Multi-Unit Franchisee Magazine Issue II, 2015 | Page 94
Technology BY TOM EPSTEIN
New Chip on the
Old Card
October deadline looming for EMV
payment readers
A
s you go about your day-to-day
routine, you may have noticed
some new ways to pay. And if
you received a new debit or
credit card recently, you also may have
noticed the new chip embedded in it.
Grocery stores, coffee shops, pharmacies, and large national chains all seem to
be installing new customer-facing devices
to enter your credit and debit card information. For instance, you can now insert your
card into a slot on the front of one of these
new devices and enter a PIN. The device
will read the encrypted information on your
card’s chip and pass that information, along
with your PIN, to the card processor for
decryption and authentication.
In essence, you are getting a double
dose of security, unlike with a traditional
swipe card, whose magnetic stripe data is
easily read by any swiper in the event a
physical card is stolen or lost. The chip in
the new cards comes encrypted, making
your data much harder to obtain for any
would-be thief.
As the cards you currently have begin
to expire, replacement cards all will have
a chip in them, beginning this year. For
a time, they still will have the magnetic
stripe on the back, but in a few years that
will stop completely. By the end of 2015,
an estimated 29 percent of cards in the
U.S. will have the chip, and the numbers
will grow rapidly from there. All EBT
and other government cards issued since
the beginning of 2015 already have them.
Why should any of this matter to franchisees?
As of October 2015, all new cards issued and all installed terminals must have
this capability (one exception is petroleum
merchants with automated fuel pumps,
who have until October 2017). To help
prevent data breach and fraud, U.S. card
issuers have adopted the EMV standard
(Europay, MasterCard, and Visa) that has
been in place in most of the rest of the
world for years. For merchants who have
92
Make the right
changes—not just
a quick fix you
will have to revisit
in the not-toodistant future.
not installed the proper hardware to read
these cards by October, the liability for any
potential breach will shift completely over
to them. (Note: Installing the new hardware
will not replace the need to continue meeting all your current PCI requirements.)
One of the things I often see with franchise systems is that they tend to run on
limited resources, and many do not have
a chief technology officer to keep these issues top of mind. Many franchise systems
either don’t require a specific type of payment terminal or they lean on a POS vendor to ensure everything is in place around
payment technology and PCI compliance.
Neither is a good approach, because there
is so much more to the customer data security equation than what any single vendor looks at.
Most POS companies are scrambling
to meet the October deadline. And even
if you are on track to meet this deadline,
questions remain. Do you have a plan in
place to ensure you are installing the new
hardware and/or software in time? Are
there cost considerations preventing you
from making the upgrades? Do you understand the reasons you need to do this?
Maybe this is a good time to to review your
POS system in general.
To succeed in this transition, you need
a comprehensive strategy that includes not
only your POS system, payment processing, and gift/loyalty vendors, but also your
IT, operations, and maybe even finance. If
you have not yet started this process you
are already behind.
With all the new technology available
today, perhaps now is a good time to move
to one of the newer tablet-based systems.
Most can be installed for about the same
cost as upgrading your current POS.
If you have to upgrade your systems for
EMV anyway, perhaps you should also look
at adding NFC (near field communication).
NFC is the technology that enables ApplePay, Google Wallet, and CurrentC. This
technology is not really new, but Apple’s
entry into the game has breathed new life
and interest into these payment methods.
Consumers are increasingly adopting these
methods—and of course the younger your
customer base, the more likely they are to
want to use this option.
My bottom-line advice to you is that
time is getting short and you need to move
on this quickly. But don’t act rashly. Have a
conversation with your department heads,
trusted vendors, and FAC.
Since you must make changes anyway,
make the right changes—those that will
carry you years into the future, not just
a quick fix you will have to revisit in the
not-too-distant future.
Tom Epstein is CEO and
founder of Franchise Payments
Network, an electronic payments processing company dedicated to helping franchisors
and their franchisees improve
system performance, increase
revenue, and reduce expenses. Contact him at
[email protected] or 866420-4613 x1103.
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