The payment industry and payments in general in the United States are set to continue transforming over the next several years. Merchants need to understand that that offering their customers as many options for payment as possible will help drive sales and also improve customer satisfaction. On top of that, merchants need to keep their business protected against the possibility of fraudulent chargebacks due to breaches in data security. These chargebacks cut into profits and can significantly hurt merchants. As the payment industry continues to expand and develop, merchants will not have to choose between security and convenience. In order for merchants to succeed in this ever-changing payment landscape, they will need to understand the entirety of changes in order to relate them back into their business strategies and customer bases.
The list of complaints goes on and on regarding chip cards in the United States. Criticisms about longer processing time all the way to customer irritation plague the internet and beyond. There is currently a lot of congestion in the EMV conversion commitment at the merchant acquirer and processing level. In the meantime, merchants are worried about potential chargebacks while they undergo the process. Though there are obstacles for the time being, there is no uncertainty that these issues will not get worked out.
Both Visa and MasterCard are taking measures to make the transition to EMV as smooth as possible. They are reducing the number of tests that were needed in the certification process to help cut down the time it takes to get the terminals up and running online. Visa, MasterCard, and American Express have also reassessed their chargeback policies in order to limit the blowback from fraudulent behavior on merchants during the period when they are transitioning and launching new EMV software. These changes being made and implemented will assure customers that extra wait times at the register will not be a permanent fixture.
With Europe and Canada both having converted to EMV years ago, the inevitability in America’s EMV success has been shown through those respective examples. The embracing of chip cards has shown a major decrease in fraud. According to the European Central Bank, fraud that would be carried out through POC terminals dropped 24% between 2007 and 2011. This was mainly due to adoption of EMV. Beyond that, the U.S. experiences a staggeringly high rate of credit card fraud. According to a recent global survey by Aite Group and ACI Worldwide, 46% of credit card holders in America have experienced at least one instance of fraud in the last five years. For consumers, this not only protects their personal data but it also creates an easier means of traveling to Europe and elsewhere. More terminals in Europe are EMV-enabled and the amount of merchants abroad accepting will only increase.
EMV has proven to be representative of the latest advancements in the ongoing battle to reduce breaches to payment data. EMV provides an extra layer of security for payments, protecting not only the customers, but also the merchants. The capability for contactless cards, which had provided European consumers with a tap and go option, is drawing more interest here in the United States. These contactless cards are protected by cryptography and offer the latest in fraud-detection technology.
Mobile payment systems, including Android Pay and Apple Pay, are utilizing EMV standards in combination with tokenization to speed up payments and create more security through contactless pay. Credentials or “tokens” are sent through the payment channel when a customer makes a purchase that signals back the primary account. Customers’ private account data is stored off-site in a safe and secure location, replaced with a token at the actual purchase location. This is beneficial for data security because if for some reason the token is stolen, it is essentially useless to the person who stole it. Tokenization integrated with EMV creates a lot more potential to fight data thieves by protecting that precious payment information. These things are not necessary obvious in the short term, but they affect merchants business in the future.
While the switch to EMV may feel sudden to merchants and consumers, it is, in fact, a part of a constant evolution in payment technology. Payment technology providers, merchants, consumers, issuers, and processors are all a part of this ongoing drive to partner convenience with security to form a seamless and harmonious union.
Sterling Payment Technologies
Sterling provides merchants with a complete range of electronic payment processing services, including credit, debit, PIN debit, fleet, gift card, and electronic benefits transfer (EBT).
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