At Connors Group, we have measured the productivity of retail front end operations for years. Few universal process changes have had the direct impact that payment card chip readers – or the EMV standard have had. It impacts every piece of the customer transaction, causing significant delays and throughput considerations at the cash wrap.
During in-store process improvement observations, our engineers have directly recorded the following delays:
- Customer learning curve – A percentage of observed customers do not know or forget that they have a chip. The progression of events is:
- Swipe the card
- Delay as the system verifies
- System comes back unverified because the card needs to be inserted into the chip reader.
- Customer restarts the process with the card insert.
- Verification delay — Once the card is inserted, there is a verification process that takes longer than the swipe process to verify – due to the generation of a unique number used for only that transaction. This is what makes EMV more secure than traditional swipe technology. If that unique number falls into the wrong hands, it cannot be used any further.
- Customer action delay – After verification, the transaction will not move forward until the customer removes the card. A delay was typically observed here because there is no audible prompt to the customer that the card should be removed. There is a visual indicator, but most customers are focused elsewhere.
- Proximity delay – Customers typically remain busy moving bags to carts and migrate away from the card reading device while verification is in process. The position of the card reader is usually closer to the cashier, causing the customer to often walk back upstream to take the card from the reader, adding additional steps and time. Often times, the next customer may actually be moving forward and blocking the reader, which can cause even further delay.
Using round numbers and a few assumptions:
- A large retail client of ours has an annual non-exempt labor budget of approximately $150,000,000
- Percentage of store labor associated with transaction processing is approximately 20% or $30,000,000
- Estimated 2-minute transaction time per customer
- Add 10 seconds (conservatively) for card processing per transaction = 8.33% increase in transaction time = $2,500,00 labor cost impact
Of course it is unlikely that a retailer will fund this added cost, though it has a definite impact on the business. But add this inefficiency on top of other operational inefficiencies at the front end, and the queue increases, throughput reduces, more labor is required at peak times, etc. The costs and inefficiencies compound. Updating this new tender type in the labor model, and then finding ways to offset this with other process improvements becomes the best option, until faster chip reading mechanisms and software are available (or ApplePay, Google Wallet and Samsung Pay achieve widespread use).
With ever increasing costs of labor and regulations like this one that negatively impact processes, it has never been more important to ensure that your operations are running as efficiently as possible to maximize the value from every labor dollar spent.
Click here to contact us to learn more about how Connors Group can help optimize your EMV experience.