Credit cards

Lessons from EMV’s First Year

It’s been one heck of a year. The rollout of the chip-card payment system known as EMV was so poorly planned and implemented, it was downright mind-boggling. The blame for this is generally assessed to three key players: the card brands, the core processors, and the hardware vendors. How is it possible that one year after the liability shift certain hardware vendors do not offer iPad-compatible EMV card readers? Or that EMV certification takes many months and as long as a year? Or that EMV was designed to add 10-30 seconds to every transaction?

Were the companies with a vested interest in the EMV transition somehow surprised by the logistics?

Whatever the reason, the EMV mess has confused and frustrated merchants and consumers alike. I hear stories of unethical salespeople telling merchants that the transition is legally mandated (it is not) to intimidate them into buying EMV terminals. Most early EMV adopters are struggling with delayed workflows caused by EMV transaction speeds. Other merchants are starting to see consumer fraud and associated charge backs as unethical consumers dispute non-EMV transactions.

At Instore, we work hard to be an ally for merchants during this bumpy transition. After a year of working alongside our clients in the EMV trenches, we’ve learned a few things about easing the pain. Here’s some advice:

Create a transition plan

Sure, merchants are motivated to add chip-card readers to protect their liability. But I don’t think the answer is necessarily to rush out and get an EMV reader and do every transaction on that reader. Why? Because what you’ll find is that a typical EMV transaction takes about 20 seconds while a swipe transaction takes only a few. Add that up over several hundred transactions a day and that’s a very meaningful lag that will scare people away from your business when the lines become too long, especially if you run a high-volume restaurant or retail store.

Until readers speed up, I suggest a hybrid approach. What this means is that you offer two kinds of payment—your swipe reader for smaller transactions where a charge-back wouldn’t really hurt your business (say < $25) and the EMV reader when the ticket size gets to a level where you’d be concerned by a charge back. This allows you to keep the line moving and still protect yourself from fraud that could cripple your business.

Keep costs low

The good news is that mPOS is one of the most affordable platforms ways to transition to EMV. Our EMV software upgrade is free for our merchants and our chip-card hardware costs under $200 per terminal. In more traditional POS systems, merchants may have to pay for professional services, custom programming, and update fees. Instore doesn’t charge for any of that.

Consider alternatives

NFC payments like Apple Pay allows you to avoid EMV altogether and still be protected from fraud liability. Allowing your customers to pay for products with their cell phone is also convenient and quick.

Say I’m a consumer with my credit card in my pocket alongside my phone. If I’m in a hurry and I know that my options are the EMV chip or Apple Pay, I’m going to go with Apple Pay because the transaction will be faster. And most of our merchants will be happy with that option because it keeps your line moving and protects you from charge-backs.

One consequence of EMV processing delays is that NFC payments will become more popular among consumers, so ask your mPOS provider about adding NFC capabilities to your terminals.

Protect yourself despite certification delays

According to a recent survey by the National Retail Federation, 60% of retailers had to wait six months or longer to be certified. In our experience, the process can take up to 12 months.

So we’ve worked with our processors to offer guarantees that protect merchants from EMV liability during the certification wait. For example, one of our payment partners offers an EMV Guarantee that covers up to $2,000 in fraud losses while waiting for iPad-compatible EMV systems to be certified. This kind of guarantee may not eliminate all of your worries, but it is often enough insurance against fraud to get you through the transition.

Another strategy we encourage is to lean more on your gift card or house account programs during a transition to EMV. These alternative kinds of payments will keep your lines moving and protect you from excessive liability until your processor is certified.

Make sure your security is top notch

EMV systems have been shown to be hackable, but only if they are unencrypted. At Instore, we encrypt all of our transactions so that they are highly secure. That’s an important offering all merchants should look for in a vendor.

Ask your vendor or their salesperson about security and whether they encrypt their transactions. As I see it, you’ve got enough worries running your business everyday. Security should not be one of them.

2017…will it be better?

I wish I could answer that question for you. And for me, frankly.

Unfortunately, I can’t wave a wand and make this whole EMV mess go away. But what we at Instore can do is provide you with a thoughtful and affordable way to handle the migration. We’ve worked with hundreds of merchants to give them a clean transition path that isn’t going to break the bank, and we can help you, too.

In the meantime, consider the solutions I’ve laid out above. It make take some savvy and patience but, yes, next year can be better.

To learn more about how Instore can provide affordable, smart solutions for your EMV transition, drop us a line.

Photo copyright: frankieleon by CC BY 2.0