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Reporting live from the future of retail payments

Started: 2019-05-05 11:55:19

Submitted: 2019-05-05 16:23:29

Visibility: World-readable

In which the intrepid narrator visits the future of retail payments and wants to stay there

The technology behind the magnetic strip on the back of my credit cards is older than I am. It took long enough, but American banks finally caught onto chip cards -- just barely.

London at night, featuring BT Tower
London at night, featuring BT Tower

I got my first chip card in 2012, which was pretty cool for a while, until I traveled to Europe and realized that it was a chip-and-signature card, not a proper chip-and-pin card. In the UK, I'd push my chip card into the reader, and the merchant would be surprised when the card reader would spit out a receipt for me to sign, and then have to fumble for a pen, instead of asking me to enter a PIN like a proper European bank card. In Denmark, the grocery check-out counter was set up so that the card reader was at the very end of the bagging area, convenient for entering one's PIN and bagging at the same time; but with chip-and-signature cards I would have to backtrack to where the cashier was standing to sign the credit card slip. It worked, but it was awkward, and I knew there had to be a better way.

It got even worse at vending machines: they refused to take my card at all, because there wasn't a human to verify that I'd signed the signature slip. (The only exception I found to the vending machine rule was the ticket vending machines selling Heathrow Express tickets: They have enough Americans coming through trying to buy tickets that they'd lose half of their sales if they couldn't accept backwards American credit cards.)

American credit cards caught up to chip cards after a couple of massive well-publicized credit card breaches, but American banks steadfastly refused to acknowledge the existence of chip-and-pin cards, collectively gaslighting their customers into thinking that chip-and-signature cards worked just fine in Europe (despite obviously being second-class payment cards).

At some length I discovered that Barclays would issue a credit card that was mostly chip-and-signature but did have a PIN that it would use for vending machines or other terminals where a human was not available to collect and verify the signature. I acquired one of these cards (and used it as my primary credit card, since it was a reasonably good travel rewards card), but its signature priority meant that it would still insist on a signature whenever a human was available to collect a signature -- including at automatic check-out kiosks, where a human was theoretically available, but supervising multiple check-out lanes at once (not necessarily even in eyesight of the machine).

(Meanwhile my employer gave me a chip-and-PIN Visa issued by Citibank, which worked exactly as advertised -- except that it was my corporate card only for things I could expense.)

With another trip forthcoming to visit my employer's office (and counterpart team) in London, I searched for a list of proper chip-and-pin credit cards and found First Tech Federal Credit Union, which would let anyone join for a tiny membership fee in their organization; or, it turned out, I could join automatically because I worked for Google (and their mission has something to do with tech companies or something, I didn't really read that far). I signed up for the credit union and got a Mastercard with a proper PIN.

After a week in the UK I can confirm that the chip-and-pin card meets all of my expectations and is just about the best thing ever. No longer do I have to watch the merchant get surprised when the card terminal spits out a slip of paper and fumble for a pen; I get to enter my PIN like a proper European. (The only thing I have to deal with now is telling the point-of-sale terminal that I would rather pay in Pounds, thank you; and occasionally the merchant recognizes my accent and expects a signature but the credit card terminal asks for a PIN like it's suppose to.)

Jaeger descends the escalators at Angel Station
Jaeger descends the escalators at Angel Station

And then, while I was waiting to catch up to the next generation of retail payments, a whole new generation appeared while I wasn't watching.

When my United Mileage Plus card expired a few months ago, Chase Bank sent me a new card and let me know that it was a fancy new-fangled contactless card. Credit card terminals that read contactless cards are few and far between on the ground in the United States, but they do exist.

The contactless card came in handy in one unexpected place: when visiting Portland I discovered that the local transit system accepts contactless payments in place of (yet another) regional stored value card -- so all I had to do was tap my card when I boarded the streetcar to pay for my transit. (It turned out to be somewhat less convenient when traveling with my family, though; they couldn't pay with the same token so they used the transit app (or bought single-use tickets).

When I arrived in London I topped up my Oyster card, and used it for a while, but then I remembered that London's transit system took also contactless payments (or, to be fair, they took contactless payments first, and only then did Portland catch on). This turned out to be even more convenient that the Oyster card, mostly because I didn't have to add value to the card.

(The only thing I noticed while riding the Underground is that the fare gates have more tap latency than BART. I haven't measured it empirically, but it feels like BART's fare gates open within 200 milliseconds -- just on the edge of my perception, but the Underground's fare gates take just long enough (maybe 400 milliseconds?) that I notice there's a delay and wonder whether my payment is valid just in time for it to open the fare gates.)

It also turned out that many merchants in London had point-of-sale terminals that would accept contactless payments -- and that using these terminals was amazingly fast and easy. All I had to do was tap my card on the top of the terminal and it'd beep and it would just work -- faster and easier than sliding the card into the chip reader or swiping the magnetic strip, let alone entering a PIN or signing anything.

The other compelling use-case for contactless payments is phone-based payments: I saw people using their phones in place of contactless credit cards on the Tube and at merchants. This is the use-case that credit card companies point to when we start talking about chip-and-pin cards: Maybe we can skip a generation and just move to contactless payments on our phones -- or our watches, or whatever.

I got to use the future of payments in action, and now I'm going back in time a decade to 2019 in America where we still use signature theater to authenticate our credit card transactions.

like a lot of geeks, I can run risky meatspace things
through my head until a faulty value comes out that
suggests there's no need to actually do them.
- Caleb John Clark, "Linux and the Lady", Salon.com 27 September 2000