over again as cards expire and need replacing.

Compare this to the cost of using a mobile wallet app like Apple Pay, Android Pay or Samsung Pay. The cost to produce the app is small change compare to the billions needed to produce chip and pin credit cards. As an added bonus, apps can be easily and cost-effectively updated as required, and quickly downloaded to smart phones to make sure all users have the latest and greatest features and benefits at their finger tips.

2. Mobile Wallet Apps Provide a Better Customer Experience

Retailers today are constantly striving to provide ways of improving their customer experience. The experience is actually better for retail customers using a mobile app on their smart phone than it is using a new chip and pin card. For example, credit cards are bulky and the more of them you carry the fatter your wallet gets. By contrast, adding more credit cards to your smart phone doesn’t make your phone any less portable.

It is also inevitable that chip and pin users will sometimes have trouble using their cards. They might forget their PIN, make a mistake keying in their PIN and have to try again, or remove the card before the transaction is completed. Compare this to the ease of simply waiving their phone (which is always at the ready) close to the terminal in order to complete their transaction.

3. Mobile Wallet Apps Provide Better Security

When you think about the security value of EMV, it does nothing more than authenticate that the card belongs to the cardholder who presents it at POS. And, that only works if the PIN is required (signatures will still be acceptable for many cardholders in the United States). A smart phone, on the other hand, has built in security elements, either hardware or software, that allow only the owner of the phone to use the device. As an added benefit, it it can also provide geo-location information and perform other checks as required by the mobile wallet provider for validation, such as a PIN or a thumb print. So mobile wallet apps actually provide a higher level of security than chip and pin cards.

Furthermore, unless tokenization is employed along with EMV integration by the retailer, the customer’s credit card number / Personal Account Number (PAN) is still transmitted openly across the payment network, making it possible for cyber criminals to intercept. However, mobile wallet apps can automatically supply the tokenization required to remove the PAN from the transaction, thereby providing a huge security advantage.

So, it makes sense if you are planning to implement an EMV solution soon, that you also take advantage of implementing a mobile wallet solution like Apple Pay or Samsung Pay or Android Pay at the same time.

This is one of the lessons learned that we outline in our 2016 white paper entitled, “7 Lessons Learned From 25 EMV Implementations”. We invite you to download a complimentary copy by clicking on the graphic below.

EMV White Paper Download