Transaction Trends

By: David Leppek, Transaction Services (ETA Payment Sales & Strategy Committee Chair) & Cleveland Brown, Payscout (ETA Payment Sales & Strategy Vice Chair)

The United States officially switched to chip cards in October 2015. The chips on these new cards drastically reduce counterfeit card fraud at the point of sale. Two years in, the migration is still ongoing. In June 2017, the US Payments Forum estimated that roughly half of all US payment transactions were “chip-on-chip” (chip card dipped into a chip-enabled terminal). So far, chip cards have substantially reduced some types of card fraud; Visa reports that counterfeit fraud fell by 58% in from June ’16 to June ‘17 among merchants accepting chip cards.

ETA’s Payment Sales & Strategy Committee surveyed select ETA members to identify the opportunities and pain points that sales organizations face in enabling EMV acceptance for their merchant customers. One consistent theme among survey respondents has been the difficulty of implementing EMV on third party POS software solutions. In cases where the product was not designed with EMV in mind, ensuring that the software solution works with every piece of the merchant’s payment infrastructure often creates complexities.

Generally, before merchants can use their new EMV terminals, the terminal hardware must be certified by EMVCo and then the payment applications within the terminal, including any related applications (inventory control, loyalty tracking, etc.) must be end-to-end certified by the card networks and the processor/acquirer. The same goes for POS systems that work across multiple devices. If the merchant or their service provider makes any customizations or modifications, these must be tested as well.

Several solutions to address these complexities have emerged. Peripheral EMV devices are typically pre-certified and ship ready to be used with minimal installation effort (“plug-and-play”). Many ETA members identified semi-integrated products – payment terminals that are already connected to a POS application – as critical to enabling fast and convenient EMV acceptance for their merchant customers. Semi-integrated solutions remove the POS system from the scope of certification (as they come pre-certified). There are many such products on the market, and may offer features like inventory tracking and CRM. For merchants that do not require extensive customization, these semi-integrated offerings combine the flexibility of a custom POS solution with the ease of an out-of-the-box EMV terminal

Looking to the future, committee members highlighted the potential of mobile-centered payments, whether NFC or QR-based. Mobile payments offer the ease and convenience of a card swipe and the layered security protections of a much more sophisticated device. Moving toward an ecosystem better designed for mobile payments would help meet consumer demand for faster and more convenient payments without requiring merchants to invest in hardware upgrades. NFC mobile payments work on any EMV-enabled terminal. QR codes displayed on a device screen can be read with an inexpensive scanner.

As the EMV migration continues, the sales channel is on the front lines working to ensure that their merchant customers are ready. Sales organizations offer incredibly valuable feedback thanks to their close relationships with merchants, and can act quickly and nimbly to improve their customers’ experience. ETA brings together the entire payments ecosystem on issues like EMV to ensure that every voice is heard, and we look forward to supporting the evolution of faster, safer payments.

With thanks to Karen Whiteley, Bob Skattum and John Barrett for their contributions.