We’re Past The Deadline; Is Everyone Ready?

by Intrepid Payment Processing

EMV is a new global standard for credit and debit card transactions at the point of sale. In the United States, the liability shift went into effect October 1, 2015, however, the migration to EMV use has been slower than expected and many retailers have not made the switch.

What’s the problem?

Because EMV-compatible cards have an embedded computer chip in them, new equipment is required on the retailer’s end…and it’s not a cheap upgrade. Ultimately, though, they should want this because the smart chips create a unique transaction code which dramatically reduces the opportunity for fraud. (And the banks are no longer going to assume the responsibility for non-EMV transactions.)

That said, a recent Debit Issuer Survey revealed that 90 percent of financial institutions in the country have begun issuing EMV-equipped cards; although only 25 percent of the total number of cards out there will be equipped with EMV by the end of 2015.  While bigger retailers like Walmart and Target are upgrading terminals to accept EMV cards, smaller merchants are much slower to upgrade. The Strawhecker Group found that about 27 percent of smaller merchants were ready as of October 1, 2015.

It’s not all that surprising that merchant acceptance has been sluggish. As consumers become more familiar with the EMV process, they will begin to expect it when they transact and that’s what will probably drive widespread acceptance.

Copyright 2015 Intrepid Payment Processing

Compliance Weak After EMV Liability-Shift Deadline

by Intrepid Payment Processing

October 1, 21015 was a momentous date for the American merchant payments processing industry. We are now in the Europay, MasterCard, Visa (EMV) chip card era, which means greater security and compliance. EMV is not only a technological shift; it is also a major shift in terms of liability and responsibility for credit and debit card issuers as well as for merchants.

As the situation currently stands, any business that accepts a physical card transaction could be liable in case of fraudulent use. In the past, merchants in the United States had some responsibility insofar as taking measures to prevent card fraud, but liability ultimately fell on the card issuers; that is no longer the case. The EMV system is designed to provide more security than the old magnetic stripe system; to this effect, merchants who do not upgrade to the new system are essentially on the hook should fraudulent use occur at their business.

It is important for American business owners to realize the gravity of the EMV shift. A couple of years have passed since this matter was stressed in the wake of the massive data breach suffered by giant retailer Target; since that time, a little more than a quarter of all merchants in the U.S. had upgraded their terminals. It is estimated that less than half of all merchants will be EMV compliant by next summer. What is truly concerning is that not all business owners who accept card payments are fully aware of the implications of the EMV shift.

A week after the October 1 deadline, the Small Business Committee at the House of Representatives looked into how much, or how little, progress has been made with regard to the EMV upgrade. One Committee member explained that the EMV transition has caught many merchants off guard. Even in the best case scenario, it may take two or more years for 60 percent of merchants to upgrade.

Considering how sizable the American retail landscape is, the fact that more than a quarter of all merchants have already upgraded their systems is auspicious. The EMV shift may not be off to the greatest start, but what has been accomplished thus far amounts to a lot in terms of compliance.

Although the EMV upgrade is not a mandate, the liability shift should be of the utmost concern for merchants. More than half of all credit and debit card fraud takes place during physical transactions, and merchants are now liable if they do not comply with the EMV shift. Criminals are aware of the EMV shift, and they are planning to make final runs on the old magnetic stripe system; for this reason, it is in the best interest of all merchants to upgrade as soon as possible.


Copyright 2015 Intrepid Payment Processing

Magnify Your Margins With Gift Cards

by Intrepid Payment Processing
The gift card industry is huge. According to a recent study, you’re probably going to both give and receive a gift card this holiday season. We give them for all the obvious reasons: they’re super convenient, easy to mail, easy to budget and perhaps most importantly, everyone loves getting gift cards.
But even when combined, the gifter and the giftee only make up half the equation. What about the seller? Yes, the retailer. They probably make out the best of anyone.
How so?

For starters, people don’t use them! CardHub estimated that from 2008 to 2014, Americans generated $44 billion in unredeemed gift card value . This suggests that the average American has over $100 in gift cards that they haven’t used. Whoa.

This is a best-case scenario for a retailer, right? They generate revenue without losing any product. Brilliant! Their economics professors would be so proud!

But it gets better because even the consumers to do use their gift cards may very well spend more than the actual value of the card once they’re in the store. It happens all the time, doesn’t it?

You need a TV…you get a $100 gift card from Best Buy as a birthday present… and BAM! You just saved a hundred bucks on your TV while Best Buy just made a high-margin sale. You may have normally purchased that same TV from Amazon or Walmart, but since you had that $100 card from Best Buy that was the best play.

You can trickle this down to retailers with a much smaller sales funnel, too. If we talk in terms of growing your customer base, offering gift cards makes a ton of sense. It’s been found that 72 percent of consumers who visit a business for the first time simply because they received a gift card to that business end up returning to that business. Again, this happens every day.

 So, if I’m a retailer, I’m not only going to offer gift cards…I’m going to promote the heck out of them. There is a lot of margin to be made!

Copyright 2015 Intrepid Payment Processing

Apple Pay, Android Pay, Samsung Pay; Which Is Best For NFC Transactions?

NFC - Near field communication
by Intrepid Payment Processing

Have you entered the new world of mobile financial transactions yet? Your options for transferring money at the speed of light have never been better. Apple Pay, Android Pay and Samsung Pay are all mobile point-of-sale financial systems, but which is best for NFC transactions?

How Does Near Field Communication (NFC) Technology Work

Apple, Android and Samsung all depend on the development of the Near Field Communication (NFC) technology to function. Both the smart phone and credit card terminals must have microchips that recognize each other during an “air swipe” inches (or centimeters) away.

Problem: Cost
New NFC-enabled credit card terminals could cost up to $500. When the economy is struggling, it is difficult to justify the addition of “new technology.” Gradually, Chinese credit card terminals are coming on board, but it takes time.

Solution: Incentives
The smart phone manufacturers are offering incentives. Apple, Android and Samsung all support the same “tap to pay feature.” The technology can be loaded onto bracelets, watches or smart phones for all three brands.

Special Apple Pay Features

Brand recognition is the greatest appeal of Apple Pay. There are more than 2,500 banks and 700,000 retailers that have signed up with Apple Pay as of March 2015.

Potential Problems with Apple
There have been reports of identity theft with Apple Pay. And three of the top retailers, have not signed onto Apple Pay, they prefer the Merchant Customer Exchange (MCX) group technology. Apple Pay is limited to the iPhone 6, iPad Air 2 and iPad Mini 3.

Special Android Pay Features

Google is the lead search engine and continuing to expand into other areas with Google Lens and self-driving automobiles. But perhaps, Google is trying to juggle too many balls at the same time. Android’s platform flexibility is a key advantage over Apple or Samsung. Google Pay also claims to have 700,000 retailers signed up as of March 2015.

Potential Problems with Android
When customers are struggling to migrate to a new technology, you don’t want to make changes. After spending money on Google Wallet, this brand has been incorporated into the Android Pay system. Android Pay uses a fingerprint sensor.

Special Samsung Pay Features

The Samsung Galaxy S6 offers both the Samsung Pay NFC payment system as well as the standard magnetic stripe swiping system. The LoopPay Magnetic Secure Transmission (MST) technology allows the Samsung mobile devices to be used at more than 30 million retail locations.

Potential Problems with Samsung
The Samsung Pay app only works with the Galaxy S6 and Note 5 models. Samsung also includes a fingerprint sensor.


Copyright 2015 Intrepid Payment Processing

Will Magnetic Stripe Cards Ever Go Away?

by Intrepid Payment Processing

One of the moIMG_3449_lbst important mile stones in the history of payment systems in the United States arrived without much fanfare. On the first day of October 2015, the Europay, MasterCard, and Visa (EMV) standard became legally significant through what is known as the liability shift. As banks, merchants, consumers, and payments processors begin to implement the new system, one of the questions we are constantly hearing is: How long until the old magnetic stripe system goes away?

The days of the magnetic strip (magstripe) are far from over. Although the liability shift from the issuer to banks and merchants should be a strong motivator for everyone in the payments industry to adopt the EMV chip system as soon as possible, we will probably see the magstripe for a few more years.

The Strawhecker Group, a management consulting company based in Omaha, recently conducted a survey on American EMV adoption. The survey indicates that only about a quarter of all merchants were ready for EMV on its official October 1 date. The forecast at this time is that less than half of all merchants will be EMV compliant 12 months from now.

Although the liability shift is a pretty serious matter since it has the potential of affecting the bottom line of banks and merchants, there is no clear mandate to perform this upgrade. For this reason, we believe it may take a few years until the magstripe becomes a thing of the past, and the transition will be similar to what Microsoft has encountered with its Windows XP operating system.

Despite Microsoft’s efforts to convince users of the risks of using Windows XP, recent statistics published by data analytics firm Net Applications indicate that millions of people are still using the old operating system, which is installed in more systems than Apple OS X, Linux, and even the new Windows 10. The Windows XP stalwarts use it because it works, and thus they are in no immediate rush to upgrade.

With more than a billion magstripe credit and debit cards currently in circulation in the United States, issuers have a major task ahead of them in terms of switching cardholders over to the new EMV chip system. Furthermore, there are more than 10 million card readers in operation that also need to be replaced. This is a major undertaking, and there is one more factor to consider: the magstripe will be the system of last resort until full EMV adoption is complete.

Starting October 1, 2015, if a magstripe cardholder wishes to complete a retail transaction where an EMV card reader has been installed, a magstripe transaction will take place. Because this is a system that still works, we think it may take a few years before it goes away completely, similar to Windows XP.

Copyright 2015 Intrepid Payment Processing