These days, it doesn’t feel all that futuristic to simply dip or tap a credit card instead of swiping it, or to hover your phone over a payment terminal at the grocery store. But if you rewind to about a decade ago in the United States, before the era of EMV chips and contactless payment technology, you’d find a world where such features seemed novel, puzzling, and even a bit risky.
Since 2015, credit card technology has transformed tremendously, and consumers have shown remarkable agility in adapting to it. Seth Perlman, global head of product at i2c Inc., a leading provider of banking and payment solutions, observed, “American consumers have adapted remarkably well to these innovations,” though he noted that the journey wasn’t entirely without its bumps.
Interestingly, many anticipated challenges never actually came to pass for cardholders and now, in hindsight, seem quite overblown.
One of the notable advancements in U.S. card technology over the past decade has been the widespread adoption of EMV-enabled cards, spearheaded by the technology developed by Europay, Mastercard, and Visa. These EMV chip cards, designed to combat credit card fraud, house a microprocessor that creates encrypted data and necessitates a card being inserted, or “dipped,” into a reader—replacing the older, less secure swiping method used on magnetic stripes.
While EMV technology had long been familiar in regions like Europe, it wasn’t until around 2015 that it started gaining traction in the U.S. At that time, there was a flurry of concern: Would consumers know how to handle this at checkout? We even saw flowcharts crafted to guide the way. But as it turned out, consumers took to dipping with ease. By 2022, data from EMVCo showed that 69% of all issued cards were EMV-enabled and 93% of all physical card transactions globally employed the technology.
“As point-of-sale systems upgraded and issuers fine-tuned the tech, consumers quickly embraced the improved security and peace of mind EMV offers,” Perlman added.
A major factor that drove the switch to EMV technology was the “liability shift,” which transferred the burden of card fraud from issuers to the party not supporting EMV. Often, this meant merchants needed to upgrade to protect themselves, ensuring greater adoption of the technology.
In the early days of EMV in the U.S., a common suggestion was for travelers to carry a “chip-and-PIN” card overseas for verification conveniences. In the U.S., after inserting or tapping their card, customers would usually sign their name. But in Europe, it was common to enter a PIN. This difference was awkward for U.S. cardholders who lacked a PIN, especially at places like automated kiosks. This concern was significant enough that some card issuers advertised “chip-and-PIN” as a perk for travel cards.
However, as technology advanced, the acceptance of both “chip-and-signature” and chip-and-PIN cards has become widespread internationally. Today, even unattended terminals abroad typically process transactions without demanding a card verification method.
It’s still wise to carry a backup card when traveling internationally to prepare for unexpected losses or instances where your primary card, such as American Express or Discover, might not be accepted. This precaution remains relevant.
And how about paying with phones? A few years back, mobile wallets, virtual card numbers, and buy-now-pay-later apps were not mainstream. Fast forward, and their rise has been rapid, spurred in part by the COVID-19 pandemic’s push for contactless payments. In fact, a recent survey by McKinsey & Co. revealed that 92% of U.S. consumers reported making some type of digital payment in the past year.
While consumers generally adopted these technologies quickly, businesses have lagged behind. A 2024 study by J.D. Power showed only 57% of small U.S. businesses offered digital wallet payment options, compared to the 94% that accepted physical cards.
Initially, consumers had their doubts. Is paying with a phone really secure? Could it mean missing out on credit card rewards? Turns out, mobile wallet payments are quite secure, thanks to tokenization, which protects real credit card numbers by sending encrypted data for each transaction.
Any early issues with earning rewards through mobile wallets have largely been resolved. Nowadays, many credit cards actively encourage usage with bonus rewards. Similarly, the ease of using virtual credit cards and the flexibility offered by buy-now-pay-later services have gained popularity.
“The move to electronic commerce has been mutually beneficial for merchants, issuers, and cardholders,” said Brian Riley, director of credit and risk advisory services at Javelin Strategy & Research, highlighting the value created for all parties involved in this digital transformation.
