2016 | DESIGN BY THE RETAIL COMPUTER GROUP
American Express Changes Chargeback Policy to Ease EMV Burden
American Express Changes Chargeback Policy to Ease EMV Burden
Late last week, American Express joined Visa when it introduced policies that should limit fraud costs for merchants facing sharply increased chargebacks since the October 2015 liability shift. As Visa did several weeks ago, American Express announced it would eliminate liability for in-store fraud on counterfeit transactions under $25. Reasons for the explosion of chargebacks on card-present transactions since the beginning of 2016 are unclear, but, according to American Express research, 40 percent of them are for transactions under $25, a rarity before the liability shift.
It has been a busy summer for the major card brands, which are trying to alleviate hurdles that have held merchant and consumer adoption of EMV back and have increased tensions to the point where retailers have taken legal action against the brands and issuers. In addition to recent efforts to curtail the mysterious increase in chargebacks, each of the brands has introduced products or policies designed to either speed consumers through lines or streamline the certification process.
"Combating fraud is an ongoing priority for American Express," said Mike Matan, vice president of Global Network Business for American Express. "We recognize the migration to EMV in the U.S. is an effort that will take time, which is why we are making these policy changes in order to provide flexibility to those merchants that may need more time to upgrade their point-of-sale terminals to accept EMV chip cards."
Swipe your card? Or dip? This change could speed the transition to chip cards.
Swipe your card? Or dip?
This change could speed the transition to chip cards.
By Sarah Halzack June 28 at 7:05 AM
A customer pays with a chip card. (Simon Dawson/Bloomberg)
How ransomware hackers "prey on people's willingness to click"
CBS NEWS April 4, 2016, 7:14 AM
How ransomware hackers "prey on people's willingness to click"
Hackers are using ransomwareto target everyone, from consumers to businesses big and small, to municipalities, and the payoff is huge.
Plainfield, New Jersey, a town of roughly 50,000 people, fell victim to hackers and is still working to get its files back, reports CBS News correspondent DeMarco Morgan.
Mayor Adrian Mapp said hackers infiltrated their computer systems when an employee clicked on an infected link. City officials scrambled to pull servers offline, but three were compromised, leaving emails and other city files inaccessible.
"We have about 10 years of documents that we are not able to access," the mayor said.
The hijackers held the files ransom, demanding roughly 650 euros paid in bitcoin. Mapp sought the assistance from law enforcement, but remains helpless in regaining access.
"It's a very serious problem that cries out for a solution and we don't have it at the local level," Mapp said.
Plainfield was a victim of ransomware, a type of malware that cybersecurity experts and law enforcement officials say is spreading nationwide.
"Everyone should be concerned. It's the number one problem facing the computer security industry and it's very, very difficult to solve," said Ryan Naraine, director at cybersecurity firm Kaspersky Lab. Naraine said the malware gets into people's computers, often with a simple click.
"They prey on people's willingness to click on the latest viral videos, they prey on people's willingness to click on Facebook links, they are even sending spam in addition to emails through Twitter," Naraine said.
Once a computer is infected, it encrypts all files or locks the user out until they pay for the key. Naraine demonstrated how it works.
"I have a music file and like many people, I have photos, often family photos," Naraine said. "The ransomware is communicating with a server. The server is sending instructions here to start encrypting all these files."
In just minutes, the ransomware takes hold and the computer is compromised.
"The machine is now ransomed -- this machine is now part of the ransomware attack," Naraine said. "If I try to look at all my photos from my last family vacation, you try to open, it's nothing. It's garbage. Imagine an average business -- not only on this computer but encrypting every computer within this a network at the same time."
In addition to a string of hospitals hacked, the village of Ilion, New York paid hundreds of dollars in ransom in 2014 and the police department in Melrose, Massachusetts paid nearly $500 to get back online.
"We are seeing an uptick in this type of activity," said Ari Mahairis, who heads the FBI's New York cyber division. "One of the reasons that our numbers are growing is because of the idea that people are paying the ransoms."
In 2014, the FBI received over 1,800 complaints about ransomware, an estimated loss of more than $23 million. In 2015, the bureau received over 2,400 complaints, and victims lost over $24 million.
"These are just the cases that are being reported. We suspect there are many more out there that haven't," Mahairis said.
The ransom demands are often relatively small -- hundreds to a few thousand dollars -- but the loss to an individual or business can be huge. "It's a very, very helpless feeling to open your computer and you don't have your computer anymore," Naraine said.
Naraine urges users to "back up" information for protection.
"Good user habits, common sense, backups and patching. With those basic things in place, I think you can minimize your exposure," Naraine said.
© 2016 CBS Interactive Inc. All Rights Reserved.
Speed up EMV
Speeding Up EMV
A big complaint merchants hear from cardholders using their EMV chip cards at stores is that they think it’s slow - the transaction takes a long time to process when compared to magstripe. The process of swiping a magstripe card is perceptually faster as the customers swipe their cards and immediately put it back in their purse/wallet as the purchases are totaled, and the terminal works on processing the transaction. However, in an EMV transaction, cardholders insert the chip card and wait patiently as it authenticates the payment. Even though EMV adds only a few seconds more to the transaction, the perceived wait time is much slower from the point of view of the customer as the chip card stays in the terminal longer.
So what can merchants do to improve upon this current EMV experience?
Visa and MasterCard have come up with a quick solution to help merchants streamline the processing of chip cards. A small enhancement from the card brands – Visa’s Quick Chip and MasterCard’s M/Chip Fast help emulate the “magstripe” experience for the cardholder where they can insert their chip cards and remove it in a matter of a few seconds. The enhancement requires only a relatively simple software update to the merchant’s card terminal and point of sale (POS) system.
Being able to make this update using existing EMV chip infrastructure and not requiring re-certification means retailers can integrate this enhancement into their solutions with minimal impact to the POS terminal application.
Ajay Bhalla, president of Enterprise Security Solutions for MasterCard, said that the solution is similar to what happens in contactless payments both in and outside the US, and allows customers to remove the card from the terminal before the transaction is completed.
While merchants won’t be compelled to take up these technologies, this would be valuable in places such as coffee shops, fast food outlets, and grocery stores where the customer impact will be more evident.
Allen Friedman, Vice President of Payment Solutions, Ingenico Group
Payments 2016: No stopping the contactless surge
Payments 2016: No stopping the contactless surge
Contactless payments exploded in 2015 and there is little evidence to suggest this is about to slow down this year. In fact, it looks like 2016 could be the year for contactless payments as the US market finally comes alive.
US market blossoms
The most striking thing will be the rise in contactless payments in the US which has, until now, been somewhat behind the curve thanks in large part to the absence of EMV chip cards.
Upgrading point-of-sale (POS) terminals to accept chip cards will mean a great many more merchants are capable of accepting contactless payments.
Currently, Apple Pay is the dominant method of contactless payments in the US market – an anomaly that is likely to change as chip cards are rolled out with contactless capabilities. Nevertheless, Apple’s position of power in this sector is noteworthy and unlike European markets, where contactless cards are the preferred channel, it’s smartphone-based proximity payments that are of importance.
Accenture analysis shows that Apple Pay accounts for 68 percent of in-store mobile phone payments in the US. Apple itself said during its first quarter fiscal year 2015 earnings call that $2 of every $3 in contactless payments are made with Apple Pay.
The latest proximity mobile payments forecast from eMarketer predicts that the total value of mobile payment transactions in the US will grow 210 percent in 2016.
Whether it’s through Apple Pay, rivals such as Samsung Pay or Android Pay, or contactless cards, the forecast is for massive growth in 2016 and beyond. US banks such as Wells Fargo, Chase and BoA are responding too by adding contactless NFC enabled ATMs to their fleets.
“Several factors will drive substantial mobile payments growth in the US. Mobile wallets like Apple Pay, Android Pay and Samsung Pay will become a standard feature on new smartphones,” said eMarketer analyst Bryan Yeager.
“Also, more merchants will adopt point-of-sale systems that can accept mobile payments, and incentives like promotions and loyalty programs will be integrated to attract new users.”
What will be most interesting to watch is whether issuers can claw back control from Apple Pay by enabling credit and debit cards with contactless tap-and-go functionality. Top-of-wallet status will go to cards with contactless functionality and consumers may find it’s easier to swipe their favourite payment card than use their iPhone, which some customers experience as a slower process.
Rest of World surges ahead
Meanwhile, as the US catches up to the contactless bandwagon, the rest of world will keep rolling on. Leading contactless nations such as the UK, Poland and Australia will continue to see more payments through this channel.
Driving up contactless payments will be further increases in spending limits. The higher limit in the UK has already led to a massive increase in transactions.
Contactless payments now account for one in ten card transactions in Britain, with spending in bars and pubs doubling since September, when the limit was upped from £20 to £30.
“In 2015 we’ve seen contactless become an even more popular way to pay for small transactions, so much so that we can even get frustrated if a retailer doesn’t offer ‘touch and go’ as an option,” said Paul Lockstone, managing director at Barclaycard.
“As the consumer appetite for new ways to pay continues to grow, particularly with the upcoming launch of high value payments and the continuing growth in wearable payment devices, we’re expecting 2016 to be another record-breaking year for contactless.”
Explore more about NCR Financial Services solutions.
Using your chip card at some stores and not at others? Here’s why.
Using your chip card at some stores and not at others? Here’s why.
A chip card is inserted into a payment terminal. (AP Images)
If you’re like many shoppers, you’ve had a momentary blip of confusion — or maybe several of them — at a checkout counter lately.
That’s because some stores have outfitted themselves with payment terminals that use your credit card’s new, more secure chip technology. Some stores haven’t. And at still more retailers, you can see they have the chip readers installed, but they don’t want you to use them yet. The result? You’re having an internal “to swipe or to dip?” debate every time you go shopping.
Here, we offer some answers to your questions about the status quo of the chip card transition.
Why is the checkout situation so patchy right now?
To understand this, it helps to rewind to October 1. This was a key date in the migration to chip cards, also known as EMV cards. Essentially, as of that date, whoever had the outdated technology — either the bank that issued a card or the retailer that accepted it — would be held responsible for the cost of fraud. The industry called this the “liability shift.”
As a result, many card companies, payment networks and others had been hurdling toward October 1 as a deadline.
However, many retailers ultimately ended up holding off on making the change because they were worried about the timing: The holiday season is the busiest time of the year for many, and they worried that activating chip technology during or right before that rush could confuse customers and, in turn, slow down checkout lines. So they put it off, preferring to take the risk of potentially being on the hook for fraud charges over possibly alienating harried shoppers.
The result was that there was a burst of chip activation before and around October 1, and then a long lull. You can expect to see retailers turn more attention to this now that the holidays are behind them.
Also, experts said that some of the unevenness is simply because it’s still early days. There are 1.2 billion credit and debit cards that have to be reissued, and 8 million merchant locations that have to outfit checkout counters.
“No country has achieved anywhere near 100 percent EMV readiness at the time of the liability shift,” said Erik Vlugt, vice president of global product management at Verifone, which makes chip-reading equipment and software.
So when I see a chip card slot, and I’m told not to use it, what’s going on? Doesn’t that mean the retailer is chip-ready?
Not necessarily. Even if the hardware has been installed, the retailer might still be readying the software that powers it.
Mallory Duncan, senior vice president at the National Retail Federation, said some stores have been held up in their chip roll-outs by what’s known as the certification process, wherein a payment processor gives a retailer a green light that its software systems are set up to safely to accept chip cards.
“There were a lot of steamed merchants waiting for certifications in advance of the day” of the liability shift, Duncan said.
Jason Oxman, chief executive of the Electronic Transactions Association, said that he suspects retailers that didn’t get certifications in a timely manner might have simply waited too long to start the process.
“It’s like Christmas shopping,” said James Wester, a payment industry analyst with research group IDC. “If you complain because you put all your Christmas shopping off to the last minute and suddenly you find there are lines,” that’s partially a problem of your own making. Still, Wester said, “there is some credibility to the claim” that merchants were ready to switch but were stuck waiting for certification.
And beyond the certification issue, there are other reasons why a retailer might not be ready from a software standpoint, including customizing it to work with other information technology systems.
Okay. But eventually, every store will get on the chip card bandwagon, right?
Mostly, yes, especially the big chains. But there could be some holdouts, because there is no legal requirement to make the switch. Experts said that some merchants, particularly small mom-and-pops, could wait a rather long time to change to chip technology. These stores simply don’t experience as much fraud as major national retailers, so they might determine it’s not worth the costs of upgrading their hardware and software.
I’m finding that it takes longer to check out with a chip card. Is that the new normal?
Yes and no. As you’ve probably noticed, you must leave a chip card in the payment terminal for the duration of a transaction, rather than just a quick swipe. That’s not going to change.
What will change, said Catherine Murchie of Mastercard, is that you’ll get used to it. Once people grow accustomed to dipping instead of swiping, they are almost certain to make fewer mistakes, such as pulling the card out too early, and then the transaction should go smoother.
Scott Carey, the owner of Sump Coffee in St. Louis, switched to chip technology this fall at his independent coffee shop. He said he’s finding the evolution of customer reaction to be much like when he first started processing payments with a Square reader attached to a mobile device several years ago.
“We would go through this whole long speech, and it got to the point where they don’t need it anymore,” Carey said.
And while Carey joked that the added time turns checkout into something of an “exit interview,” he said he doesn’t think that’s such a bad thing: He feels like it creates more time for small shops like his to connect with customers.
Okay, that’s nice, but aren’t a lot of shoppers annoyed by the extra time this builds in?
Probably. According to survey conducted by Ingenico Group this fall, some 21 percent of U.S. cardholders who had used EMV said they felt the transaction took a long time. Experts say this could be a reason that customers and businesses are taking a closer look at migrating to mobile payment systems such Apple Pay or Android Pay, which offer speedier checkout times.
So how long will this transition take?
The payments industry projects it will have 98 percent of chip-enabled cards reissued by 2017. The major card companies are making steady progress toward that, but have a ways to go. Mastercard says that as of December, 59 percent of U.S.-issued credit cards and 23 percent of its debit cards are chip cards. Visa says 43 percent of its credit cards in the United States and 21 percent of debit cards were outfitted with chip by the end of last year.
Meanwhile, 70 percent of Americans have received at least one chip card, according to data from the ETA.
It’s a little harder to figure out the pace at which merchants will accept these cards. Verifone estimates that by the end of this year, 60 percent of its equipment in the market will be capable of accepting chips. But that doesn’t necessarily mean retailers will have the technology turned on.
What's Next for Ecommerce in 2016?
What's Next for Ecommerce in 2016?
This year will be a defining one for ecommerce, in terms of mobile domination. Sources predict that 2016 will mark the consolidation of the mobile era, with half of all consumers using their mobile devices to make transations.
Related: 10 Tweaks That Instantly Increase Mobile Conversion Rates
The numbers are already impressive: U.S. mobile commerce sales last year totaled $104.05 billion, up 38.7 percent from $75.03 billion in 2014, according to Internet Retailer magazine. And mobile's lead is opening up new ways to reach and influence customers -- including paid Vine and Instagram sponsorships, interactive content and creative videos.
On the flip side, some industry analysts worry that we may have reached “peak content,” with consumer bandwidth reaching maximum capacity. This makes a smart content-and-search-optimization strategy all the more critical for companies to pursue in 2016.
Indeed, the ecommerce explosion is global: Michael Hewson from CMC Markets, which provides UK market analysis, has said that despite slower-than-expected holiday retail sales, UK-based retailers that embraced online shopping are actually beating performance expectations. “Inditex, Ted Baker, Next and Associated British Foods owner Primark have all outperformed since 2011,” reports CMC Markets.
Mobile ecommerce is actually growing faster internationally than it is in the United States. In Asia, the combined sales of 14 major Asian retailers ranked in the 2016 Mobile 500 grew year over year by 249.3 percent, according to the 2016 Mobile 500 project. European merchants grew their year-on-year mobile sales by 70.7 percent.
And while U.S.-based mobile sales may not have exploded the same way they have overseas, American businesses should get ready. "Mobile ecommerce is going to be huge in 2016, and businesses need to be ready with a competitive search strategy," says MacDecals owner Bryan Loconto.
So, what’s next for ecommerce in 2016? Here are three of the biggest trends in play this year:
1. Mobile dominance is permanent.
One out of every three online purchases are now made via mobile devices, as mobile continues its takover of the ecommerce pie, reports Internet Retailer. This rise of mobile presents new challenges for ecommerce retailers, including optimizing content for mobile viewing and mobile search.
The growth of voice search is changing the mobile-search world, too. Strengthening content on geographically based applications such as Google My Business, Yelp and Facebook can increase the likelihood that Siri’s suggestions include your business. And while mobile won't kill desktop ecommerce altogether, optimizing for mobile search is critical to staying ahead of the competition.
2. Videos are key for descriptive product sharing.
By the end of 2016, video content may account for nearly two-thirds of all Internet traffic. While most of this content consumption will take place within a streaming service ecosystem like Netflix, Hulu or Amazon Prime, that doesn’t mean retailers are off the hook.
The Internet has long been home to popular viral ads that got their start on network television. Now, retailers are getting more creative with their video offerings, by creating short web series and spoofs on pop culture. From Hootsuite’s “Game of Social Thrones” to Oscar Mayer’s “Wake Up and Smell the Bacon” app, viral video content is key for building brand enthusiasm, differentiating products and exciting consumers about a new service or offering.
3. Concerns over content saturation persist.
Content marketing as a key strategy for building brand loyalty and strengthening consumer relationships has exploded in tandem with our growing consumption of digital content. The average American adult now spends 5.6 hours per day engaged with digital media, more than double the 2.7 hours spent on average in 2008.
And the largest growth sector in digital engagement is on mobile; adults spend nearly three hours per day on mobile devices, according to venture capital firm Kleiner, Perkins, Caufield and Byers, as reported by Practical eCommerce.
With only 24 hours in a day, have we perhaps reached peak content consumption? Expect ecommerce retailers to face new pressures in 2016 for creating content that connects with consumers and cuts through the digital clutter.
The bottom line
This is the year for consolidation and creativity. Online retailers need to first cover their bases, asking such questions as, is my website mobile-friendly? Is my site content optimized for all aspects of mobile search, including voice command search with Siri? Is my checkout process streamlined for mobile use?
Then, once retailers have those ducks in a row, it’s time to get creative and think outside the box.
What opportunities exist for hijacking some pop culture phenomenon as Hootsuite did with its perfectly crafted Game of Thrones parody? What about harnessing current events or holidays, as Pandora, the jewelry company, did with its "Unique Connection" video for Mother's Day?
With the competition gearing up to stand out more fiercely than ever, and with traditional bricks-and-mortar retailers continuing to lose ground, a competitive and creative ecommerce strategy is essential for your business in 2016.
ShopTalk - How consumers really feel about credit card rewards
ShopTalk - How consumers really feel about credit card rewards
What's inside their wallets?
From travel rewards to cash back, payment card rewards programs are hard to miss. They can help mass issuers differentiate themselves, gain more wallet share, and reinforce purchase behavior from loyal customers.
But do rewards programs really impact consumer behavior? Vantiv teamed up with Socratic Technologies to conduct an online survey with 500 consumers to learn more. Here’s what we found.
Consumers with payment cards have an average of 6+ cards in their wallets.
How does this breakdown?
•2.7 credit cards
•1.5 debit cards
•2.4 store cards
Rewards programs do influence payment choice.
While 38% of respondents report that their credit card usage is typically driven by lack of cash, 25% of the time credit cards are used because of the associated rewards. 17% of the time, the purchase amount makes consumers choose their credit cards.
Rewards are important to Millennials.
38% of Millennials (ages 25-34) use cards instead of cash because of the rewards program.
How do they stack up to other age groups?
•35-44 yr olds: 28%
•45-54 year olds: 25%
•55-64 yr olds: 22%
•65-74 yr olds: 20%
Reward cards are the go-to plastic in your wallet.
For customers that have several credit cards in their wallets, 42% of the time they’ll use the card that offers them the best rewards.
Big spending happens on credit cards most frequently.
Credit cards are chosen more frequently for big-ticket items, travel expenses, and purchases on the internet. If these cards have an associated rewards program, the benefits can add up quickly.
Next up for integrated payments in 2016—Top 4 Trends
Next up for integrated payments in 2016—Top 4 Trends
Will 2016 be the year of technology or the year of security? At Vantiv we believe both will be of utmost importance for businesses and their customers. That’s because in addition to the ever-expanding catalog of new payments options, security is also pushing to the forefront with changes – such as EMV, tokenization and encryption.
Following are the four biggest integrated payments trends to watch in 2016. From increased security standards and mobile options to accelerated innovation cycles, these trends present challenges and opportunities for businesses:
New Technology Will Drive Innovation
With increasing competition, small businesses and partners need to find efficient methods to stay engaged with existing and new customers. For example, The Salvation Army began using DipJar’s credit-card enabled tip jars at some of their donation spots – an innovative alternative to an increasingly cashless payment environment. 2016 will see more businesses improve customer retention and growth through the utilization of new technology in the payments industry.
2. Payment Security Won’t Stop with EMV Alone
According to a report by BI Intelligence, payment card fraud cost the U.S. $7.9 billion in 2014. That’s almost a 60 percent increase over the previous five years. The EMV liability shift will continue to be a hot topic this year, and while EMV is certainly an important part of the overall security picture, it is just a piece of the puzzle. Other security tactics – like encryption and tokenization – will play a huge role in securing the transaction process. While some merchants may not be ready to migrate to EMV, they still need to be aware of other methods to secure their business.
3. Mobile Payment Is Growing Quickly
The use of mobile payments isn’t a new concept. In fact, different offerings have been around for years. But in 2016, we will finally see significant adoption. According to a study by Juniper Research, 1.5 billion mobile wallets will be in use globally by 2018, which would account for roughly 1 in 5 phones. Accelerated innovation cycles will create an explosion of payment use cases, with more opportunities to attract customers and keep them coming back.
4. More Consumers Will Use Merchants’ Mobile Apps
Notice an increase in merchant mobile apps that offer convenient ways to order, or discounted prices on merchandise? One example you might have seen is Starbucks, whose Mobile Order & Pay app drove five million transactions in less than a month. Now, more than 20 percent of Starbuck’s mobile transactions take place through the app. This trend can be seen across other merchants – including Domino’s Pizza, Taco Bell and Walmart – and part of a larger trend that is seeing more and more downloads of merchant apps and an increase in mobile sales.
The overarching trends for integrated payments this year are security, and the evolution of how we pay and interact with merchants. While EMV integration continues past the liability shift, security won’t stop there as tokenization and encryption will be viable ways to ensuring a more secure payment environment. Most agree that many merchants will also notice a shift towards online fraud and Vantiv can help those businesses with our advanced fraud toolkit.
Merchants will need to explore various payment methods until they find what works best for their customers. Whether that’s accepting mobile payments or releasing easy-to-use apps of their own.
Are there any trends you expect to come to fruition in the integrated payments space in 2016? Let us know on our Vantiv social channel including LinkedIn, Facebook and Twitter.
Top Benefits of Upgrading to an EMV Terminal
Top Benefits of Upgrading to an EMV Terminal
Although the Oct.1, 2015 fraud chargeback liability shift has come and gone, many merchants are still considering whether the transition away from magnetic stripe point of sale systems to EMV is the way to go. One of the main reasons some are hesitant to take the plunge is the additional expense associated with the new hardware. Although the change may take some getting used to, in the end, EMV terminals offer companies many benefits. These include:
1. Reduction of fraud
Criminals have figured out how to steal and counterfeit the information contained in magnetic stripe credit cards. Reducing fraud is one of the reasons that spurred card providers to introduce EMV-enabled versions, which feature a small chip. This mechanism creates unique data for each transaction, making it much more difficult for fraudsters to get their hands on the information.(1)
Although the chipped cards do fight fraudulent purchases on their own, they can only be completely successful if merchants have an EMV terminal. With EMV chip card technology, the card is dipped, rather than swiped, and remains in the terminal throughout the transaction. Chip cards can be swiped too, but have extra security advantages when processed via EMV chip readers instead.
2. Improved customer trust
Since upgrading to EMV terminals is not mandatory, some businesses will likely not make the shift. However, this move could seriously impact their company. Credit card fraud and identity theft are two major concerns in the world today and customers want to protect their sensitive information by any means possible. Consumers want their transactions to be with enterprises they can trust and EMV compliance is one way to gain that credibility in clients' eyes. Even loyal customers may question their dedication to a company if the business is not considering a shift to an EMV terminal.
To maintain and even increase consumer confidence and satisfaction, merchants should consider making the switch from a magnetic stripe to EMV terminal. Knowing that the business is taking the necessary steps to keep their data safe will go a long way with customers. This action will also keep enterprises competitive in their industry.
3. Increased cost-savings
While many entrepreneurs cite the cost of an EMV terminal as the reason they waver on making the switch, the transition could actually save companies money in the long run. Since the fraud chargeback liability shift took place on Oct. 1, 2015, merchants may be held liable for certain fraud related chargebacks if they process chip cards on a terminal that is not EMV-enabled. Merchants may be held liable for hefty penalties in the event of a data breach. Upgrading to an EMV-compliant terminal is one step merchants can take to help avoid the possibility of a data breach and the ensuing fines and fees.
Furthermore, certain organizations are taking steps to help businesses make the change. Some EMV providers are allowing merchants to trade in their old POS systems or are offering reduced prices for making the transition.(2) Even the Payment Card Industry is making exceptions for merchants that switch to an EMV terminal; a new program waives a merchant's annual audit if 75 percent of transactions are completed using a dual contact and contactless system.
4. Acceptance of new technologies
As businesses continue to evolve, so do the payment methods customers can use. The EMV card transition is a large focus right now, but so is NFC (Near Field Communication) and contactless payments. Luckily, merchants may find themselves compatible with both EMV and mobile payments when they transition to a chip-reader terminal.(3) These methods make transactions easier for customers, improving their overall satisfaction with a company that offers the technology. This combination could also increase a company's competitiveness with its opponents.
The shift to EMV acceptance can be overwhelming. For small businesses that process fewer transactions, the transition may even seem unnecessary. Although the change may represent an extra up-front expense, the benefits are numerous.
Payments Basics: Currency Terms
Payments Basics: Currency Terms
With eCommerce available to even the smallest of merchants, your business has global opportunities like never before. Let's start with the basics of currency.
So, if you go global—what are some of things you need to know? This installment of our payments basics takes a look at essential currency terms and the language of going global.
Billing Currency - The currency in which a card issuer bills a cardholder for transactions
Cross-Border Fees - Fees associated with cross-border transactions
Domicile - The region where a merchant (you) is located
Dynamic Currency Conversion - Conversion of the purchase price of goods or services from one currency to another, as agreed to by the cardholder and merchant; that currency becomes the transaction currency, regardless of the merchant’s local currency
Foreign Currency - A currency other than local currency
Local Payments - Payment types that are offered in a specific geographic location (most commonly within a region or country) that are not accepted outside of that region—for example, Interac® is a local payment type specific to Canada, iDEAL is local to the Netherlands
Multi-Currency -The merchant’s ability to offer goods and services to cardholders in different currencies
Moving through the language of payments can sometimes be funny business. It can be an alphabet soup riddled with acronyms. We’d like to help simplify by removing some of the complexity and defining more clearly. This chapter in our series looks at some of the most common terms in the language of chargebacks, starting with the retrieval request.
A Retrieval Request is a request for transaction information (such as a sales receipt, invoice, or contract) for a particular transaction. This can occur when a cardholder does not recognize a transaction on their billing statement.
A Chargeback is the process of the Issuer sending the transaction back to the merchant. This can occur because of a processing technicality, a customer dispute or fraudulent activity.
A Representment is the merchant rebuttal to a chargeback, sent back to the Issuer for review. This is the process by which a merchant can respond to a chargeback with an Issuing bank and allows the merchant to present evidence to prove the chargeback is not warranted.
A Pre-arbitration or Second Chargeback can occur if the Issuer does not agree with the representment.
An Arbitration can occur when the Issuer continues to dispute the case and does not accept the previous representment, pre-arbitration response, or second chargeback response. At this stage, the card brand will determine financial liability between members.
Pre-compliance is notification to the other party that a violation of the network rules and regulations has occurred and no chargeback rights are available.
Compliance is the escalation of the pre-compliance case to the card brand if a resolution has not been reached.
Payments Basics: Card Acceptance Terms
Payments Basics: Card Acceptance Terms
Moving through the language of credit card acceptance and payments can sometimes be funny business.
This simple guide is a good place to start getting your edge. This chapter in our series looks at some of the most common basic terms in the language of card acceptance and processing.
Signifies which payment brands are accepted at a merchant location; provides the cardholder with information on where his or her card can be used
The unique identifier (typically a number) that an account issuer, as part of providing a credit or debit account, issues to an account holder
Member-based corporations that connect consumers, businesses, and banks to transact through electronic payments instead of cash and check; also establish and enforce rules amongst members and promote the brands (popular card brands include Visa® and MasterCard®)
Any association member financial institution, bank, credit union, or company that issues (or causes to be issued) plastic cards to cardholders
Person or entity that receives an account from a card company or issuer
The date embossed on a credit or debit card beyond which it becomes invalid
A commercial entity or person authorized to accept cards and access devices when properly presented; an organization that uses credit cards to receive payments from its customers pursuant to agreement with card brands
The Scary Side Effects of a Data Breach
The Scary Side Effects of a Data Breach
News stories about data breaches are increasingly common as hackers are becoming more intelligent in their means of infiltrating companies’ networks. Businesses have put certain security measures in place, but these features aren't always enough to keep outsiders from accessing sensitive data. In addition to compromised security and the potential for fraudulent charges, data breaches come with a variety of negative consequences.
A good reputation is often a company’s most prized asset as a business must work constantly to build and maintain the integrity of its brand. However, one compromising episode like a data breach can tarnish even the best of reputations. While every hack is different and effects enterprises in various ways, companies that have been breached will often say their reputation was negatively impacted. In fact, 46 percent of organizations say they suffered damage to their reputation and brand value as a result of a cybersecurity breach (1).
Before the Internet, businesses may have been able to recover more quickly without stories spreading at such a wide distribution in such a short amount of time. Today, however, that is clearly not the case. News of a data breach travels far and wide, affecting a company’s identity for customers around the world. When creating a contingency plan for potential breaches, enterprises should include media preparation and strategies for maintaining their reputations through the ordeal, from beginning to end.
Decreased competitive ability
Often, data hackers are interested in a business's proprietary information, including customer lists, pricing strategies, and trade secrets (2). Once cybercriminals have this information, they can effectively damage a company's competitiveness by providing these materials to industry rivals or by exposing the information to the public. This effect is heightened if the data breach is not discovered immediately and is allowed to continue for weeks or months at a time.
Additionally, a company’s competitive ability will decrease following a data breach as customers are likely to look to other sources for making purchases. A data breach, if not identified fast enough, can have major effects on a company. Rebuilding a reputation can take more time and effort than it did to build it in the first place.
Lost customer trust
Clients share their sensitive information with businesses frequently, assuming the companies have the proper security measures in place to protect their data. As soon as a data breach occurs, customers will question the amount of trust they've put into a business. Furthermore, consumers want to believe that enterprises can not only prevent but also properly manage a potential data breach (3). While the hack itself might affect customer loyalty, companies that don't handle the attack with competence will likely see a more negative impact on client confidence. The majority of consumers won’t do business with an enterprise they can't depend on.
It’s a company’s responsibility to maintain client allegiance. Since loss of trust often comes not from the breach itself, but from lack of follow-up after an incident, companies must be transparent with affected customers. Enterprises should already have a contingency plan in place and communicate it with consumers as soon as possible. The more information businesses can share with clients, the better. This action will show companies are not attempting to hide information and can maintain customer loyalty and trust throughout the data breach aftermath.
Once businesses are aware that their system has been infiltrated by an outsider, the most common course of action is to stop operations until a solution is found. Companies have to find the source of the data breach, especially if a particular network flaw allowed the hacker to access sensitive information. With processes on shutdown to eradicate the criminal activity, enterprises can lose revenue (4). The longer a business's network is down, the more profits a company stands to surrender. In addition, earnings may also decrease as a result of diminished customer trust. If clients look elsewhere for products and services following a data breach, enterprises can be seriously affected.
Unfortunately, it's not about if a data breach will occur, but when. Companies around the world and from a variety of industries experience these incidents every year with differing magnitudes and overall effect. Businesses can suffer from serious consequences, including decreased revenue, trust and competitiveness if a hack is not discovered quickly and handled properly. To avoid these side effects, enterprises must be transparent with their client base and willing to provide answers to important customer questions. With frequent communication and the right breach assistance provider, businesses can maintain their reputation, even following a data breach.
Post EMV, Retailers Can't Sleep on Fraud, Convenience
Post EMV, Retailers Can't Sleep on Fraud, Convenience
With the EMV migration continuing, it is critical that organizations keep in mind that EMV is not the security “silver bullet” that businesses might hope for. Rather, it is only one piece of a layered approach to fraud prevention that businesses should incorporate.
Retailers still need to take the necessary steps to safeguard data in several different ways through a balanced and consistent strategy that relies on a proven, best-in-class fraud detection solution and industry expertise to prevent fraud without preventing sales.
EMV was designed to better authenticate credit transactions. Rather than handing over their card to a cashier or swiping their card’s magnetic strip, consumers are now prompted to insert their card into an EMV terminal and enter a pin number. This new system adds several layers of protection, including encrypted data on the card itself, which makes it tough for fraudsters to duplicate.
Here are 3 things that businesses can expect with the new EMV change.
EMV adds hurdles for consumers and merchants – at least initially.Even in business, we are all consumers first and we’re all starting to feel the impact of the EMV conversion.
Once we begin using our new cards, we will immediately notice that our shopping experience is different. We’ll no longer have to hand our card to a cashier. Instead, we’ll dip our card into an EMV terminal.
This is part of the appeal of the new system, as it adds several extra layers of protection, including encrypted data on the card itself, which makes it tough for fraudsters to duplicate. However, while the new system is more secure, given that the entire country is in the process of adopting the new credit card system there will likely be headaches and hiccups.
EMV requires significant business investment. For businesses, especially retailers, chip-and-signature required significant investment, especially on hardware.
It has been reported that many small businesses are still not ready for EMV credit cards. Businesses need to keep in mind that consumer convenience should remain an important consideration – and that should be balanced with security and privacy concerns. That means deploying fraud prevention tools that don’t also equal sales prevention.
Fraud will move online. With the EMV rollout point-of-sale fraud will be much more difficult for fraudsters to perpetrate.
While point-of-sale transactions become safer and more secure, card not present (CNP) fraud will rise in the wake of the EMV rollout as criminals focus their energies on the fraud they can still perpetrate. Thus new challenges in preventing CNP fraud are expected to emerge. In Europe credit card fraud has been slashed by over 65% post-EMV and many attribute this to the adoption of chip-and-pin technology. However, those same markets within EMV already in place saw their CNP fraud rates increase as a result of the switch. Fraud is always moving.
Go Chip Card - FAQ EMV
What is a chip card and why am I getting one?
Chip cards are payment cards that have an embedded chip. Chip cards offer you advanced security when you use the chip to pay in store or at an ATM.
What is EMV?
Chip cards are based on a global card payment standard called EMV, currently used in more than 80 countries. There are more than 3.4 billion chip cards issued across the globe. Learn more awww.emv-connection.com/consumers.
Why are chip card transactions more secure?
Chip card transactions offer you advanced security in-store and at the ATM by making every transaction unique.
And, your chip card is more difficult to counterfeit or copy. If the card data and the one-time code are stolen, the information cannot be used to create counterfeit cards and commit fraud.
How do I know if I have a chip card?
If you have a chip card, the chip is located on the front of the card. You will still have a magnetic stripe on the back so that you can use it at merchants who don’t accept chip cards yet.
How do I use my chip card in stores?
During the transition to chip, you can swipe your card as you normally would and follow the prompts. If the terminal
is chip-enabled, it will prompt you to insert it instead. If you already know your chip card works there, start by inserting your card. These basic steps will help ensure successful transactions:
1. Insert your card with
the chip toward the
terminal, facing up.
Do not remove until
2. Provide your signature
or PIN as prompted
by the terminal. Some
transactions may not
3. When the terminal
says the transaction
is complete, remove
Always remember when you use your chip card to follow the prompts on the terminal and leave your card inserteduntil prompted to remove it.
What should I expect when using my chip card at ATMs?
Depending on the type of ATM, your experience may differ slightly.
IIf your card stays visible, use these basic steps for a successful ATM transaction:
1. Insert and remove your card as you normally would. This tells a chip-enabled ATM whether you have a chip card or not. Then follow the prompts.
2. If the ATM is chip-enabled, it will prompt you to insert the card again and leave it inserted. The ATM will clamp down on your chip card to hold it in place until the transaction is complete. Do no try to remove your card until prompted by the ATM.
3. When the ATM says the transaction is complete, remember to take your card.
If your card is not visible, a chip-enabled ATM will automatically recognize the chip on your card. If you’re used to an ATM returning your card immediately, note that your chip card will now be returned at the end of the transaction. To complete a transaction, proceed as you normally would and follow the prompts. When the ATM says the transaction is complete, remember to take your card.
Can I still pay in store or use an ATM if I don’t have a chip card?
Yes, merchants and ATMs will continue to accept magnetic stripe cards.
Can I still use my chip card at a non-chip-enabled ATM or merchant terminal?
Yes. Your card will have a chip and a magnetic stripe to accommodate any situation.
What does a chip-enabled merchant terminal look like?
Chip-enabled terminals have all of the features you are used to with a payment terminal, with the addition of a slot to insert your card. The slot is typically located at the bottom or the top of the payment terminal.
What does a chip-enabled ATM look like?
Chip-enabled ATMs have all of the features you are used to. You likely won’t notice any physical difference between
a magnetic stripe ATM and a chip-enabled ATM.
How do I know if a merchant terminal accepts chip cards?
During the transition to chip, you can swipe your card as you normally would and follow the prompts. If the terminal
is chip-enabled, it will prompt you to insert it instead. If you already know your chip card works there, start by
inserting your card.
How do I know if an ATM accepts chip cards?
At an ATM, start the transaction as you normally would and follow the prompts. A chip-enabled ATM will guide you
through the transaction. Depending on the type of ATM, your experience may differ slightly.
If your card stays visible, use these basic steps for a successful ATM transaction:
1. Insert and remove your card as you normally would. This tells a chip-enabled ATM whether you have a chip card or not. Then follow the prompts.
2. If the ATM is chip-enabled, it will prompt you to insert the card again and leave it inserted. The ATM will clamp down on your chip card to hold it in place until the transaction is complete. Do not try to remove your card until prompted by the ATM.
3. When the ATM says
the transaction is
to take your card.
If your card is not visible, a chip-enabled ATM will automatically recognize the chip on your card. If you’re used to an ATM returning your card immediately, note that your chip card will now be returned at the end of the transaction. To complete a transaction, proceed as you normally would and follow the prompts. When the ATM says the
transaction is complete, remember to take your card.
What if the terminal or ATM doesn’t accept chip cards?
Cards will still have a magnetic stripe on the back, so even if a terminal or ATM is not yet chip-enabled, you can use
your card as you do today.
Where can I use my chip card?
Anywhere. Your card will have a chip and a magnetic stripe to accommodate any situation.
When will I be able to use my chip card at all merchant and ATM locations?
Every day, more merchants and ATMs are becoming chip-enabled to increase security for in-person card transactions,
so you will start to see these terminals and ATMs at many of the stores and financial institutions you visit
today. You will continue to be able to pay at both chip-enabled and non-chip-enabled merchants and ATMs with the
When can I expect to get my chip card?
Many financial institutions are issuing chip cards today or are planning to soon.
Will anything change during my online purchases?
No. You will use your chip card for online purchases by following the same process you do today.
Can I use my chip card outside of the U.S.?
Yes. Chip cards are widely used in international markets and are accepted in more than 80 countries. Having a chip
card will make it easier for you to make purchases and complete ATM transactions when you travel internationally.
Card-Not-Present Fraud: 10 Things Merchants Need to Know
Card-Not-Present Fraud: 10 Things Merchants Need to Know
Think You Understand Card-Not Present Fraud? Think Again.
For online merchants, card-not-present fraud is a viable threat to their revenue. Unfortunately, most eCommerce merchants don’t fully understand the realities of this ever-present danger.
The recently released True Cost of Fraud report revealed that for the first time, card-not-present merchants lost over 1% of revenue to fraud.
The bad news? The situation is only going to get worse.
The Top 10 Things You Need to Know about CNP Fraud
Any merchant considering card-not-present transactions or currently immersed in the eCommerce environment must know these ten things about fraud.
Fraud is a broad term.
Ask five merchants to define ‘fraud’ and you’ll likely get five different definitions—and they’ll all be right. That’s because fraud covers a wide range of activity and can include various methods employed by criminals to steal from others. Some of the activities under the ‘fraud umbrella’ include:
•Unauthorized transactions/stolen identity
•Fraudulent requests for returns
Merchants who focus solely on preventing unauthorized transactions are leaving the door open to criminals who engage in one of the other types of fraud. More than simply dealing with ‘fraud,’ merchants need to engage in a systematic, comprehensive approach to protecting their profits from each type of fraudulent behavior.
Fraud rates can change.
Every year, agencies such as LexisNexis release detailed reports outlining the incidence of fraud and its effect on merchants. The 2015 report details what financial experts have suspected: card-not-present fraud rates are growing.
The current amount of revenue lost to fraud was a 94% increase over the previous year. If this trend continues, profit loss will grow exponentially over the next five years. Some experts estimate as much as $2.1 billion in losses by the year 2018.
The 2015 report also shows that, while the rate of overall revenue loss has escalated, the costs per fraud incident has declined to the lowest rates in six years. Costs are now just $2.23 per dollar of fraud (a drop from $3.16 the previous year).
The reality is that if fraud is declining in one area, it almost certainly is growing in another. Fraud rates and statistics fluctuate. Merchants shouldn’t relax their prevention standards just because it seems like risks and liabilities seem to be decreasing. Constant vigilance is essential.
Fraud filters aren’t a comprehensive solution.
Merchants often use fraud filters to help reduce their risk. These tools can be useful, however they aren’t an all-encompassing solution.
Fraud filters are based on automatic programming that can only flag transactions that meet particular criteria. It is up to the merchant to verify a majority of the transactions through a manual process. With up to 75% of transactions identified as potential fraud, merchants must engage in a time consuming process of determining the validity of each transaction.
Even with a merchant’s manual review, a significant portion of declined transactions are actually false positives. This causes unnecessary revenue loss. Professionals can provide intelligence that helps fine-tune fraud filter rules, improve the efficiency of the review process, and experience fewer false positives.
Ineffective solutions are needlessly expensive.
It’s the antithesis of the adage, “You’ve got to spend money to make money.” Merchants have to spend money to save money.
Some large ecommerce merchants use as many as five fraud mitigation systems and spend hundreds of thousands of dollars a year for protection. However, the industry in general is still seeing record-breaking fraud liabilities. This proves one thing: the only expensive solution is the one that doesn’t work.
Paying for fraud prevention that works is one thing. Paying for fraud prevention that doesn’t work is quite another.
EMV can hurt card-not-present merchants.
For card-present merchants, the Europay MasterCard Visa (EMV) chip cards will make it virtually impossible for criminals to use counterfeit cards. While this is good news for traditional brick-and-mortar merchants, it’s bad news for online businesses.
Criminals will look elsewhere to use their ill-gotten card numbers, bringing them straight to the card-not-present merchant’s door.
Countries already utilizing the EMV technology experienced staggering growth in card-not-present fraud, some reports indicating as much as a 79% leap in fraud costs once the new card processing standards were in place.
As the United States finalizes the transition to the new card processing standards, merchants should be prepared for what could be a barrage of fraudulent attempts on the card-not-present environment.
Chargebacks result from three types of fraud.
All fraud can be organized into three categories. When chargebacks are issued, one of these three triggers is to blame.
Merchant Fraud: Merchant fraud can happen as a result of merchant error, mistakes in processing, or purposeful misleading of customers. This type of fraud was the basis for the development of the chargeback process, and can typically be prevented through the adherence to best business practices.
Criminal fraud: The most talked about form of fraud, criminal fraud occurs when a criminal steals either a cardholder’s identity or account information. This information is used to purchase items or services at the expense of another. The cardholder appears to be the victim in this type of fraud, but cardholders can initiate a chargeback, eliminating their financial loss. In this case, merchants are the unwitting victims of criminal fraud, losing the revenue from the sale, forfeiting the items sold, and paying additional chargeback fees.
Friendly Fraud: The most common form of fraud, friendly fraud is the result of an otherwise loyal customer contacting the bank to dispute a credit card charge. A variety of reasons can lead a consumer to engage in friendly fraud, and merchants must address each of these reasons to prevent unnecessary revenue loss.
Outdated standards can’t keep up with the growing fraud problem.
Originally established in the 70’s, chargeback guidelines haven’t changed much in the last forty years. In an era that gave us cell phones, online banking, Apple Pay, mobile commerce and other technological advances, the commerce industry has seen dramatic changes in how payments are handled.
A process that was designed before the internet was even a consideration have no possible way of keeping up with the fraud that has developed with the new technologies.
As technology continues to evolve, criminals will continue to find new ways to exploit that technology for their own gain, leaving merchants with outdated policies as their only backup.
Consumers have identified loopholes.
Consumers are looking for solutions that fit their lifestyle. Often, this means that the inconvenience of making a return becomes more than a consumer is willing to deal with.
Research conducted by payment industry experts found cardholders admitted that 81% of chargebacks were filed out of convenience, as a method of forcing a return without the hassle of contacting the merchant.
Additionally, 86% of chargebacks are filed fraudulently. Consumers initiate a chargeback without first contacting the merchant in an attempt to resolve the problem.
Banks aren’t helping the situation.
In an effort to placate consumers, banks offer zero liability coverage. While this is a bonus for consumers, it often inadvertently incentivizes friendly fraud.
Banks don’t engage in sufficient due diligence when illegitimate chargebacks are requested. Under the guise of “the customer is always right,” friendly fraud continues to flourish.
In-house, DIY chargeback management is, by far, the least effective option available to merchants. There are several reasons why their efforts don’t produce sufficient ROI.
•Merchants fighting fraud are forced to use their own resources to deal with this growing problem. These resources should
be spent growing the business.
•To keep up with card networks’ changing regulations, merchants must spend time verifying current standards and learning
the new processes.
•Automated programs are unable to detect professional fraud rings that cause an otherwise successful business to flounder.
Automation is also susceptible to errors, errors that need human analysis to detect.
•The rapidly changing ecommerce market leaves merchants vulnerable to criminals seeking new avenues in the card-not-
For merchants trying to maintain revenue and hold on to profits, cost effective methods of preventing fraud and fighting chargebacks can be as simple as contacting a professional.
If you need help managing card-not-present fraud, now is the time to act.
To EMV, Or Not to EMV – That’s a Big Question
To EMV, Or Not to EMV – That’s a Big Question
Helping you process the EMV decision
For many businesses, the October 2015 fraud liability shift associated with EMV (Europay MasterCard Visa) wasn’t so much a shift as it was an about-face. Holding merchants accountable for certain cases of card-present fraud occurring through no fault of their own is a switch from the previous process, which routinely held credit card companies responsible for the same fraudulent transactions.
However, as the credit card companies have increased their efforts to debilitate certain means of card fraud, merchants are now expected to increase their securities as well. As more and more consumers receive and begin using their issued EMV chip credit and debit cards, merchants may find that adopting EMV-enabled payment terminals to be in everyone’s best interests. Making the transition to EMV can be beneficial in the long run, although with the new definition of “fault,” it can be difficult to say what EMV steps are right for which businesses.
With so much liability information to digest, maintaining EMV literacy can be a challenge unto itself. As EMV chip technology becomes the standard for U.S. card-present transactions (as it has globally), it’s crucial that merchants understand how this new technology will impact their business with or without EMV-enabled terminals. To help you navigate your options and make a more informed decision about EMV adoption, we have created the following liability and fallback charts to outline the basics along with the more intricate aspects of the October 2015 EMV liability shift.
U.S. Liability Flowchart
Refer to the flowchart below to determine liability for disputed transactions under EMV liability rules. This material is intended to be used only as a reference tool in association with the card brand’s rules.
Fallback Transaction Chart
Occasionally, for reasons such as malfunctioning devices or terminals, not all EMV chip transactions can be completed. When this happens, it is called “fallback,” which necessitates the use of magnetic stripe or key entry to complete the transaction. All fallback transactions require online authorization and proper identification, which transfers liability to the card issuer, if approved. Declined transactions, as well as blocked chip AIDs, should not be attempted.
Use the fallback chart below to help determine what party assumes responsibility in case of fallback and what action is necessary.
7 Website Elements that Kill Ecommerce Conversions
7 Website Elements that Kill Ecommerce Conversions
Apple nails this almost every time. Most pages on its site are gateways to the online store, and the headlines throughout the site entice visitors to take an action (read the page or click a link).
2. Unhealthy Margins
According to a psychology study at Wichita State University, margins play a huge role in both reading speed and comprehension. It showed that smaller margins allowed for faster reading, but larger margins resulted in better comprehension. Since it’s important for your visitors to learn about products quickly, it’s crucial to find what works best.
Test margins to find the right one for your site.
3. Over Attempting to Limit the Number of Clicks, to Get to a Product
It’s long been said that the more clicks it takes to reach a certain product, the less apt the user is to continue. While analytics most always make this appear to be true, countless studies have shown that guidance works, regardless of how many clicks it takes.
A user interface engineering study from 2003 is still heavily referenced by industry pros. It revealed that the problem isn’t with the number of clicks but, rather, unexpected outcomes when a link is clicked.
This study showed that unexpected outcomes after each click were more an issue than the total number of clicks.
4. Cramming Everything at the Top of the Page
Yes, it’s important to include key info above the “fold,” especially on product pages. The upper portion of a product page should include the name, price, main image, and the add to cart button.
Starting the product description or, at least, the bullet points before scrolling is ideal. However, important content can fall below that line. A study that used data from 25 million sessions revealed that the portion just above the fold is seen the most, and that nearly 75 percent of visitors begin scrolling before the page fully loads.
This chart, from Chartbeat, shows that visitors often do scroll. They just need a reason to take that action.
5. Offering Too Many Options
An interesting study published in Neuro Web Design showed that the more choices given resulted in reduced decision making. (You can read some of the study, which took place at a grocery store, here.)
Analytics will often reveal the same when more than a handful of options are provided — only the first few are ever selected, or the visitor leaves because he can’t decide.
Amazon product pages are a perfect example of information overload. Offering too many options can often leave shoppers up in arms.
Unless it’s a custom-built product (like a computer), you can convert more by not dangling so many carrots.
This applies to social sharing icons, too. Presenting a plethora of icons because people use all different types of networks can actually limit the number of people sharing your products. Three to five primary sharing icons is sufficient. You can use an additional icon that links to other networks.
6. Assuming People Know What Each Icon Represents
Using icons to guide users saves valuable space and can help in cleaner design, but do your visitors know what the icons mean? There aren’t many universally recognized icons. Icons for print, search, email, and shopping cart have been used for years, but most others are relatively new.
Always choose icons that are simple to understand. Including a text label alongside them or, at least, the most important ones, is key.
Placement of icons matters just as much. Be sure to include ample space between icon and label sets, and be careful about setting icons directly next to other menus or input fields.
(Speaking of icons, stick with the standards for social media. Everyone recognizes the white-on-blue “f” for Facebook.)
7. Being Too Technical or Too Basic
Sure, you have a target audience. If you want to attract more customers, though, you need to do your best to speak to everyone. That means speaking in layman’s terms, even if the simpler explanation is provided elsewhere on the page (you wouldn’t want to offend your primary audiences by seeming to talk down to them).
This mobile site screenshot, captured by Nielsen Norman Group, shows how visitors could confuse the menu icon as a search button.
Teavana explains to everyone how to steep the tea.
Marhar Snowboards uses expanding labels to explain things more simply.
Accompanying details with how-to images or video is a good way to ensure more people understand how a product works.
These, of course, are just seven potential issues. I’ll be writing about more in the near future. If you implement any of these recommendations, I’d love to hear about the results. Chime in below and let me know.
EMV Credit Card Chips: No Silver Bullet, but a Significant Step Forward in Fraud Reduction
EMV Credit Card Chips: No Silver Bullet, but a Significant Step Forward in Fraud Reduction
By Steven Myers Associate Professor of Computer Science and Informatics Indiana University
With the New Year beginning, we have just come through another holiday shopping season, and for many of us, we await our credit card bills--the hangover to the cheer that is the giving season. Only two years ago, during the holiday season, Target's infamous data breach put some 40 million credit card numbers in peril due to hacked point-of-sale systems skimming credit credentials. The result was millions of reissued credit cards. Of course, Target is not alone, and since that breach many other national brands such as Goodwill, TJ Max, Kmart, Neiman Marcus, Staples, Safeway, Hilton and others have had breaches that released credit card data. These breaches have resulted in wasted time and money, as millions of people were issued new credit cards, and have spent time looking for and following up on fraudulent activities. It is worth considering how technology is adapting to provide more secure transactions to hopefully improve the situation going forward.
For most people the most noticeable change is the implementation of chip-and-sign technology in the U.S. Many new credit cards issued in the past year or two contain large gold-colored metal chips. This chip (often referred to as an "EMV" chip) is actually a small tamper-resistant microprocessor with some private storage that is used to secure transactions and provide significantly more security beyond what is capable with the small magnetic strip on the back of traditional credit cards. The chip adds a small computer to the credit card that permits it to interact with credit systems using secure cryptographic protocols, similar to those used to secure Internet transactions. The chips can even be reprogrammed at a point-of-sale terminal to modify their susceptibility to fraud in real-time. For example, they can be cancelled, or have a limit on the size of transactions placed on the card. In contrast, traditional magnetic strips can only contain static information, and are quite easy to read, duplicate and forge.
So, how do these new chips reduce fraud? The system works on several levels. First, all of the digital information stored on the card is digitally signed by the issuer. Digital signatures are not the scanned signatures the consumer signs on a digital pad, but rather cryptographic protocols that allow a signing party to sign information, so that a verifying party knows who signed it and that the signed information has not been modified. However, EMV chips do not just send a card number to perform a transaction. The point-of-sale terminal generates information specific to the transaction, and the card itself digitally signs this transaction-specific information. This prevents transactions from being replayed, and ensures the card is present for the transaction. The card is known to be present as the tamper-resistant private memory of the chip contains something called a signing key, and only someone with access to the key can sign on behalf of the card.
Secondly, a number of fraud prevention features can be programmed directly into the card, either at the time of issuance or the next time it is inserted into a point-of-sale terminal for a transaction. For example, EMV cards can be programed to prevent the card from being used in foreign transactions, or to allow only offline transactions below a certain value, or to completely disable a card that been reported lost. These features can be programmed in near real time, during the next transaction the card performs.
One might wonder why EMV cards do not simply encrypt all information and send that data to the issuer. There are several issues here. First, there will always be a need for some transactions to be offline, and in those cases some public credit card number is seemingly necessary. Secondly, and probably more importantly, many merchants and intermediaries need these numbers to track customer purchases, enable easy purchase returns, route purchase data through payment networks, and other practical functions. While encryption seems like an easy solution, it creates a number of practical problems.
One recently introduced solution called "tokenization" uses an "alternate" credit card number for different merchants, locations or even transactions. This allows merchants to store all your transactions under a unique pseudo credit card number, but one that has no value to other merchants, as your card would generate a different pseudo credit card number for other merchants. Thus, merchants can perform returns, and track purchases using the pseudo credit card number, while gaining the security that a breach in their pseudo credit card numbers would result in no global damage. Further, after a breach has happened, everyone's cards can be programmed to update their pseudo credit card numbers, making them of no future value. Of course, both the card and the bank need to be able to map back and forth to the actual credit card number to appropriate pseudo credit-card numbers, in order to properly manage accounts. This is done securely on the chip, and in secure processing facilities at the issuer.
Several "new'' technologies, including wireless Near Field Communication (NFC) credit cards and smartphone enabled technologies such as Apple Pay, Android Pay and Samsung Pay, are all very similar in that the point-of-sale terminal is talking to the microprocessor is the smartphone as opposed to the one embedded in the credit card. The mechanism by which communication takes place is now over a low-power, near-range radio transmission, as opposed to physical contact with the chip reader. All these technologies are running EMV protocols, which is why ApplePay, Android Pay and Samsung Pay were able to roll out their services to so many merchants with little difficulty.
EMV technology is not a silver bullet that solves all problems. For backward compatibility most merchants are still accepting traditional magnetic swipe cards, although this will change over time. More importantly, EMV is currently not useful for online purchases (your personal computing device probably doesn't have an EMV reader on it). Therefore, there will continue to be a market for stolen credit card credentials for the near future. However, it does provide many fraud reduction features, and has enabled more payment options for consumers. Some food for thought as you nurse your holiday shopping hangover.
The Six Things That Will Define Payments In 2016
The Six Things That Will Define Payments In 2016
If the principles of Nostradamus are to be believed, 2016 isn’t going to be such a great year.
Those who interpret the writings of this famous 16th century French astrologer predict that this year, Obama will be the last U.S. president, but not because 2016 marks his last year in office. They suggest that this will be the last year the U.S. will actually have a president.
Listening to the news, it sometimes seems that way.
Still, others interpret his writings — which hypothesize that the world’s events are cyclical and that history does really repeat itself — to mean that we’ll have severe meteorological catastrophes (doesn’t seem to require a huge leap of faith), that the Middle East will destabilize and erupt in war (ditto), and that instead of the world ending in 3797, as Nostradamus predicted, that it will, in fact, end this year.
That would be a real shame, since we’re just starting to have fun in payments.
But just in case these prognosticators are wrong, I thought I’d share my six for ’16 – the six trends that I think will define the year in payments – or whatever time we have left.
1. Mobile Apps Kill Countertop Checkout
Question: What’s the biggest friction consumers face paying for things in a store?
Answer: Standing in line waiting to checkout.
And all of the mobile payments apps in the world that substitute a tap for a swipe (and now the dreadful dip) won’t change that. In fact, it might even make it worse since there are so few locations where consumers can transact that way that it simply introduces more uncertainty, confusion and friction.
It’s well known that mobile phones and connected devices allow consumers to do lots of things anytime and anywhere, including shop, and to do those things even standing inside a physical store. We’ve been talking about the blurring of the online and offline worlds now on PYMNTS for the last six years — and with our MPD clients, even longer than that. We don’t think that’s much of a news flash anymore.
But in 2016, we’ll see the offline/online distinction blur even further, even faster and even more broadly.
And start to kill off the countertop checkout in the process – in some categories much, much faster and in a very material way.
And that is a news flash.
Consumers increasingly won’t use their phones to look for stuff inside or outside of a store, and then walk into them and wait patiently in line to pay for those items using a plastic card like they’ve done for the last 60 years. Nor will they routinely stand patiently in those same lines and whack their phones or their watches against a POS terminal that can enable a contactless transaction.
They’ll instead leverage cloud-based apps to checkout on their phones inside the store – and use them increasingly to pay things that they want to buy before they even step one foot inside.
And establish preference for the merchants that enable that experience.
That’s exactly the experience we’re seeing take off like a rocket ship in QSR, in many other traditional and even non-traditional retail formats and in the many connected end points that the Internet of Things makes possible.
And it makes total sense. That behavior replicates the habit that consumers have honed for the last 20 years while shopping online, and for the last seven, doing so via a mobile device.
In QSR, the impact is dramatic and in such a short time.
In less than a month’s time, Starbuck’s Mobile Order & Pay drove 5 million transactions a month and huge numbers of new downloads of its mobile app. Starbucks says that more than 20 percent of Starbuck’s mobile transactions are taking place this way now – and the service is less than three months old.
Taco Bell has seen 2 million downloads of its mobile app just because of that functionality. But there’s more. Consumers who order their burritos that way spend more, on average, about 17 percent more. It’s easy to click “yes” to the question “do you want to add side of beans to the order” online. Order ahead makes impulse buying a sport and that’s huge.
Domino’s Pizza now calls itself a digital company since 50 percent of its orders happen online. Pizza Hut says 40 percent of theirs do, too.
But it’s not just QSR where this checkout and payment transformation is happening.
Buy online and pick up in-store (BOLPUIS) is the hottest trend in retail. Ten percent – and growing – of Target’s online sales are done that way now. Kohl’s reports that 3 percent of theirs are, too – and the service has only been active for a few months. Retailers love it since the vast majority of consumers – 60 percent according to RetailNext — spend more when they get to the store to pick up their loot – on average, 30 percent more.
But here’s where it gets really interesting.
Walmart Pay just launched its mobile payments app which essentially mimics an eCommerce transaction at checkout – linking the consumer’s app to a QR code that not only triggers payment but also applies coupons, promotions and Savings Catcher and gift card balances. The phone can be inside a consumer’s pocket or purse – it isn’t even material to “checkout” once the consumer has been checked in via the app. Target is said to be toying with a mobile app that works in somewhat the same way. Macy’s, with PayPal, rolled out a checkout option that mimics a PayPal online/in app checkout in the store, with, it says, amazing results.
SAP and its connected commerce initiative brings together a variety of players to enable commerce at the gas pump without swiping at the pump or in the store – or even getting out of the car. And, of course, Amazon with its Echo ecosystem and dash replenishment system is all about giving consumers the ultimate cloud-based digital experience. All that’s required of the consumer is to ask Alexa to add Tide to the shopping list and it’s done.
Of course, countertop checkout isn’t going to die totally in 2016, or even entirely ever. Payments is a slow moving train, as we’ve seen. But in some categories, it will deliver a remarkable and dramatic shift in how consumers pay for the things they are buying from physical stores – paving the way for the retail transformation inside of the store that will happen in the years to come. The 2016 offline/online blurring trend isn’t about giving consumers an app that allows them to move seamlessly between worlds to shop but about giving them the ability pay that way, too.
Which will increasingly not be standing in a line at a counter – at least to pay.
2. Faster Payments Won’t Just Be About Speed
The world is in a lather over faster payments. Eighteen countries have implemented some form of it, and here in the U.S. a number of initiatives are underway to replace and/or modify the payments rails to enable faster, secure and data-rich payments between all of the ~13,000 FIs that exist here.
NACHA is the first to advance the ball down that field in the U.S. in any sort of meaningful way by enabling ubiquitous Same Day ACH this coming fall. Three settlement windows each day will enable settlement and posting the same day, where needed.
But faster payments, like beauty, is in the eye of the beholder and comes with a number of trade-offs. Speed can deliver great benefits in some cases, but can introduce friction in the form of risk, uncertainty and cost in others. There’s a natural trade-off between the speed of payments and their flexibility and efficiency. For example, is a real-time payments system without ubiquity among all of the various relying parties any better than same day or even next day with it? Or without the appropriate risk management or compliance requirements that guarantee the integrity of the funds? Or the accompanying data that makes posting seamless and efficient for the receiver? And with a business model that allows the banks to recover the investments made in new systems?
That’s why in 2016 the faster payments debate will shift beyond a discussion of what rails and initiatives can make payments happen faster but about those that can make payments happen better. That will be about making payments flexible and efficient — instant in some cases, but always efficient enough to deliver payment and the value-added layers that relying parties also need: appropriate levels of risk management, compliance, security and data that travels with the payment and enables accurate posting to banks and enterprise systems of record.
Rails that do that – be they new and/or modified existing rails – will then become the platforms for enabling a whole host of use cases – some familiar like instant bill payment and others that are yet to be defined.
And that will set an interesting tension within payments as these initiatives take shape and these rails become more defined in the years to come.
It’s not exactly easy to build a global payments system capable of operating at scale and moving trillions of dollars daily, securely and quickly between relying parties. It’s why the notion of the blockchain as the world’s global financial systems backbone is little more than interesting cocktail party conversation. Not only is its tie to bitcoin fatal, but it’s slow, even at the small volumes it carries today.
But, the concept of a distributed ledger, a software platform that can support new products, and new ways of moving data and money together has given rise to the new thinking that is influencing the “faster payments” debate today. There’s great agreement that we need a fast, transparent, and reliable way to move money between people, businesses and governments.
So, 2016 will be the year that we get a better sense of how the new financial services superhighway will look, who’s best positioned to build and operate the on and the off ramps for that new superhighway, who might be the first to give it a ride, and what methods of transport they’ll use. And how faster and efficient they really need to be.
And, of course, which initiatives, will hit a big dead end.
3. Contextualized Commerce Will Redefine Impulse Buying — And Payments Innovation
A couple of years ago around this time I wrote that invisible payments, a la the “Uber” experience, would influence the direction of digital payments. Payments would simply become invisible as they became embedded into other apps that in the first instance solved other problems for a consumer – just as Uber did for those who wanted an alternative to a taxi.
“Invisible payments” has evolved to become contextual commerce and it’s the latest buzzword in payments. Contextual commerce takes the notion of embedding payments into apps and raises it to the power of 1,000. It’s about payments enabling the various digital experiences that consumers engage in during the course of their day. And, it’s sweeping payments by storm for one simple reason: the act of shopping isn’t something that consumes a huge part of a consumer’s digital day.
The latest Pew report says that consumers today spend about 5 hours and 38 minutes online. About 2 percent of that time is spent “shopping.” Instead, what consumers do with their digital day is check Facebook or other social media apps, text their friends, take pictures, listen to music, watch videos, play games, get caught up on news and weather, search for stuff, and get directions.
All of these environments, naturally, provide a rich set of information about consumer behavior that can shape or influence or even trigger a purchase in a very relevant and contextual way. It’s why advertisers and brands and retailers find mobile and digital such an amazingly attractive environment.
It’s also why ad blockers are among the most popular apps on mobile devices. Consumers find being served with ads in that environment utterly and amazingly annoying.
But that is contextual commerce’s greatest opportunity – the ability to payment-enable impulse purchases in a new and different way.
Today, contextual commerce is about putting buy buttons in places that consumers visit with an interest in buying – like Pinterest. But, if reports can be believed, payment-enabling Pinterest isn’t setting the world on fire. It’s been suggested that one of the major retailers participating in the program is only getting something like 10 orders a month. That’s not exactly game-changing. But perhaps not all that surprising.
Consumers might go to Pinterest for inspiration and ideas and perhaps even with an interest in buying something at some point in time. But more likely, they’re going to be inspired when they are planning a wedding or remodeling their family room or seeing what the latest in spring 2016 fashions might look like. But not to buy at that moment.
Consumers still need to process those inputs, be convinced that what they see they really want to buy, is in stock in their size, and that they are getting that item at the best price. Unless the item is a branded and familiar product that consumers need or want to buy right then and there, interest doesn’t translate to a transaction.
Pinterest is facing the same issue as Facebook. Buying inside the News Feed may sound like a great idea since consumers spend so much time there every day, but consumers aren’t taking the bait. Clicking on a news story in the News Feed about the Top 10 trends of a Vogue stylist is different than buying one of the 10 things that every Vogue editor has in her closet directly from the News Feed. That fashionista would want punch out to read the story but would want to visit the site where the item is being made available, zoom in on the product, check it out and then potentially see if a knock-off exists somewhere else.
But all of this is contextual commerce 1.0.
Contextual commerce 2.0 is giving the consumer the opportunity to buy something in the moment when there is both an interest and intent to buy. And not from an ad, but from inside an environment that is also providing useful information, in context, to consumers in some other way.
Maybe that’s inside a messaging app. Or a fashion site. Or a recipe site. Or a news site. Or Netflix. Or YouTube. Or search. It could be an app connected to the home that triggers an automatic purchase – or addition to a shopping list.
Anywhere it’s easy for a consumer to make an informed impulse purchase – from a brand presented in the right context that takes the uncertainty out of buying.
Contextual Commerce 2.0 will make it possible for new relationships between brands and consumers to be established and for the retail playing field to be defined differently and on the consumer’s terms. We’ve seen it happen already with Amazon and its branded Dash Buttons where consumers order Tide and Bounty, not laundry detergent and paper towels. And with recipe sites like Yummly that offer prompts to buy SnapDaddy BBQ sauce for that pulled pork recipe that a consumer wants to make for dinner.
In 2016 – and beyond — the winners will be those who can enable a relevant commerce experience across any operating system, channel or buying environment enabled by secure digital account credentials that move with them.
4. Online Friction Will Increasingly Drive Consumers Into Amazon’s Retail Arms, Unless …
There’s a reason that Amazon crushed the 2015 holiday shopping season: it’s just really easy to buy things on Amazon. Fill the virtual basket, click and two days later stuff just shows up. Consumers are prompted to put in their password at checkout, but they use Amazon so frequently that they remember it – it’s not a point of friction.
That’s not the case with most other retail sites. For sites that consumers visit for the first time, the information that’s asked of them before they’re allowed to pay for things is mind-numbing in some cases, including on some of the largest sites online, including the sites where consumers may have account credentials on file. Unless a consumer remembers her password (which she rarely does unless she uses the same one everywhere) it’s a very painful process to get past that gate to checkout.
And, more times than not, when that happens, consumers either go to Amazon to see if they can get the item they want to buy there, or just decide they don’t need the item that badly and buy something else somewhere else.
Yes, this is done for the protection of the consumer, but it’s also done because the merchant wants to capture consumer data. Consumers aren’t given the opportunity to checkout as a guest in these situations and then reestablish account credentials once the transaction is done. On many sites, even checkout pages that allow checkout in one click like PayPal, MasterPass, Visa Checkout, live on the page past that gate, which of course you can’t get to unless you enter your credentials.
That costs retailers — and in a big way, especially since consumers have other options that are less friction-filled, and consumers are increasingly taking advantage of them. Our work with BlueSnap to compile the Checkout Conversion Index suggests that retailers lose about 36 percent of their sales because of this sort of friction.
And a lot of them lose those sales to Amazon.
In 2016, retailers will need to come to grips with how they want to engineer the checkout process so that it solves a merchant’s biggest problem – making sales – first and their desire for data problems second. Having great products and great prices is only as good as the consumer’s ability and willingness to purchase on their terms. Sorting this out one way or the other will not only determine the degree to which retailers drive consumers into Amazon’s open and willing arms, but how well retailers deliver their omnichannel ambitions, which will increasingly be about using online credentials to pay for things via cloud-based apps from physical stores. Consumers just won’t put up with the friction retailers insert into the online shopping experience, especially when there are lots of alternatives to buy just about anything they want to buy.
5. Loyalty Will Become Payments’ Killer App
Give something to get something is an age-old and very familiar adage. And it’s the premise of a lot of online marketing programs: give up an email address to get [fill in the blank]. It’s also the premise of a lot of loyalty programs: give up name, address, and email address in exchange for discounts and other goodies. It’s one of the ways that retailers have tried to compensate for the lack of data about the customers that walk into their physical stores – enrolling them in their loyalty programs gives them the ability to create a record of what’s been bought and how frequently consumers shop at that retailer.
The problem is that loyalty, though, as a category, is also pretty unimaginative. As a category, it came out dead last in our Pii360 Innovation Index survey last year, as did the players representing that category. Until recently, loyalty has been a lot of the same-old, same-old – points-based programs with declining redemption values, that don’t inspire usage, much less influence loyalty.
So, most retailers get back what they give: enrollment without usage. Most consumers enroll in more loyalty programs — on average 29 — than they use – on average 12.
Data – and the creative use of that data — has the ability to change that and inspire the frequency of use that builds preference, engagement and loyalty. Loyalty programs alone can’t deliver that since there’s no ability to close the loop. And payments platforms alone are limited in their ability to deliver that since there’s no incentive, outside of acceptance, to build a base. But together they can change the consumer dynamic for their mutual benefit.
Loyalty can become the killer app for digital payments in much the same way that points were the killer app for card acquisition back in the day. Creatively integrating loyalty capabilities into payments apps can help retailers get what they want — data on consumer behavior in their stores and a way to communicate with them – and consumers what they want – a benefit for being a loyal customer – and payments apps players what they want – adoption of their payments method online without violating consumer privacy or data security.
In 2016, we will see loyalty programs reinvented around data, payments and enabling platforms that simultaneously give consumers the incentive to give up the right data to get something of value from a retailer – and for that to become the foundation for building a lasting relationship between that consumer and that merchant.
6. Consolidation Will Shift Payments’ Balance Of Power
During the first part of 2015, many FinTech investors and startups partied like it was 1999. If the company you were running wasn’t a unicorn or on its way to becoming one, there must be something wrong with what you were doing. Unicorn valuations were a function of what might happen someday if all the stars aligned and revenue started flowing. But it didn’t matter. Investors, flush with cash that they couldn’t figure out what to do with given low interest rates and returns everywhere else, just kept plowing more money into those ventures to prop up the many firms without revenue and maybe even the semblance of a sound business model that might drive a revenue stream somehow, someday, maybe.
Even good companies with seemingly good ideas fell onto hard times. Alt lenders, for instance, that solved a lot of problems for SMBs in need of capital during the financial crisis, found themselves on the wrong side of the valuation spectrum after they went public and investors started to question their long-term viability.
In 2015, Square was the poster child for what happens to firms with great ideas that can’t scale efficiently. Square commercialized the mPOS market in 2009 when it launched, but could never cross the chasm and scale as their customers grew into the need for new and different capabilities. Their IPO not only failed to deliver the valuation that their last capital raise did, their future as a SMB platform is being questioned, as is their attractiveness as an acquisition by someone who might value their technology platform. Of course one could look at the $4.2 billion market cap of Square as of Dec. 31 and either be very impressed at what the company did in a short period or wonder whether there’s still a bubble to be burst.
But, in 2016, it will be time to sober up and that’s great news for anyone looking to pick up some assets for a reasonable price. At lower valuations, many of the unicorns (and wannabe unicorns) may now be good purchases by bigger guys looking to fill in the cracks or to buy some innovation.
And its not just the startups that are in play.
Some very smart players have been banking their pennies in the hopes of making some strategic moves as the market pushes downward pressure on valuations and that they get to snap up great companies for less then they would have cost even a year ago. It is very likely that American Express, at $69 billion in market cap and $27 billion less than it was valued a year ago, will either be acquired or taken private by a PE firm and probably broken up. Hey, I thought someone might even buy it for me for Christmas. Discover is likely in play, as well, as its network and issuing business are probably more readily sold – and potential even more valuable — broken apart then they are together.
Then, we’ll likely see lots of other interesting mashups as payments and commerce expands and extends into any number of places. Payments acquisitions won’t just be about one payments player buying another or even existing payments players expanding their capabilities into adjacent areas like lending, loyalty, or data analytics. Software companies like SAP and Salesforce have all shown their interest in adding payments and commerce capabilities to their platforms, and the acquisition of the right payments assets could accelerate and enrich those ambitions.
And speaking of platforms, there’s Alphabet and Apple with their sizeable war chests and commerce aspirations, too. The degree to which we see acquisitions versus investments or partnerships in payments capabilities by either of them will be directly related to their interest in becoming payments and commerce-centric instead of enabling those capabilities on behalf of the platform.
So, in 2016, I think we’ll see the payments and commerce industry get stronger, if not a little smaller in terms of the sheer number of players out there doing stuff. Without access to a freely flowing tap of capital, emerging and existing firms will have to dig deep and focus on the value they have to deliver to their stakeholders. Which includes, gasp, actually delivering real revenue streams. Those who survive will start 2017 that much stronger.
Then again, if some of the Nostradamus devotees are to be believed, it won’t matter since we won’t make it that far.
So, better get busy putting these six to work in the time that we have left this year. You never know, we just might make it to 2017 after all.
The Advantages of Adding Mobile Payment Acceptance Capabilities to Your Business
The Advantages of Adding Mobile Payment Acceptance Capabilities to Your Business
Merchants of all types and sizes are discovering the advantages of using a mobile point of sale system. By bringing payment acceptance to the customer, wherever they are, a mobile POS system can help a business grow revenue through increased engagement, flexibility and improved customer service. Here are a few tips for how merchants can use a mobile POS system to help increase profits:
More sales opportunities
Mobile payment processing technology gives merchants the ability to be more flexible in their operations, which translates to more revenue-generating opportunities. Attaching a card reader to a device enables merchants to take payments outside of their brick and mortar location. A merchant can expand their business to new markets by displaying and selling their wares in specialty fairs, farmer's markets or pop-up shops. Without mobile payment processing technology, business owners might not be able to make as many sales, since most customers now expect to be able to pay with a card. Mobile card readers allow merchants to take credit card payments from nearly anywhere.
Mobile-card readers also give merchants the ability to improve customer service and checkout speeds. Long lines are a turnoff for many shoppers and may even cause customers to leave without their merchandise. To prevent this, merchants can give staff mobile credit card processing tools so they can break up lines. Rather than having only one checkout station, staff can operate throughout the store so customers can purchase items as soon as they're ready to go. This also provides a one-to-one transaction that provides greater opportunity for customer engagement and even upsells. When staff members are given tablets, they can also pull up information for customers and educate them on additional products that might interest them.
Restaurants also benefit from mobile payment processing tools. Many restaurants have begun to implement technology that allows customers to pay for their meals on their own time, rather than waiting for a server to bring them a bill. More than half of restaurant visitors would be interested in using this type of technology if it were available.(1) This process has the added advantage of increasing bill size. Tablets can be set up to display advertisements at specific points in the meal, which can encourage patrons to purchase more drinks or desserts. In addition, adapting consumer-facing payment tools reduces the need for labor, so businesses can redeploy staff when needed. These tablets can also be loaded with customer engagement tools that keep diners happy while they wait for their meals to come.
Mobile payment technology also improves the customer experience, driving loyalty. The mobility and seamless integration with back office programs deliver faster, smarter, more profitable customer interactions. In a restaurant, for example, mobile payment acceptance can significantly reduce the amount of time it takes for a server to accept payment, by doing it on the spot at the customer’s table. In a retail setting, sales associates can check out time-pressed customers wherever they are in the store. This also helps salespeople capture immediate sales, before a customer has time to rethink a purchase while waiting in line. A mobile POS system also allows salespeople to quickly search inventory and make product recommendations, offering another level of service that can help retain customers and boost sales.
Small businesses often struggle to gain customer insights. Another benefit of mobile payment processing is the ability of merchants to track customer data. By keeping track of sales, businesses can use the data they've gained to implement new promotions and increase revenue. Merchants can also gain greater insight into individual customers - how frequently they come in, what they spend and what they tend to order. Restaurants can also use data from their pay-at-table systems to learn how patrons tend to use the equipment and what the most popular orders are. Businesses can then use this information to deliver more of what customers want and optimize offerings based on customer behavior.
Mobile payment acceptance gives customers more options for how to pay, and also increases flexibility for the merchant. Whether business owners want to test out new markets with a pop-up shop or break up lines within the store, mobile payment processing provides the necessary technology to accomplish it. Why not get started accepting mobile payments now?
7 tips for growing your small retail business
7 tips for growing your small retail business
Good news for small businesses — there’s never been a better time to grow your business, and according to a survey from American Express, growth is the number one focus for small businesses. Education from the Small Business Experience at Retail’s BIG Show 2016, a special program designed for small retailers, emphasized how the combination of more accessible technologies, more options for getting funding, easier access to resources and a healthier economic environment makes 2016 a great year to take your business to the next level.
Among the takeaways from the event were these key points contributed by Rhonda Abrams, president and founder of PlanningShop, and Nikki Baird, industry analyst at RSR Research.
Find a niche. A small retailer will never be everything to everyone, and it shouldn’t strive to be. By finding a specialty, either by industry, demographics, geography or special interest, your business will become the go-to for that niche and allow you to stand out.
Plan and set specific goals. Abrams advocates reviewing and revising your business plan annually, a time when you can think strategically about your business and set measurable goals for growth. It’s during this time that you’ll identify the resources you need to help you get to the next level.
Don’t take too long to grow. If your time is completely tied up, you won’t have time to grow your business. In retail, this doesn’t always mean sales associates. Consider what’s taking you away from the things you do best and that will contribute to strategic growth. Even hiring a part-time administrative assistant could free up hours of your valuable time — and in business, time is money.
Use technology to help your team work better. Today, the solutions that used to be for huge enterprises are increasingly available — and affordable — for small businesses. Cloud-based systems put the latest solutions within reach and can help you achieve the ever-important single view of the customer. Baird advised that when it comes to choosing technology, you should look for a provider that will be a partner, not just make a sale. In addition, you may have to go outside of your comfort zone because understanding technology yourself is essential. “Technology is just as important as the products you sell,” she said. “You can’t outsource tech completely.”
Use digital channels to compete with the big guys. When it comes to social media sites like Twitter, Facebook or Pinterest, small businesses can run with the big guys. In these platforms where authenticity, personality and connecting with customers are key, small business have advantages big companies do not. “Don’t just hire your daughter’s friend to do your social media,” Baird said. “This is your opportunity to present your vision and what you stand for. You have to own the content.” And when it comes to your online presence, Baird recommends blending content and commerce, providing useful information in addition to selling your products.
Invest in your growth. Abrams emphasized that there are more options for financing growth than ever before, whether it’s from sales, crowdfunding, credit cards, bank loans, investors or other. “Debt is a reasonable tool to use if managed well,” Abrams said. “Plan your expenses and master the tools you need to monitor your money.”
Be mobile-friendly. Your customers look for things first on their phones. Ensure your website is mobile-friendly, accept mobile payments and make sure that you’re appearing on things like Google Maps so that people in the area who are looking for businesses like yours will find you easily.
Just as important as the steps you take to achieve growth is your personal commitment. In closing, Abrams reminded the attendees that growing a business takes hard work. “If you want to grow your business, the tools are out there, the time is right,” she said. “The choice, however, is yours.”
Training Your Employees on EMV Card Acceptance
Training Your Employees on EMV Card Acceptance
Although some companies made the shift to EMV-accepting card readers by Oct. 1, 2015, many more are still in the process of making the transition. In fact, only 40 percent of merchants were ready for the payment industry's self-imposed deadline.(1) Whether businesses have made the change or not, it's important to remember the process requires more than just a new card reader. Business owners also need to prepare their staff for the eventual alteration.
Recognition of the chip
Even after merchants have implemented chip-reading point of sale systems, employees could still encounter credit cards that have the magnetic stripe without a chip. It's important for workers to be able to recognize an EMV card versus a traditional magnetic stripe version. This will help them instruct customers on the proper procedure for processing the transaction. The chip itself is a small, gold square usually placed above the numbers on the front of the card, and below the issuer's name. When employees see this chip on a card, they can instruct the cardholder on the proper steps to complete the transaction.
The education behind it
Even though consumers received new cards in the mail - most likely with information on the change - some may still not understand what the chip actually does. Business owners need to inform their employees about EMV so employees can share it with curious customers. The most important information to know: Starting Oct. 1, 2015, merchants may be held liable for certain fraud related chargebacks if they process chip cards on a terminal that is not EMV-enabled. Consumers should also know that the chips in their new credit cards is the technology that makes the card more secure than traditional cards.
The process itself
The steps to process a transaction with an EMV card are much different than a traditional payment card. In the past, customers simply had to swipe their magnetic stripe card and sign for the purchase to be complete. With the new system, however, clients must enter the chipped card into the terminal, and leave it there for the duration of the transaction.
While this is the more common situation, some merchants have introduced contactless POS solutions, where clients have to simply wave or tap the chipped card over the unit to be read. (2) Either way, it's important for people to know to keep their cards out for the entire purchase process to ensure all information is transferred without error.
Pin versus signature
EMV cards come with two options for verification: pin and signature. While the latter is more common in the U.S., the former is always a possibility. (3) Certain POS systems, however, may be able to handle only one of the two methods. It's critical for merchants to take that fact into consideration when making the change to an EMV-enabled reader.
Business owners should make employees aware of these two options, as well as how to process and handle each case. If companies do utilize a system that can take either a PIN-verified card or a signature-accepted version, workers should be trained with a talk track - a breakdown of common questions and answers - for consumer interactions.
Making the switch
Many merchants are still weighing the costs, risks and benefits of EMV compliance. Many worry about the additional expense to purchase or upgrade to new equipment, as well as the maintenance or support required for these systems. However, as more consumers being using chip cards, merchants will be greater pressed to begin using an EMV compatible system.
Companies can manage their costs by taking advantage of the deals EMV-compliant POS providers and the Payment Card Industry are offering. Both are helping merchants by allowing them to trade in their old systems for new terminals at a discounted rate or waive their annual audit if organizations make the switch. (4)
Merchants have a lot to consider when it comes to implementing EMV chip-card technology. There are many POS providers that will help companies maintain compliance with these standards, while also offering the equipment at a lower rate to save businesses money. But the expense isn't all entrepreneurs have to focus on. Companies also have to make sure their employees are educated on EMV and all its intricacies. From recognizing the chip to processing a transaction to aiding unknowing customers, workers must have a wide range of knowledge to be able to handle the method properly. However, with the proper education, the transition to EMV-enabled readers can be seamless.
Seven Payment Predictions for 2016
4 Predictions for Credit Cards and the Payments Industry in 2016
4 Predictions for Credit Cards and the Payments Industry in 2016
2015 was a big year for credit cards and the payments industry. It was the year that EMV cards were rolled out on a major scale, making transactions more secure, but leaving merchants, cardholders and issuers to keep up with the October 1st liability deadline. Additionally, the payments industry saw rapid changes after years of stability (and stagnation) as technology companies and security developments shook things up with mobile wallets, biometric passwords and increasingly digital-only interactions.
The new developments in 2015 indicate that we should expect even more disruption in 2016 as new technologies enable faster, more secure payment processes even as interest rates rise and debt climbs.
Here are 4 predictions for the payments world in 2016:
In an interesting twist on the rise of the "selfie," your face may become the most secure way to process a credit card transaction in 2016. In late 2015, several companies, including MasterCard, tested new technology that requires a live shot of your face to securely complete an online purchase. In MasterCard's process, the user downloads an app called Identity Check that requires a customer to take a live, blinking shot of their face to confirm an online purchase.
This technology, called "Selfie Pay," would work in a similar fashion to current biometric authorizations already in place, such as the fingerprint scan to confirm an ApplePay payment. A benefit to this type of technology is that it would make online payments more secure, which is currently a high-risk fraud platform. As in-person transactions with an EMV card shift risk to CNP (Card Not Present) transactions (such as online purchases), implementing a biometric technologies could be a major step in making payments more secure in 2016.
2015 saw the introduction of ApplePay, a major game changer in the world of payments. This brought the idea of a mobile wallet to the mainstream, and as Android Pay, Samsung Pay and Chase Pay all entered the space hot on the heels of the Apple announcement, there's no doubt that smartphone users will be inclined to try a mobile wallet experience in 2016 -if they haven't already.
The security, speed and convenience offered by a mobile wallet will continue to be the biggest selling point. Mobile wallets can store your credit card information so you don't need to carry plastic, and it can speed up the checkout process. Perhaps what's best of all is that your card information cannot be stolen even if you lose your phone! In the wake of an EMV rollout that has left many consumers frustrated, the streamlined solution of mobile wallet technology is likely to gain mass appeal in 2016.
Banking online saw a huge boost in 2015 as almost all financial institutions equipped themselves with an app to give consumers 24-hour access for total control over their bank accounts, even when they're on-the-go. Hundreds of bank branches were closed as customers found the online experience to be significantly less "annoying" than visiting a bank in-person.
2016 should see an increase in online and app banking as more institutions begin limiting in-person branch opportunities and maximizing online capabilities. With overhead costs a concern for banks, this push will be driven as much by the bank as by the consumer, where statistics show that app users are more loyal, cost less, and report a more pleasant customer experience overall. As other countries, such as the Netherlands and China, lead the way in mobile banking technologies, the U.S. is likely to follow suit in 2016.
Credit Score Adjustments
2015 marks the year that credit score assessments were revised to factor in payment history in different ways than existing models. 2016 will mark the first year this new equation is implemented for the major credit bureaus. This means that "transactors," those who pay their balances in full, will get a boost to their score, which could qualify millions of folks who were not previously approved for a loan or credit card. However, "revolvers," those who carry a balance from month to month, are likely to be penalized as their payment history factors more heavily into the new credit scoring equation.
This "trended credit data" is set to take effect mid-2016. You can track and monitor your credit score for free and see if your credit improves or declines. We're excited to see what 2016 has in store for credit cards and the payments industry.
In 2018, 50 Percent of Consumers Will Use Smartphones or Wearables for Mobile Pay, Says Gartner
In 2018, 50 Percent of Consumers Will Use Smartphones or Wearables for Mobile Pay, Says Gartner
Mobile payments are gaining acceptance among consumers in North America, Japan, and some countries in Western Europe. That’s the news from research firm Gartner, Inc., which notes that …
By J. Barton
Mobile payments are gaining acceptance among consumers in North America, Japan, and some countries in Western Europe.
That’s the news from research firm Gartner, Inc., which notes that fully half of consumers in mature markets should be using smartphones or wearables for mobile payments by 2018.
“Innovation in apps, mobile devices and mobile services are impacting traditional business models, particularly in the way people use personal technology for productivity and pleasure,” said Amanda Sabia, principal research analyst at Gartner. “Product managers must understand who their customers are for these new devices and services, and how the products are being used. Knowing your customer is imperative in order to capture a fair share of spending opportunities in this dynamic marketplace.”
Gartner describes the three types of mobile payments now in vogue: smartphone or wearables-based payments, branded mobile wallets from banks or credit card providers, and branded mobile wallets from retailers like Starbucks.
“However, mobile payments using Near Field Communication (NFC) technology (Apple Pay, Samsung Pay and Android Pay) will be limited in the short to midterm due to a lack of partnerships between retailers and financial organizations, as well as consumers seeing little value in such payments,” reports Gartner.
“Any mobile payment wallets that are tied to the device will have limited adoption and only if the device has a huge installed base,” said Annette Jump, research director at Gartner. “Instead, cloud-based solutions will have a better chance to succeed as they can reach a wider audience and can support many use cases beyond face-to-face or in-store options. Also, mobile payment and mobile wallet adoption requires a country-by-country rollout plan with an enabled payment infrastructure and agreement with major banks and retailers.”
Other Gartner predictions for the personal tech market?
By 2018, 75 percent of TV-style content will be watched through application-based services in mature markets.
“The increasing prevalence of application-based TV-style viewing will be disruptive to the traditional pay-TV market. Consumers are already cutting back on premium pay-TV channels in favor of subscription video on demand (S-VOD) services such as Netflix and Hulu Plus,” said Derek O’Donnell, senior research analyst at Gartner. “We expect that this phenomenon will continue to accelerate over the next three years, putting pressure on the revenue of pay-TV operators, particularly from premium channel subscriptions.”
5 Key Factors Impacting EMV Migration
Security Refresh: Are Your Employees Protecting Your Customers' Card Data?
Security Refresh: Are Your Employees Protecting Your Customers' Card Data?
Security breaches continue to make headlines, bringing unwanted attention to affected businesses and eroding trust in their services. While business owners may go to great lengths to protect payment data, it won't be enough if employees aren't on board as well. In fact, keeping employees informed of best practices for payment security is so important, it's already part of Payment Card Industry Data Security Standard requirements. Employees could easily make a mistake that leads to a security leak or data breach. To prevent this from happening, education is crucial.
The importance of security education
According to the PCI Security Standards Council, uninformed employees can often be a bigger weak point for a business's security than technology. (1) Staff may accidentally share information that should be kept secure or inadvertently cause a data breach through failing to uphold best practices in general.
Unfortunately, most workers don't receive this type of training. According to a survey from Security Monitor, more than half of employees indicated they never received any type of workplace security training. (2) Moreover, the majority of staff admitted to unsafe practices, such as using weak passwords or one password for multiple functions, as well as storing sensitive information on mobile devices or in the cloud. More than one-third of respondents also admitted to clicking links from unknown senders. Before an employee slips up, it's critical to teach the whole staff about the need to stay secure.
To better secure your business, here are some factors to keep in mind when educating staff on security procedures:
Create a team
PCI suggests employers put together a security awareness team that's responsible for creating and implementing the program. This team should contain members from all different areas of the organization so they can provide insight into weaknesses in unique points of the business. Each person will have different responsibilities to cover the breadth of security needs.
Businesses shouldn't assume anyone on staff has more background knowledge than others. It's important to educate everyone from managers to part-time workers about the need to maintain security. For instance, managers can be a target for fraud because of their privileged access to information. (3) Anyone can be a weak link in a business's security. Make sure that employees on all levels participate in training sessions. However, managers should also receive some specialized training because they need to uphold and reinforce secure practices among staff, PCI suggested.
Conduct training regularly
Maintaining payment security is an ongoing process. As technology and practices change, fraudsters evolve to keep pace. This means companies need to be vigilant about updating training materials and communicating new trends to staff members. Businesses should create a schedule so they don't overlook this crucial task. Integrating some basic security training into onboarding and orientation is also a good idea.
Make it fun
Payment security might not be the most exciting topic for staff, but there's no reason training sessions have to be a burden. To make sure staff members stay engaged during training sessions, it might be a good idea to make sure there are some snacks on hand. Consider quizzing employees on basics and offering some kind of reward for those who perform well. Testing workers at the end of the session is also a good way to measure the effectiveness of the training.
Ensure employees know what to do
If employees do spot a red flag, make sure they know how to respond. Make it clear what steps employees should take if they see something is wrong, including who to report to and what number to call. Encourage staff to speak up even if it turns out to be a false alarm. Frequently occurring false alarms are simply a sign that you need to improve your approach to training or clarify a few points.
Critical areas to consider
There are many different topics to cover in a payment security training program. Here are a few important areas businesses should touch on:
•The need for strong passwords.
•Email, browsing and social media security.
•Avoiding malicious software, such as viruses and spyware.
•Awareness of card data security in various environments, such as in-person and card-not-present environments, when applicable.
There is always room to improve data security environments. In addition to maintaining PCI compliance and adopting data security technology, it's crucial for businesses to implement training processes to keep employees in the know about best security practices. Without any kind of background in security, employees are more likely to make an error, which could lead to a full-scale data breach. At the same time, a well-informed employee may notice a red flag that managers miss. Staying secure is everyone's job.
Retailers Need to Get 'Social' and 'Loyal' to Win at Mobile
Retailers Need to Get 'Social' and 'Loyal' to Win at Mobile
The explosion of mobile over the last few years has been staggering. By next year, the twenty billionth mobile phone will be sold. And not only are there many more mobile devices, we’re all becoming more reliant on them. In fact, 9 out of 10 consumers in the U.S. keep their phones within reach 24/7.
This has significant ramifications for retailers, particularly for online commerce, where mobile commerce already accounts for 30% of U.S. e-commerce and is expected to grow 300% faster than traditional e-commerce. What does the coming year hold for mobile commerce?
Here are the top mobile commerce trends to watch in 2016.
The physical and online worlds will continue to converge. If your brand has a large U.S. audience, chances are good your customers are going to be engaging with you across devices. About two-thirds of Americans own at least two digital devices (a desktop, smartphone, tablet or laptop). And more than one third own all three. And they’re not only using multiple devices, they’re also interacting with your brand in ways that are blurring the lines between the physical and online worlds. Retailers are aware of the overlap between online and physical channels.
Brands like Target are partnering with third party apps like Curbside rather than using their own apps; online reservation and purchase of goods and services such as the online reservation of clothes to then be tried on in-store at Sears or tire changing services at Pep Boys; same-day delivery of items by a range of retailers including Macy’s, Target, Walmart, Kohl’s and Nordstrom; and beacon-enabled features including targeted offers, loyalty rewards and mobile payments. As many as 85 of the top 100 retailers are planning to adopt beacon technology by the end of 2016.
Social commerce will remain hot, but will buy buttons deliver? There is a very strong connection between social media and mobile. In 2014, the top 500 retailers earned $3.3 billion from social shopping. Social shoppers are spending more money online than ever before. And social-driven retail sales and referral traffic are increasing at a faster rate than any other online channels.
2015 was a big year for social commerce, with the launch of buy buttons on Twitter, Pinterest, Instagram and Facebook. Though Pinterest, for example has 60 million Buyable Pins, buy buttons have yet to gain wide traction on any social platform, turning in a performance over the holidays. However, given the importance of social in terms of both traffic and revenue to m-commerce sites, social buy buttons - and whether they gain a foothold with consumers or not - will be an important trend to watch in the coming year.
The mobile web will continue to outpace apps. Over 85% of mobile time is spent in apps. That’s pretty staggering. A quick glance at this number would indicate that offering an app is an imperative in 2016. But if you dig one level deeper, it gets really interesting: 8 out of every 10 minutes of app time is spent solely in an individual’s top 3 apps. Across industries, the web drives 2x the site traffic of apps. In fact, of the top 30 U.S. retailers only two - Amazon and Wal-Mart - drove more than half of their visits via their apps.
As for revenue, only about 20 to 30% of a retailer's mobile sales come from their app, according to Forrester Research. It’s not surprising therefore that Forrester’s “The State of Retailing Online 2015”report found that 56% of retailers said mobile apps would not play a major part in their mobile strategy.
To be clear: apps can certainly play a key role in retailers’ mobile strategies, particularly for their most loyal customers. And thanks to deep linking and Google App Indexing surfacing relevant app content in mobile search, traffic to apps will surely increase in 2016. In fact, already 40% of Android searches turn up app-indexed results. But given its clear leadership over retail apps today, the mobile web will no doubt continue to eclipse apps as the biggest revenue driver for retailers in the coming year.
Consumer expectations will drive retailers to focus on 'mobile moments.' Consumers rely on the their smartphones during countless moments throughout the day. In fact, 91% use their smartphones while completing another task. And as they become more reliant on their mobile devices, consumers expect to get exactly what they need in the moment they need it.
This mobile moments mindset presents retailers with unprecedented opportunities to engage their customers on mobile. Whether consumers are pulling out their smartphones to conduct a product search over breakfast, using the store locator feature to swing by a retail location after work or pulling up a scanable rewards card at the register - mobile moments enable brands to provide their customers exactly what they need in thier immediat contexts.
Loyalty will eclipse convenience in driving mobile payments. Tim Cook of Apple declared 2015 the “Year of Apple Pay” when the service launched in October 2014. Yet one year later, it only accounted for about one percent of total transactions in the U.S. Mobile wallets in general have been slow to take off.
One historical challenge was not all retailers accepted mobile wallet payments. But even today, with one million merchants, accepting Apple Pay for example, and the mass upgrade to EMV compliant terminals (which means many more vendors in 2016 will be accepting mobile wallet payments than ever before), most consumers will not start using Apple Pay and Android Pay.
The challenge is mobile wallets do not offer enough incremental convenience to shift user behavior - at least not in the next year. A far more significant shift for mobile payments in retail in 2016 is being driven by retailers themselves: mobile payments via retailers’ apps. Starbucks already drives 16% of its total transactions from payments via its mobile app.
Walmart also recently launched its own payment system, Walmart Pay. And Target is reportedly planning to develop its own mobile wallet as well. The success of retailers’ mobile payments, and where they can succeed where mobile wallets have struggled, will lie in the connection with their customers via loyalty rewards tied into their payment apps.
The Starbucks app, for example, will automatically let you know how many times you’ve visited a Starbucks for coffee and when you’re due for a free cup. Of course only the largest retailers with the most loyal customer base will really see a significant impact from mobile payments in the coming year. And mobile wallets, if they can integrate loyalty rewards would challenge retailers’ apps.
But the story here isn’t one of one retailer’s app versus another - or even retailers’ apps versus mobile wallets. It’s about the customer and improving the mobile customer experience. And while most retailers won’t see many of their customers paying via mobile payments in 2016, mobile payments will experience some growth in the coming year. In fact, eMarketer expects mobile payments to grow 210% in 2016.
The growth of mobile will force brands to optimize mobile checkouts. Retailers are losing $18 billion annually due to shopping cart abandonment. And research shows over two out of three users who add items to their online shopping cart leave without making a purchase. The numbers are even worse on mobile where conversion rates are 70% lower than desktop.
However, 2015 was a pivotal year for mobile shopping. This holiday season, for example, mobile played a bigger role than ever, with a 45% increase in mobile traffic and 82% increase in revenue. In fact, smartphones generated over 57% of traffic and nearly 30% of revenue over the holidays. And with mobile commerce expected to grow at a rate 300% faster than traditional e-commerce, more brands will focus on implementing a seamless checkout experience in the coming year.
All of these trends will generate some buzz in the coming year. And more importantly, they will all create unique opportunities for brands to provide their customers with better mobile experiences in 2016.
SBOs Like EMV Technology. So Why Aren't They Embracing It?
SBOs Like EMV Technology. So Why Aren't They Embracing It?
A TD Bank survey finds that small-business owners may be overestimating the cost -- and underestimating the benefits -- of EMV technology.
IMAGE: Getty Images
Most small-business owners (SBOs) are well aware that a number of highly publicized data breaches in recent years gave an unintended meaning to the “swipe” in “credit-card swipe” and spurred conversations about how businesses need to better protect customer information. Yet, despite the headlines, many SBOs have been slow to embrace new payment terminals that accept chip-enabled cards, which add another layer of fraud protection for consumers.
In fact, a survey conducted by TD Bank in early November, one month after the liability shift for chip-enabled credit and debit cards by the world’s major card issuers (Europay, MasterCard, and Visa, giving the phrase “EMV mandate” its name), found that only 41 percent of SBOs had deployed EMV-compatible payment terminals. Another 40 percent said they plan to switch soon, but perceive obstacles or have concerns about the transition. Meanwhile, 10 percent said they don’t plan to install EMV terminals, and 9 percent said they weren’t aware of the new mandate.
That could be a costly oversight. Under the new liability shift, merchants are required to have EMV-compliant payment technology systems installed. Without these terminals in place, if a consumer pays with a chip-enabled card and the merchant processes it via a swipe-only terminal, the merchant can be liable for any fraud. Using a newer EMV-enabled terminal shifts the risk to credit-card issuers.
Given that SBOs reported the cost of their new terminal ran an average of $450 that would seem to be a relatively affordable investment for significant protection from covering costs in the event of fraud. So why the relatively blasé attitude toward the new system? The survey uncovered several telling clues:
• 58 percent of companies that haven’t switched to the new technology say cost is an issue. A common misperception, fueled by some early reports that pegged the cost of buying and installing an EMV terminal at $1,000 or higher for many businesses, may be to blame.
•73 percent of all respondents said fraud is not a major concern for them. Yet annual U.S. merchant losses due to payment-card fraud reached nearly $2 billion in 2012, according to a 2014 Nilson Report, and were estimated to be increasing by 15 percent a year.
•On the plus side, 81 percent of SBOs in the TD Bank survey say they either own a chip-enabled payment terminal or plan to switch to one soon.
“Every day more SBOs are becoming aware of all that’s going on in the world of payments,” says Julie Pukas, head of U.S. Bankcard and Merchant Services for TD Bank. “So we are now seeing a high rate of improvement, but it has taken longer to raise initial awareness than the industry expected when the mandate was first announced.”
Those SBOs who have yet to deploy the new technology can take heart from a few key details about the change-over:
•You may already own the equipment you need. Yes, it’s true: many merchants won’t need to spring for new terminals-;they will simply need to have their payments provider install the necessary software.
•These newer EMV terminals do more than simply read chip-enabled cards. They can also generate a variety of reports and metrics that can give you a better window into many aspects of your business.
•The time needed to install the software and learn the new system is minimal and can be scheduled with your provider at your convenience.
•Customers may need a little coaching from you as they become accustomed to how the terminals operate, but, as Pukas notes, “this can become a great opportunity to engage with them at the point of sale. As you walk them through the prompts you can deepen your relationship with them in a casual, friendly way, and reinforce the improved security features you now have.”
The survey found that almost one-third of respondents may use the advent of EMV technology as a catalyst to switch terminal providers. Given that the cost of the equipment is already substantially less than most merchants anticipate, Pukas cautions against shopping on price alone. “When you consider the percentage of your sales that are being handled by credit cards,” she says, “it’s imperative that you be able to trust your financial institution. Make sure they earn your business by demonstrating a strong knowledge of your industry, as well as expertise regarding the technology and liability issues at the heart of credit-card transactions.”
When asked about the perceived benefits of the new EMV terminal, respondents cited everything from improved security and protection against fraud liability to speed of processing and an improved customer perception of their business. Only a tiny fraction (2 percent) said they see no benefits at all. Given that, the time to close the gap between perception and reality is now.
“These newer terminals have a lot of functionality that can help business owners run their companies more effectively,” Pukas says. “This liability shift offers businesses an opportunity not only to better protect against card fraud, but to enhance many aspects of a company's financial operations.”
2016: The Year of Data Security
2016: The Year of Data Security
Establishing and maintaining a strict data security policy should be at the top of your 2016 resolutions as you prepare your business for the new year.
The following are five data security tips for small businesses going into 2016:
1. Educate employees on safe practices
Although many of the data security issues you hear about are from external sources, internal attacks are happening more often than many companies realize. Whether they're malicious or accidental, internal data breaches are very common (1).
To maintain strong security, merchants must put a data security policy in place so that employees at all levels are educated about safe practices. Workers need to know what information should not be shared publicly, especially over the company's network. The policy should also include information and guidelines on password management, Internet usage, best practices for bring-your-own-device programs, and a procedure for reporting security incidents (2). With a detailed policy, businesses can better enforce data security precautions, monitor employee access, and find the source of potential hacks faster.
2. Be wary of phishing
While there are many forms of internal data breaches, phishing is becoming increasingly prevalent in the workplace. Hackers are finding more intelligent ways to infiltrate a company's network. One method includes targeting emails to employees and executives with believable content. Most often these correspondences include decoy documents or websites requiring worker credentials. As soon as an associate enters the information, hackers have substantial access to the business network, company records, and even customers' sensitive data. A recent study found 39 percent of workers polled opened a phishing email even though they suspected it could be fraudulent (3).
Businesses must be sure to add phishing education as part of their data security policy, ensuring all employees are better able to identify a fake email or at least know what steps to take if there is a message in question.
3. Encrypt all sensitive data
To protect sensitive cardholder information, merchants should ask their POS provider or payment processor about card data encryption. While some enterprises may have to purchase this capability as an add-on, the overall cost savings will be well worth the initial expense. Encryption masks sensitive cardholder data the moment it's swiped and throughout the transaction. Encryption offers merchants a variety of benefits, including a competitive edge over opponents who don't offer the feature. Furthermore, the PCI DSS strongly suggests the feature for the transmission of customer data.
4. Make sure networks are secure
Employees can use unprotected wireless networks in their personal lives, so they can do the same at work, right? Wrong. Companies of all shapes and sizes utilize wireless networks today for their business, but it's essential these access points are completely secure. Enterprises should password-protect their wireless internet systems and use WPA2 encryption to maintain data security (4).
Although securing these networks is crucial, businesses also need to educate users about how these connections should be used. Employees should only access and transmit company data when on the secure network. Networks that aren't password protected can be used for personal tasks, but workers should be aware of what information fits into that category. Any data that could be considered work-related should always be accessed and sent over a secure network.
5. Implement EMV readers
Many merchants are aware of the push toward EMV chip-enabled credit and debit cards to better guard against fraud. As consumers receive and begin using their issued EMV chip credit and debit cards, merchants should think about adopting EMV-enabled payment terminals to further protect customer data and reduce liability for certain cases of card-present fraud.
Small businesses should take the proper steps to maintain their data security in 2016. Secure networks, data encryption, and EMV acceptance are just a few ways merchants can help protect their company and customer records while avoiding non-compliance penalties and possible information breaches. With a strong data security policy and breach protection in place, enterprises can reduce the possibility of internal attacks and maintain consumer trust.
What Features Should Your Point of Sale Terminal Have?
What Features Should Your Point of Sale Terminal Have?
Your point of sale (POS) terminal plays an integral part in running your business. From payment processing to managing inventory, it’s important to have a POS that meets your specific needs. Though some needs are universal, yours may require specialized features from your point of sale terminal and its components.
Here are some things you should look for in point of sale systems for use in retail and restaurant environments:
The ability to manage your inventory is a must-have feature of a retail POS system. To better meet customer expectations and maximize profit, you need to know when to order more of specific items so they are available when customers want them. Keeping excess stock can also be a major factor; retailers in the U.S. lose $224 billion each year due to unsold inventory.(1)
•On-the-go payment processing
Retail shop owners sometimes need the ability to take their business beyond the walls of the store. You may want to extend your POS operations to a pop-up shop, craft fair, or even a farmer's market. In these situations, you’ll want a reliable system that can accept credit cards and other forms of payment remotely.
•Discounts, coupons, and gift cards
Promotions and sales are part of the retail business. You need to be able to quickly adjust prices and add discounts, enabling your staff to easily implement last-minute pricing changes. The ability to sell and accept gift cards is also crucial for promoting your business.
•More payment options
The more ways customers can pay, the better it is for business; whether that means using a mobile wallet or visiting your ecommerce shop after hours from the comfort of their own home. The more ways your customers have to engage with your store, the more profitable your business will be.
The right point of sale terminal can help restaurant owners handle back-of-house tasks that increase efficiencies on the floor. Ideal restaurant POS systems will enable easy employee scheduling, quick menu adjustments, and inventory capabilities.
•Improve table service
In the restaurant business, speed matters. Hungry patrons quickly become irritable when they wait too long for service. When evaluating POS systems, restaurant owners should prioritize platforms that help servers move more quickly. Consider a system that will allow servers to take payments at the table. Another advantage of mobility is the opportunity to add multiple terminals throughout the restaurant, which will increase the speed of service by enabling servers to send orders to the kitchen more quickly.
Customers have preferences and dietary restrictions. Servers need to have the ability to easily remove ingredients from a dish or make other adjustments as necessary. The ability to adjust orders drives better service because an error could lead to an unhappy customer. In general, the flexibility to add and remove ingredients will keep changes simple and customers happy.
Patrons enjoy eating as a large group but paying for their meals separately. They may be frustrated if a restaurant won’t split checks and one person has to pay for the entire meal. These days, customers don't expect to carry cash, which can make it hard for them to divvy up the bill themselves.
When implementing a point of sale terminal for the first time, it's important to find a system that will fit your specific industry and support your unique way of conducting business. Making the right choice for a POS may increase productivity and profits in the years to come.
Will 2016 Be mPayments’ Consumer Adoption Year?
Will 2016 Be mPayments’ Consumer Adoption Year?
Are consumers coming around to mobile payments? As we head into 2016, new data from Retale shows why next year is poised to be the year of mobile pay.
In a Dec. 2015 survey, when consumers (1,000 adults) were asked if retailers should offer mobile payment in-store at checkout, 63 percent of consumers replied yes; 2014’s figures recorded 57 percent for the same question. But when asked if they were interested in making an in-store mobile payment, 56 percent said yes. This figure was unchanged from last year.
When asked if they had used their mobile device to make an in-store purchase, 43 percent reported they had; in 2014, 36 percent said they had.
EMarketer’s data from the year shows that U.S. proximity payments are poised to grow drastically over the next four years. Based on its research, eMarketer reported that 2015’s proximity mobile payment users totaled 23.2 million. By 2016, that figure was expected to go up to 37.5 million. That trend continues on in 2017’s projection of 50.2 million, 2018’s of 58.8 million and 2019’s of 69.8 million.
Those mobile payments forecasts call for a staggering 210 percent growth in transaction traffic by the end of 2016. Bryan Yeager, an analyst at eMarketer, explained that multiple elements will combine to make next year a particularly promising one for the future of mobile payments.
“Several factors will drive substantial mobile payments growth in the U.S.,” Yeager said. “Mobile wallets, like Apple Pay, Android Pay and Samsung Pay, will become a standard feature on new smartphones. Also, more merchants will adopt point-of-sale systems that can accept mobile payments, and incentives, like promotions and loyalty programs, will be integrated to attract new users.”
Aside from gross traffic, overall and individual purchases should grow as well. In fact, eMarketer estimated that the average consumer using mobile payments in 2016 will spend about $721.47 over the course of the year, for a grand market total of $27.05 billion by next year’s end.
What factor is most responsible for what looks to be mobile payments’ breakout year? All signs are pointing to younger consumers. Though eMarketer estimates that only 6.3 percent of consumers over 65 years of age will be using mobile payments by the end of 2016, eMarketer anticipates that 37 percent of 25- to 34-year-olds will have already embraced the technology.
“Younger consumers generally have fewer apprehensions when it comes to experimenting with, and eventually adopting, new technologies,” Yeager said. “That’s certainly true for mobile payments, where security concerns are more pronounced among older consumers.”
Fraud prevention tips for 2016
Fraud prevention tips for 2016
By Bill Zielke
The introduction of EMV chip cards that reduce fraud in stores, will ultimately lead to more online fraud attempts. Retailers must be prepared.
Online retail reached a major milestone this past Thanksgiving weekend: according to the National Retail Federation, more people shopped online than in stores. It’s more proof that e-commerce is an increasingly important element both in retail and in consumers’ lives.
This boom in online business is great on many levels, but there’s one fly in the ointment for e-commerce merchants, and that’s the attraction of fraudsters to online retail. And the more significant e-commerce becomes, the more attractive it will be to criminals. So what do retailers need to know as they head into 2016?
Online Fraud Increases, Post EMV
The payments world was in a flutter over EMV adoption this year, and a lot was said about a resulting spike in online fraud. But, while it’s true that fraud attempts do seem to have risen this year compared to last year, it’s also true that the rise hasn’t matched the concerns pre-EMV. So should retailers be worrying?
Retailers shouldn’t worry—but they should prepare, and prepare now. The fact is that although attention was focused on October 1, when adoption became official, changing over to EMV is gradual. That’s why Forrester’s prediction of a 55% increase in online fraud was not tied to October, but rather predicted over a three-year period.
Over the next few years, online fraud will be increasing. Retailers who ignore that reality are in for heavy losses. But the slow shift to EMV is an opportunity for retailers to scale their fraud prevention. Don’t put off a review; with EMV an established fact, you know that if the solution you’re using isn’t completely scalable, you’re going to run into trouble in the near future.
Moreover, retailers should use the assessment to measure the impact that fraud prevention is having on their business as a whole. Overly strict rules and policies which simply reject transactions outright result in lost legitimate sales. Fraud prevention should be consumer-centric, and aim to boost sales - just like the rest of the company.
Say Goodbye to Rules, Scores and Manual Reviews
Rules, scores and manual reviews used to be an essential and unavoidable aspect of effective fraud prevention. But that’s no longer the case. Full automation is now an option, and increasingly necessary. According to Gartner, "the explosion of data sources and complexity of information makes manual classification and analysis infeasible and uneconomic."
Today’s fraudsters are clever and creative, and they move fast. Manually updated rules, scores and manual reviews can’t keep up. Retailers who want to prepare for the EMV rise in fraud must automate. Staying manual is slow, costly and can result in good customer declines.
Fulfill As Fast As Possible
As recently as two years ago, two-day delivery was a sure way to woo shoppers. But e-commerce norms move fast, and consumer expectations are always heading up. Amazon Prime Now represents a new step ahead, and customers know it.
Fast fulfillment means instant fraud prevention. When every minute counts, building delay into checkout doesn’t make sense. This links back to retiring manual reviews, which are time-consuming (an average of 5 minutes per order) and a major cause of delay, especially during crucial holiday periods when overwhelmed reviewers cause backlogs and angry customers.
Many retailers showed signs of fulfillment strain this holiday—and that’s not likely to sit well with shoppers, or encourage them to return in the year ahead. To avoid these problems, fraud prevention must be automated, and real-time.
Omnichannel and Every Channel
Retailers must ensure that their fraud prevention is up to the “omnichannel and every channel” challenge—able to cope with customers moving across a variety of channels, and also optimized for each channel individually.
Consumers love to order online and pick up in store, and research and purchase across a range of devices. They’re already entrenched in an omnichannel perspective - it’s a case of retailers having to innovate to match customer expectations.
Fraudsters are just as thrilled about omnichannel, because it opens up new opportunities for successful theft, and they’ll take advantage of any weakness they find. Fraud prevention must be able to join the dots between channels.
In terms of optimizing for individual channels, a clear area for improvement this year is mobile. Adobe revealed that mobile devices accounted for 33% of online sales on Black Friday, and mobile sales grew almost 53% on Cyber Monday.
Encouraging the mobile consumer to spend on your site means frictionless checkout. Ensuring that fraudsters don’t cheat you on mobile means being aware of the differences between data available through mobile and through e-commerce, and adapting fraud prevention systems to accommodate that. In both cases, it means optimizing for mobile.
Make Fraud Prevention Part of Your 2016 Planning
Payments, e-commerce and consumer expectations are changing faster than ever. One of the things retailers must do to keep up, and keep competitive, is make sure they’re using the latest fraud prevention technology to automate and shift to real-time, to block fraudsters and to ensure that fraud prevention is contributing to the overall business goals of growth and customer satisfaction.
Few Retailers Accepting 'Chip' Credit Card Payment Feature for Holidays
Few Retailers Accepting 'Chip' Credit Card Payment Feature for Holidays
by Herb Weisbaum
Maybe you've noticed: At many stores, both big and small, you still have to swipe the magnetic stripe on your new chip-enabled credit card, rather than insert or dip it into a chip-reader.
Edgar Dworsky, founder of the website ConsumerWorld.org, wondered why he's rarely asked to dip his smart cards, despite an Oct. 1 "deadline" for retailers to adopt the new standard. So he decided to survey the marketplace last week.
He checked 48 national and regional chains and found that only one in four had payment terminals able to process a purchase using the chip security feature in the EMV cards (an acronym derived from Europay, MasterCard and Visa, the three companies that originally developed the standard).
"Virtually all - except for Radio Shack - have installed checkout terminals with the card slots for these chip cards, but most of them did not work. They had not turned on the system yet," Dworsky told NBC News.
Only 10 chains in the ConsumerWorld survey have enabled the chip card function chainwide: Best Buy, Home Depot, Lowe's, Macy's, Old Navy, Rite Aid, Sam's Club, Target, Walgreens and Walmart.
Big-name national and regional retailers that cannot accept chip cards at some or all of their stores include: Bed Bath & Beyond, CVS, Costco, Foot Locker, Kmart, Kohl's, Kroger, Marshalls, Michaels, PetSmart, Safeway, Sears, Sports Authority, Staples, Stop & Shop, T.J. Maxx, Toys R Us and Whole Foods.
"It seems crazy that all of this money is being spent to send out replacement cards and to install all the new payment terminals at these big-name stores, but nothing has really changed - the security is no better," Dworsky commented. "Plus, it's really frustrating and confusing for shoppers who see the new terminals and don't know whether to swipe or dip their credit card."
EMV cards were developed to make credit card transactions more secure. The smart chip cards have two important advantages over traditional magnetic-strip cards. First, it's harder for fraudsters to make a fake physical card. Secondly, even if the bad guys get a hold of the transactional code, it's worthless because it works only one time.
NBC News contacted many of these retailers to find out why they had not yet made the switch.
CVS said it started accepting EMV cards at some stores at the beginning of December and expects to be able to use them chainwide by the end of the year.
Sears did not provide a reason for the delay. In an email, Howard Riefs, director of corporate communications, wrote: "We are continuously working to further enhance the security of our systems, including our card readers. While we don't give specifics on those steps to improve their effectiveness, the security of customer and member information is of paramount importance to us."
Bed Bath & Beyond said it is on track to begin processing chip transactions in the first half of 2016. In an email, spokesperson Jessica Joyce said the company will also be adding protections "that go above and beyond the chip-and-sign process" and include "end-to-end security" for its customers.
It should be noted: Because of the massive data breach during the 2013 holiday shopping season, Target was the first national retailer to adopt chip card checkout technology. Target added an extra level of security to its new credit and debit REDcards. While most new chip cards in the U.S. only require a signature to complete the transaction, Target's new REDcards require a PIN.
Why the holdup?
Making the switch to chip technology is a costly and complex process that requires retailers to do more than install new card readers. They must also integrate new software, have their upgraded payment system certified and train employees.
"It's a massive undertaking," said Jason Oxman, CEO of theElectronic Transactions Association, which represents the companies that process credit and debit card payments. "We've made a lot of great progress. We have literally hundreds of millions of cards in the market and hundreds of thousands of merchants have upgraded their infrastructure. But we still have a lot of work to do and it will continue in 2016."
It takes the average retailer about 19 months to get the new chip card payment system up and running, according to Mallory Duncan, senior vice president and general counsel at the National Retail Federation. Many stores did not have time to do that before the start of the holiday shopping season, so they decided to delay implementation, he said.
"Most sane individuals are not going to be ripping out terminals, installing new ones and testing them out at the busiest time of the year," Duncan said.
Duncan blamed the card processing networks, such as Visa and MasterCard, for providing the technical specifications to retailers late and delaying the certifications needed to turn on the new systems.
"For our mid-size and larger members, there's a huge adoption of the equipment, but they're sitting there, madder than wet hens, that they can't get certifiers or that they've been thrown new specifications, essentially at the last minute, to comply with," Duncan said.
Randy Vanderhoof, executive director of the Smart Card Alliance, told NBC News that developing specs for handling debit cards took longer than expected and that they were provided to merchants later than anticipated. The Smart Card Alliance represents all the major players in the switch to smart cards: card issuers, payment brands (American Express, Discover, MasterCard and Visa), payment processors and merchants.
"We heard from merchants that they were ready to go with their chip card readers for credit, but since they weren't fully implemented yet on the debit side, they decided they didn't want to offer a mix of chip credit cards and swipe debit cards and chose to delay the implementation of the activation for all cards until they had both of them working," Vanderhoof said.
Actually, it's really going rather well
The Smart Card Alliance was formed in 2012, when the commitment was made to switch from the outdated and easy-to-counterfeit magnetic stripe credit and debit cards to a smart card with an embedded chip. Chip cards are difficult to counterfeit if lost or stolen, or the account information is compromised. It cannot prevent all card-related fraud, such as using stolen card information for online transactions.
In his position as executive director, Vanderhoof has a unique perspective on the transition.
"I think we've done very well with what we had to work with, but we would like to have seen more progress being made by the time we hit this holiday shopping season," he said. "Even so, we're still satisfied that progress is being made and it will only be a matter of a few more months before we really get to the point where we want to be."
Chip cards are not required by law, but since Oct. 1, stores that can't process them could lose money. The reason: The credit card companies changed their rules about fraud liability. Now, if a customer hands the clerk an EMV card but the transaction cannot be processed using the chip, the merchant will bear any loss due to fraud, not the credit card company.
While Vanderhoof said he believes that October deadline was "overly optimistic," both Visa and MasterCard said they believe things are going very well.
"We're moving very, very quickly as compared to international statistics," said Carolyn BalfanyEMV expert at MasterCard. "Historically, it's taken some time even past the liability shift being implemented for the merchants' locations to be enabled and the cards to be issued. On both fronts, the U.S. is doing a very nice job."
Current statistics show:
•More than 800,000 merchant locations across the U.S. can process a chip-enabled MasterCard.
•More than 592,000 merchant locations now accept chip-enabled Visa cards, up 49 percent in October.
•Visa saw the volume of chip transactions in the U.S. increase by 42 percent from September to October, from $4.8 billion to $8.9 billion.
•It's estimated that seven out of 10 Americans now have at least one chip card in their wallet.
"We've seen really steady progress and great momentum, particularly during the summer and heading into the fall," said Stephanie Ericksen, vice president of risk products at VISA. "It does take time, but the progress we've seen so far is just really encouraging."
Canada, Brazil and Australia are the three most recent countries to move to chip technology. Ericksen said it took four to five years until 90 percent of their payments were made with a working chip card.
A recent report by Javelin Strategy & Security predicted that universal adoption of chip technology - 85 percent of merchants accepting them - will take until 2019.
"The large merchants who haven't done so already will make the switch after the holidays are done. They're just biding their time," said Al Pascual, director of fraud and security at Javelin Strategy & Research. "The small retailers and restaurants will be the holdouts and we'll start to see that play out over the next year or two."
Your mobile reach matters
Your mobile reach matters
By: Stef Siegfried
As more consumers turn to online searches from their smartphones to find small, local businesses, it’s imperative that you’re making the most of mobile channels. Increase your online presence to better reach potential customers by utilizing some simple, yet significant devices to engage this growing mobile audience.
Make yourself searchable
Not only are local consumers prone to researching your business before visiting, according to Google data, they’re 18 percent more likely to make a purchase having reviewed your business online1. Appearing prominently in local search is key to enticing interested customers. Increase your searchability by optimizing your online relevance. Regularly posting and promoting original and sharable content about your business and industry through blogs and social media is key to gaining rank in search engines. This is also a valuable tactic for increasing your brand credibility. Offering clear and captivating information about your business will drive online visits and prompt customers to not only visit your store location, but also make a purchase.
Having the ability to connect with your customers is more important than ever. A recent Social Media Examiner study showed 96 percent of small business respondents used social media marketing in 2014, while 92 percent of those either agreed or strongly agreed with the fact that social media marketing was important for their business. Using social media platforms with mobile apps like Facebook, Twitter, and Instagram can give consumers a better idea of what products and services your business provides and can even lead them to visit your website.
Here are a few tips:
◾Use visuals; an image of a product or service your business offers
◾Keep it short and to the point
◾Make your message timely and relevant, and include a promotion if possible
◾Provide a link to your site
Maximizing your online reach is essential for business, but tailoring your presence for mobile accessibility is a worthwhile strategy for engaging potential customers and driving sales.
How Online Retailers Can Fight Fraud Increases After The EMV Rollout
How Online Retailers Can Fight Fraud Increases After The EMV Rollout
In October 2015, the online retail landscape in the U.S. was revolutionized by the introduction of a new credit and debit card processing structure (known as EMV, or EuroPay, MasterCard and Visa). While EMV is a boon for brick-and-mortar merchants and their customers, it poses a serious threat to online retailers.
I cofounded eMerchantBroker in 2012 to provide credit card processing services to both traditional and high-risk merchants. A big part of our work is helping to protect merchants from fraudsters. This is becoming a real issue: we’ve seen that in every country that has adopted the EMV standard, there has been a follow-on wave of fraudulent credit card activity in the online retail world. Why is this happening, and what can retailers do to avoid it?
The New EMV Technology
The reason for that spike in fraud lies in the very nature of the change to brick-and-mortar credit card processing itself.
EMV is a fancy way of saying that most new debit and credit cards will have chips embedded in them, and at the point of payment, customers will need to enter a four-digit PIN. The cards and readers encrypt all the card information so thieves and fraudsters can’t make use of it. It ensures transactions are safe and secure if you’re running a brick-and-mortar business.
The Great Fraud Migration
The great news for retailers and customers alike is that in every country where EMV has been launched, card-present fraud has decreased significantly. And yet, overall fraud levels have not gone down. Why? Put simply, fraudsters just don’t give up. Close the holes in offline retail security, and they’ll turn their attention to easier targets. What we’ve seen in every country where EMV has been launched is that fraud moves to environments where “chip and PIN” isn’t available — like online retail.
According to a 2014 Aite Group white paper, Canada experienced a 54 percent decline in offline fraud post-EMV rollout but suffered a staggering 133 percent spike in online fraud. A similar trend has occurred in Britain, France and Australia, all of whom have experience with EMV. The problem is so serious that, in America, Aite predicts that online fraud losses will total $6 billion by 2018 — that’s almost double the current level.
What Online Retailers Should Do to Prevent Credit Card Fraud
As an international vendor, we have experience helping online retailers in countries outside the U.S. combat credit card fraud in the wake of EMV launches. In the process, we’ve identified several ways to successfully defend yourself and your customers.
So far, we’ve seen that the U.S. online retailers doing the best job at combating fraud have adopted best practices from merchants in countries where EMV has already taken hold. These retailers are constantly looking to innovate, using a robust set of interlinked strategies in the process. They think outside the box, and seek to work with vendors who have similar attitudes toward preventing online fraud. Some of the most effective fraud prevention best practices we’ve seen include:
•Automating fraud detection. All the top payment processors incorporate fraud detection in their offerings. They use software to analyze unusual buying patterns in user data (like multiple purchases on different cards from the same address, or small gift card purchases followed by a big ticket item purchase) and flag potential cases of fraud.
•Encoding data so fraudsters can’t access it. Several software solutions exist that encrypt customer information, replacing it with a string of letters and numbers that can’t be used by fraudsters if the retailer’s system is cracked. This encryption is called “tokenization” and is offered by companies like Protegrity and SafeNet.
•Pushing liability for fraud back to the issuer. In the U.S., banks have pushed liability for fraud to merchants, meaning that if you get burned by fraud when a “chip and PIN” system wasn’t used, you’re on the hook for it. That’s a killer for online retail. Luckily, Verified By Visa, MasterCard SecureCode and American Express SafeKey all use 3-D Secure technology to provide an additional layer of authentication — and the use of 3-D Secure shifts fraud liability from the retailer back to the issuer.
Getting a handle on chargebacks. Companies like mine offer services that inform retailers when customers dispute a charge, allowing the retailer to evaluate the legitimacy of the chargeback. This is important because, in 58 percent of instances, merchants are never notified that a charge is being contested, leaving them defenseless against the chargeback. And the cost of chargebacks, in dollars, time and effort are huge. The actual cost of chargebacks can be up to 270 percent of the disputed charge—meaning, on a $100 chargeback, you may wind up paying $270 in fees.
Putting It All Together
These measures protect retailers and their customers by reducing stolen or forged card fraud, preventing identity theft, and helping customers and retailers resolve legitimate chargeback disputes more quickly and effectively. They’re a great start — but not quite the be all, end all solution. The big lesson we’ve learned from other EMV countries is that fraudsters are continually searching for new weaknesses to exploit. This means that going forward, retailers must be diligent in evaluating and constantly upgrading their fraud prevention strategies.
Cash or card: How do you pay for Christmas?
Cash or card: How do you pay for Christmas?
by Andy Brown
Online shopping, mobile wallets, biometric ID – given all the media attention around new ways to pay, you’d be forgiven for thinking that cash has quietly shuffled off this mortal coil. But it is not so and this Christmas – when retail spending reaches its peak for the year – consumers appear as wedded to cash as ever.
According to Bankrate and Princeton Survey Research Associates International, four in ten Americans will be making their festive purchases with cash.
Considering US shoppers will spend an average of $805.65 on gifts, decorations, food and other Christmas purchases, according to a survey for the National Retail Federation, this is not a small amount of notes.
When we talk about payments it’s easy to focus on convenience, security and acceptance. But one of the things about cash versus plastic is just plain home economics. When you have cash in your hand you have control over the spending; it’s not possible to fork out any more than you physically hold.
“Paying with cash or debit means people definitely have changed their priorities. They’re going to buy what they can afford and no more. That’s very good,” says Ronit Rogoszinski, wealth advisor at Arch Financial Group.
Budgeting is clearly a factor and this is demonstrated neatly by the differences between low and high-income households.
At 53 percent, those with household incomes of less than $30,000 were most likely to say they will use cash for the majority of their purchases. This compares with just 21 percent of those with a household income greater than $75,000 who said cash is their preferred channel.
For higher earners – those with household incomes above $75,000 – plastic is the number one payment method. In particular the richer households prefer credit cards over debit cards – again sound budgetary decisions are a factor here.
Lower earners prefer the debit card. With a debit card a consumer can only spend what’s in their checking account. Unlike the certainty of holding cash, this could be more than they’d like to spend. But unlike a credit card, at least they have the funds and it’s not borrowed money.
Security is another factor. Credit cards offer greater protection – zero liability in most cases – while a debit card doesn’t tend to offer the same level of protection.
Again, it’s interesting that cash remains so popular given the security risks of theft and loss. But in payments there is always a choice and research hints that electronic payments in the US market have suffered because of 2014’s retailer data breaches. ATM Marketplace found a third (34 percent) of US consumers are making more cash purchases because they are worried about card details becoming compromised following a spate of breaches at some of the country’s top national stores.
In terms of in-store shopping, it’s arguable whether mobile wallets are really making much of a dent. Cash remains widely used and 84 percent of smartphone users told Bankrate that they do not plan to use a mobile wallet app to make a purchase. Just one percent of shoppers said the mobile wallet would be their go-to channel this year, the same percentage as for checks.
A worrying sign for providers is that the biggest obstacle is the perceived security risk – 36 percent said they are not secure enough. Meanwhile, one in three (31 percent) said other payments are more convenient. The good news is that only 12 percent said they don’t know how to use mobile payments.
Being secure and convenient are meant to be the two big draws for mobile payments – clearly there is work to be done persuading people this is the case. For now, it’s still hard to get people to part with their cash – except at the tills.
Next Year’s Fraud (And Solutions) List
Next Year’s Fraud (And Solutions) List
“There’s nothing like the holiday shopping season going into the New Year to test our latest security efforts and payment technologies,” Jeremy Gumbley, CTO and CSO of Creditcall, recently told PYMNTS.
Overall, Gumbley thinks there will be a downshift in card-present fraud, thanks in large part to the October liability shift and the retail industry’s migration to EMV standards.
“In the wake of the October Liability Shift, EMV will remain a strong force in card data protection,” Gumbley remarks. “EMV will continue to drive down card-present fraud around holiday shopping and into the New Year, and for years to come in the U.S.”
He speaks from experience, noting that when Creditcall helped companies navigate the EMV migration from mag-stripe cards to chip and PIN cards in the U.K., “by 2011 the U.K. had experienced a 79 percent decline of card fraud over the course of three years.”
Gumbley also predicts a lag in security vulnerability, attesting that while a shift in fraud to online card-not-present channels may occur, it is likely to be slower and to a lesser extent than “sensationalized.”
“Like any technology, it takes time before a new technology is widely adopted and therefore an exploitation interest for criminals. When EMV first came out in the U.K., there was no immediate increased online fraud until some time had passed,” explains Gumbley. “It’s too soon to predict to what extent U.S. and Canada will experience more online fraud as EMV helps to combat card-present fraud. However, North America has the significant advantage of embracing all the best lessons learned and best-in-class payment technologies from others who have already gone through this.”
The Creditcall CTO additionally assesses the likelihood of fraudsters exploiting change and the weakest link in the system; this includes mag stripe cards still being used as the rollout of EMV-enabled machines continues.
“It is unfortunate consumers are being victimized during a festive time of year, and pivotal time in the payments world,” says Gumbley. “However, around any notable change, it is not unsurprising to see scammers attempt to capitalize on consumers and businesses alike.”
Mag stripe cards have been proven easy to hack — and, given that many chip cards are still being shipped to the consumer, scammers will exploit this area of vulnerability.
Another area of interest for Gumbley is around usability of new chip cards for both retailers and consumers alike.
“CreditCards.com recently released a report that outlined approximately 1.2 billion credit and debit cards still have to be upgraded to chip cards and approximately 12 million merchants’ point of sale terminals have to be upgraded to accept chip cards,” he tells PYMNTS. “Furthermore, [that] consumers and retailers … have the technology doesn’t mean they will know how to use it.”
Gumbley points out that even the simple shift from swiping to dipping payment cards requires a behavior change and as “creatures of habit,” it’s likely retailers and consumers might default to what’s most familiar to them. This is especially likely, Gumbley notes, if the transaction doesn’t go through right away because a consumer may have removed their card too quickly.
“This will get better over time,” he states. “Especially after the concentrated holiday shopping season when everyone has had practice and more time to become accustomed to the new process.”
Lastly, Gumbley predicts the rise of the Internet of Things and new payment methods amidst security naivety and fatigue. He points out that the latest VTech data breach that exposed data of 6.4 million children and 4.9 million adults raises security concerns around what risks are associated with all of our Internet-enabled devices.
“With the growing prevalence of IoT,” says Gumbley, “and many of these items on holiday shopping lists (e.g. Nest, IP baby monitors, Apple Watch), we expect to see more IoT devices linked to payments and personal identifiable information — and more people unintentionally exposing themselves to potential hackers.”
This can be chalked up to security naivety as consumers interact with new kinds of technology or even security fatigue, as users just don’t want to go through the hassle of changing default passwords or setting up basic security protection on new devices.
“In the wake of the VTech hack around the holidays,” concludes Gumbley, “we may see larger players like Google and Apple take more precaution to help users better understand the risks of a potential IP-hack and how to set up basic security measures.”
60 Days (And Counting) For EMV
60 Days (And Counting) For EMV
To get a status check on EMV in the U.S. 60 days after the liability shift, PYMNTS checked in with some heavy hitters for a digital discussion entitled: “The U.S. EMV Migration Shift: 60 Days In.”
MPD Managing Director Gloria Colgan was joined by three players at the crossroads of payments security: Lori Breitzke, Marketing at Verifone, Shan Ethridge, Vice President and General Manager of North America Financial Services Group at Verifone and Brian Hamilton, Senior Director of Risk Products and Business Intelligence at Visa. The conversation dug into the current payment security landscape, persistent challenges for merchants and what the future holds for securing payments here in the U.S. and abroad.
EXPECTATIONS VS. THE REALITY
Prior to Oct. 1 and as the EMV liability deadline approached in the U.S., it was expected throughout much of the payments and commerce industry that there would be something of a “light bulb effect” and the majority of retailers would be ready for the changeover. It turned out, however, that of 12 million merchant terminals in the U.S., only 314,000 were EMV-enabled by Oct. 1 — and not all of them were activated and in use. The card side was a bit more prepared, with roughly 250 million cards upgraded to include chips. But that’s still a small drop in the proverbial cards bucket — there are 2.1 billion cards in circulation across all networks and platforms.
“There were expectations that we would be 100 percent deployed across issuers, acquirers, processors and merchants,” says Breitzke. “It’s now obvious it’s going to take a good deal longer than that.”
So, what will it take for merchants and card issuers to get to that 90 percent adoption mark that many other countries have reached?
Hamilton articulated the state of payments fraud in the United States, pointing out that fraud today is equally distributed across card-present (the fraud that EMV addresses) and not-present fraud.
“When we look at card-present fraud,” says Hamilton, “we can see that two-thirds of [it] is counterfeit cards. This is the result of data breaches where fraudsters have gotten mag stripe data and used it to create new counterfeit cards.”
THE FOCUS ON COUNTERFEIT FRAUD
Lost and stolen cards actually make up a very small percentage of this kind of fraud (less than 10 percent) and are a source of fraud that continues to decline. Counterfeit fraud, on the other hand, continues to grow year over year.
Hamilton goes on to clarify that “EMV is not a silver bullet” but rather part of a layered approach that Visa believes is an effective approach to cardholder security.
“EMV is there to support counterfeit fraud and authenticate a consumer at the physical point of sale,” he explains. “It’s a robust ecosystem of checks and balances with the right protocols being employed on the right transactions.”
That ecosystem includes: Visa’s predictive analytics, which evaluate 500 data elements for each transaction in less than a second to spot suspicious transactions as they are occurring; Verified by Visa and Visa Cardholder Authentication Service for verifying riskier card-not-present transactions, as needed; tokenization measures that apply to mobile and card-on-file transactions; and progress is being made in biometrics that help to secure transactions on mobile and some pilot EMV transactions.
“It’s important to know that EMV doesn’t protect the data — that’s the job of encryption — but what it does is it devalues the data,” continues Hamilton. “Because of the cryptogram — the one-time code generated with each chip-enabled transaction — if the card is compromised at one transaction, it is virtually impossible to counterfeit that card across other transactions.” This certainly does make the card data less valuable to would-be fraudsters who often are looking for the path of least resistance in turning card data into cash. “But what can happen,” Hamilton explains, “is the card data and primary account number could be used in a card-not-present environment, and we have seen that in other parts of the world — a migration of fraud to card-not-present.”
Breitzke points out that Oct. 1 was not a true deadline or mandate but rather the date that marked the shift in liability and that merchants were in no way required to implement new EMV technology.
“It’s just a starting line,” agrees Hamilton. “It’s very much a journey to get to chip; this has been [Visa’s] experience around the world. Typically, it takes years to get to that 90 percent mark. Issuers need to continue to put more cards into the market, and on the acceptance side, merchants with high risk for counterfeit fraud tend to lead the adoption, followed by smaller merchants.”
HOW THINGS CAN IMPROVE
“[Payments in the U.S.] are very different than [in] any other country,” says Breitzke. “We [the U.S.] allow our financial institutions to have choices in how they issue cards; we take a risk-based approach, and because of that, there is a lot of flexibility built into the system. We also have many processors and acquirers here in the United States. We have between 10 million and 12 million merchants, there are different commerce lanes on top of that and the way we process our transactions is very different as well.” The EMV security framework has a lot of flexibility built into it to ensure all potential scenarios are accommodated.
Not to mention a lot of FIs — like 12,000 banks and credit unions. That’s a big and gnarly ecosystem to organize, and that’s before we get to the number of merchants.
Part of the lag in adoption by merchants has to do with the many steps required for implementation, as Breitzke explains.
Firstly, merchants need to get the hardware so they can accept chip cards. Then, they need the software.
“It’s easy for us at Verifone because all of our terminals already have the software built into them,” says Breitzke. “But the complexities we were just talking about make that software piece take longer.” She explains that the software must be certified by all parties involved in transacting, at which point the merchant will get updated software, which they then install in their terminal. Only once all that is complete can a merchant begin to transact according to EMV standards. She adds that Verifone’s Secure Commerce Architecture is leveraged by various acquirers to expedite the process by removing merchants’ point-of-sale software from the payment process.
Nonetheless, some merchants have been hesitant to begin accepting EMV during the busy holiday season. Not only are they less likely to implement new technology, roll out new training for staff and update critical payments systems during the holiday rush, but longer processing times on cards is also a key concern.
“We are seeing longer transaction times, with it taking up to 10 seconds to [process] the card,” says Breitzke. “Most major retailers are seeing between 1–9 seconds longer at the terminal. There is a huge desire to get that down.”
Larger merchants have been quicker to adopt new EMV standards than their smaller SMB counterparts. Ethridge notes, “I think the larger merchants have been very proactive in ensuring their staff understands how EMV transactions are processed. When you get into the small merchants, they are more focused on running their business and don’t see the value or the risk associated with EMV at this point.”
However, he adds that “we are starting to see an increase in demand for EMV-capable devices within the space over the last 60 days,” making the outlook promising for implementation across SMBs in the near future.
While a casual observer at the point of sale might assume that implementation of EMV has been slow, early data suggests that acquirers have actually done a great job of prioritizing on their side of the rollout.
Hamilton articulates some key numbers very clearly: “We [at Visa] have 2.4 billion cards globally that are chip-enabled, 37 million terminals, 552,000 merchants enabled and 180.6 million Visa cards issued here in the U.S. Visa is closing the gap quickly.”
“On the card side,” Hamilton continues, “when we look at merchants who implemented chip, we’re seeing 60–70 percent of merchant transactions are being processed as a chip-on-chip transaction, and only 30 percent are going as mag stripe. So, when the issuers prioritized card rollout, they did a very good job of focusing on those ‘top of wallet’ cards that are getting used a lot.”
So, as EMV gets enabled and chip-enabled cards reach cardholder wallets, what areas are merchants, cardholders and acquirers still leaving vulnerable to fraud? There are a few scenarios to be aware of.
If a card is stolen, it is a chip card and the fraudster replicates the mag stripe, does it work? Hamilton says no.
“If they swiped that card because of the service code on the mag stripe, they would be told to insert that card, and it would not be able to process,” he explains, adding that the chip itself, because of the cryptogram, is “virtually impossible to counterfeit.”
Even if a fraudster were to take that chip card and use it to create a mag stripe (because it has a card number, expiration date, et al.), “the difference,” says Hamilton, “is the card validation value (CVV) on the mag stripe is different than the iCVV on the chip. It would fail CVV matching and … be declined.”
To this point, Breitzke reiterates how important multiple layers of security are: “EMV is just one piece. You need to have both encryption, tokenization and EMV to be super-secure beyond what we have today. Many merchants are moving toward employing all of those methods of security at the point of sale.”
So, how can merchants and the payments industry address all of these complexities and create solutions that are able to respond to increasingly sophisticated fraudsters?
Ethridge puts it this way: “All of the acquirers in the U.S. offer encryption and tokenization for all of their merchants; it’s just a matter of working with the acquirers to employ those features. EMV is a card authentication tool; it’s not necessarily a security tool by design. By taking the three-pronged approach and employing encryption and tokenization, which can all happen simultaneously, you’ve addressed every area you need to within your location to remove sensitive data from the point of sale.”
The digital discussion concluded with the sharing of several resources for merchants to help them monitor the security of their systems and transactions.
Why 2015 Is The Most Secure Holiday On Record
Why 2015 Is The Most Secure Holiday On Record
With record spending on the horizon this holiday season, will that equate to record levels of fraud? Not necessarily, says Stephanie Ericksen, Vice President of Risk Products at Visa. In fact, Ericksen says, 2015 is shaping up to be the most secure holiday on record.
“Payment fraud is an unfortunate fact of life,” Stephanie Ericksen, Vice President of Risk Products at Visa, recently told PYMNTS. “And when shopping volume spikes, as it does around the holidays, so, too, does the threat posed by fraudsters and criminals.”
According to Visa data that Ericksen shares, the amount spent on the holidays in the U.S. this year will be significant. On the most recent Thanksgiving Day alone, in fact, Visa accountholders stateside made $1.5 billion in online purchases — a 22 percent increase from the 2014 holiday, when they spent $1.2 billion.
Although one might assume that with more spending comes more risk, Ericksen states that, thanks to several recent payment innovations, “2015 is shaping up to be the most secure [holiday] shopping season on record.”
What will help that prognostication come to bear, Ericksen attests, is merchant and consumer awareness of potential fraud areas, as well as the security features that can help combat criminals who are targeting the payments system during the holidays.
While card-present counterfeit fraud represents about 70 percent of in-store fraud, Ericksen notes that EMV chip cards — and the unique, one-time code that they generate, thus preventing the creation of counterfeit cards by cybercriminals — are “leading the charge” against it.
“Consumers are getting new [EMV] cards en masse,” she remarks, “with over 180 million Visa chip cards issued, more than 592,000 merchant locations accepting chip transactions as of the end of October, and approximately 22,000 new locations being added each week.”
Mobile Payments Security
Through services like Apple Pay, Android Pay and Samsung Pay, mobile payments — and the convenience and speed they provide to consumers — are on the rise.
Central to their security is tokenization, which Ericksen sees as beneficial in part because the process of replacing sensitive payment account information (including the card number) with a unique digital identifier is “largely invisible to the consumer.”
Beyond the tokenization that all mobile payments provide, specific services like Apple Pay provide the additional security of using the accountholder’s fingerprint to authenticate the user, which Ericksen notes is “a convenient and secure alternative to signatures or PINs.”
Sharing further data from Visa (from a new survey), Ericksen points out that “90 percent of shoppers will be buying online” this holiday season, making mobile and online security — in addition to more traditional card-present security — “imperative.”
“Technologies like Visa Checkout,” says Ericksen, “provide consumers with a fast and secure alternative to filling out online form fields. Once consumers sign up and enroll their cards, they can complete online transactions with a single account, across multiple devices.”
Ericksen goes on to describe additional security features that Visa provides to its customers, such as Visa Advanced Authorization, which “takes into account up to 500 parameters, from geographic location to transaction history, [and] provides Visa card issuers with a valuable tool to use before deciding whether to authorize a purchase.”
Furthermore, Visa encourages consumers and its partners in the payments ecosystem to fight holiday fraud by “spreading the word about simple tools and techniques that can really make a difference,” says Ericksen. Such tools include transaction alerts that warn accountholders of potentially fraudulent activities via text or email, as well as Mobile Location Confirmation, “wherein cardholders … can register their mobile device’s geolocation data to serve as an additional input into Visa’s predictive fraud analytics.”
“At Visa we devote significant resources to protecting payment data, preventing fraud, and maintaining trust in the payments system,” Ericksen continues. “Our efforts to date have been successful, with fraud continuing to trend to historic lows, despite hugely increased transaction volumes.”
“Special vigilance is required at the holiday season to combat criminals’ efforts,” she concludes, “but working together, we can all help fight holiday fraud.”
The A, B, Cs Of Payments 2015
The A, B, Cs Of Payments 2015
By Karen Webster
Well, here we are – just a few short weeks before 2015 is one for the history books. What a year it’s been.
In many ways, 2015 was the year in which everything – and nothing — about payments changed. Plastic cards, checks – and yes, even cash – still define how payments are made among people and businesses. This is despite the billions of dollars and manhours dedicated to launching a seemingly endless array of new innovations intended to change that.
That’s why 2015 might be one of the most important years in payments and commerce history yet. It was a year in which important lessons were learned about what the future of payments might look like, where we got a better sense of what real problems need to be solved and for whom, what enabling technologies might help us do that, and who might lead the way.
This year may not have made the big dent in the payments universe that many thought we’d see when the year started. But, more so than many, 2015 will go down in the history books as a turning point nonetheless. It’s likely that the year’s hits and its misses will translate into crucial pivots that will define the year to come.
So let’s take a look at the year that is 25 days from ending but a bit differently.
I thought it would be interesting to highlight the big topics of conversation in payments and commerce. Turns out that there’s one for every letter of the alphabet.
This is the first installment of the 26 things that help us better understand the hits, the misses and the too early to tell events that defined Payments 2015. I’ll give you my take on why each is important.
We’re going start today with A-K. To tease you just a little bit, A is for Apple Pay and K is for Kool-Aid. There’s a whole lot of juicy stuff in between.
Tomorrow we will do L through S. I can already tell you that S does not stand for Security, but M does stand for Mobile.
Wednesday, we will wrap things up. T is for Tokenization and W is for Wearables. Z you’ll just have to wait for.
Then, a week from today, I’ll synthesize those 26 into the 5 Really Big Things that will underpin Payments 2016 – and, hopefully, your strategies and plans.
So, drumroll please, as we reveal the first part of the Payments Alphabet 2015:
THE A,B,Cs OF PAYMENTS 2015
Not since, well, ever has there been such fanfare around the launch of a new payments scheme. Apple’s Tim Cook proclaimed 2015 the “Year of Apple Pay” when it launched in the Fall of 2014. And ever since, the industry pundits and the media basically have called it “game over” for everyone else.
Yet a year later, the vast, vast, vast, vast majority of the early adopters of the new iPhones, and now the mainstream Apple iPhone 6/6S users, haven’t taken the bait. And the shine has come off the apple, so to speak.
Only 5 percent of all transactions that could be done via Apple Pay – consumers with 6/6S handsets and merchants with NFC-enabled terminals – are done that way, which makes the overall percentage of retail sales via Apple Pay something less than a freckle on a pimple on a gnat’s eyelid. We estimate it around .002 percent — we’re not saying that’s a precise estimate by any means, only that everything points to overall usage being miniscule.
But there are important lessons to be learned here.
No. 1 lesson: payments is hard. And it’s hard for everyone, even if you happen to be the biggest and most beloved tech company in the world.
But Apple made something that is hard to begin with even harder for themselves. Apple came into the market forcing constraints on all sides of its platform given the technology horse that they chose to ride. Apple’s decision to embrace NFC meant that consumers had to have special hardware, so did merchants and few merchants did (and still do). Banks had to agree to give up money to play along – which they did then but which will make additional asks from Apple even tougher. And, of course, consumers had to buy the phone, which millions did, but few (like 3 percent) did because of Apple Pay. Its global expansion strategy is pegged to American Express cards, which limits the market even further.
That means that Apple’s strategy puts it at the mercy of both consumers and merchants to upgrade their gear. Consumers have to be convinced that using their phone to tap at a terminal is better than swiping a card — but doing that at far, far fewer places than they do now.
And all of this has to happen before enough consumers fall in love with something else that solves a bigger problem for them instead of creating one and before merchants then prioritize around that something else. Dollars aren’t the only currency in payments — time can be as crucial.
Apple Pay is perhaps the most visible and interesting lesson in platform ignition we’ve had in payments for a very long time.
Puhlease, can we all just agree to stick a fork in bitcoin? I am pretty sure that no one at this point is a bitcoin-as-global-currency-supporter – and for that PYMNTS will unabashedly take some credit given our rather stark assessment of its chances at doing that a few years ago. No sensible person could ever advocate the need for a currency that takes fiscal policy and control out of the hands of a central government.
But if we kill bitcoin that means we will also kill and bury the blockchain since bitcoin is what keeps the blockchain alive.
Bitcoin is the method of transport used by the blockchain to move data between the miners. That’s how they are paid. That’s sort of the dirty little secret that blockchain advocates don’t talk much about.
And keeping bitcoin alive is a bad thing. It’s a global currency alright, one used today around the world – by cybercriminals to finance their activities on the dark Web. Want to buy stolen credit card credentials? Easy peasy. Get a whole big pile of them and pay using bitcoin. And just about everything else that’s unsavory that bitcoin now makes easier to pay for – and procure online.
Distributed ledgers, on the other hand, could have some potential — think of them as blockchain without the bitcoin. Many are also bank friendly, many of them leveraging existing banking infrastructure, their well-developed risk, compliance and regulatory expertise and APIs to innovate the movement of money between these distributed ledgers around the world.
FIs don’t have to give up on innovating how money moves around the world, they should just give up on doing it via the blockchain.
And if regulators are looking for something to add to their agenda in 2016, maybe regulating bitcoin out of existence could be top of their list. So far, bitcoin has been really good at doing two things: one good and one very bad. It’s opened up a whole new narrative around how we should be thinking about innovating the movement of money around the world. That’s good.
It’s also removed the friction from buying illegal goods and procuring illegal services online and ignited that market. And that’s really bad, especially now.
Have mobile phone, will travel – via the Internet to any online merchant. Mobile devices provide an opportunity for merchants to scoop up incremental sales from consumers who can now use those devices to find them and do business with them.
And, there are more than 1.2 billion consumers online and ready to do some serious shopping.
Yet, for all of its potential, so far cross-border is retail’s biggest fail. If anything, it’s getting worse. Our latest Cross-Border Payments Optimization Index shows that merchants have taken a few steps backwards – just as consumers with mobile devices are taking many giant leaps forward.
But doing cross-border well can be complicated – currency, language, payments method, taxes and shipping all have to be localized. The best of the best know that being a global merchant means solving for both payments and logistics pain points — and doing it from the perspective of the shopper in their home country.
We’ve seen, shockingly, that some merchants have actually opted to “get out of” cross-border entirely by deliberately making it impossible for consumers to ship anywhere but within the merchant’s domestic market. The tradeoff that they are making is turning those consumers away rather than deliver a bad customer experience.
Either way, they are missing out on perhaps the most clearcut way of adding incremental revenue to their bottom lines, since on the Internet, everyone knows you’re a merchant.
Data is the coolest kid at the payments party in 2015. And data scientists are the Big Men And Women On Payments’ Campus. And, transaction data its most coveted prize given its potential to give everyone concrete clues on how consumers are actually behaving at the point of sale.
But as commerce becomes more distributed and data sources more extensive, data is being used by many different players across the ecosystem to create entirely new products and business models.
I listened last week to an Under Armour executive describe how access to data from the sensors in their clothing has driven a fundamental shift in their business. The data that Under Armour captures, with the consumer’s consent, helps Under Armour make better products, but it also helps them and others serve those athletes better, too. For instance, getting information on what high-performance athletes eat before a race not only offers useful information to other athletes but a potentially new source of revenue for Under Armour when information and promotions about those food products are marketed to them.
Data has become such an important part of its business that Under Armour doesn’t think of themselves as just a clothing manufacturer anymore. They think of themselves as technology company that has created and now runs the largest connected fitness network in the world.
Data has always been important to payments – but in 2015 we saw the beginnings of how it will evolve to create new adjacent revenue streams for companies across the ecosystem in the years to come.
2015 might not have been the Year of Apple Pay, but it was the year of EMV for the U.S. With the move to chip and signature in the U.S., the world is finally standardized on EMV at the physical point of sale, ushering in a variety of digital standards based on the EMV spec, like payments tokens.
While no one can argue the merits of standardized protocols for transacting – after all, that’s what the mag stripe is, too – and doing it under the rubric of a more secure experience — the deployment of EMV and the timing of said deployment was not without its controversy.
The liability shift timeline was aggressive, and the result is that the vast majority of terminals still are not EMV ready and far fewer consumers have chip cards in their wallets. Merchants, even with EMV terminals on their counters, don’t have them activated. I’ve been to big merchants – CVS, Walgreens (in San Fran), Whole Foods – and they tell me (when I swipe by mistake) that they won’t be turned on for a while.
Meantime, back at the SMB ranch, according to the newly released SMB Technology Adoption Index we did with Sage, 64 percent of them have no plans to introduce EMV ever. Some categories like restaurants think they’ll skip it all together given the friction it will introduce into their service process. Now, that’s not to say that they are blasé about fraud and security since of course they want to avoid being hacked, but most SMBs think they’re too small to be a target. Others are exploring tokenization and P2PE to keep data protected.
Yet, what EMV has done is to open up useful and important conversations about consumer authentication – the problem that EMV originally set out to solve more than two decades ago. And how to do that online, offline and in a world that will move commerce to any end point with a connected device. The digital identity of a consumer – securing it, protecting it and making it interoperable across channels was a key topic of conversation in 2015 – and it will be a center point in 2016 as well.
Ah, yes, the biggest “f” word in payments.
2015 will go down as the year in which “frictionless” was simultaneously the most overused yet least defined/understood word in payments.
Frictionless was in every pitch deck, every marketing brochure, and peppered within every conversation by every innovator when describing their solution. But “frictionless,” like the blind man and the elephant, became a matter of context.
To deliver a frictionless, one must first assess the points of friction. Is friction caused by the number of steps to checkout online? By the fact that businesses still pay each other with checks? By the fact that most retailers still make customers pay for shipping? That one-click checkout is still elusive on many sites? That, even with a mobile phone, consumers still have to walk up to a counter to pay – and sign? That we still can’t clear and settle a check the same day? Making the consumer authenticate themselves multiple times during the course of a transaction? Because having a bank account is too expensive so some people opt out of traditional banking?
So, Step 1 in paying off a frictionless value prop means first identifying what gets in the way of an efficient payments transaction, how much that friction costs a merchant or a business and then the ROI on truly become frictionless.
And we’re starting to get a sense of that in a few key areas.
The Checkout Conversion Index, something we did in collaboration with BlueSnap, reveals that friction online costs merchants 36 percent of their online sales. SMBs tell us that that being paid on time is their No. 1 priority, yet most of them say that checks used to pay them introduces about an 18-day lag between the time that the check comes into their office and the money shows up in their account.
In both situations, billions upon billions of dollars slip through the cracks — needlessly.
As they say, with knowledge comes power. And as we chip away at defining friction and its real impact on the payments ecosystem, 2016 could shape up to be the year that merchants and businesses start to use that knowledge to truly become frictionless.
Gas stations are a proxy for a future where every device is a commerce device – including one’s car.
MasterCard and Visa and SAP and Chase Pay and Samsung Pay, Verifone, and P97 have all independently (and in some cases collectively) announced initiatives that take the first steps into turning cars into enabling commerce platforms. Sensors linked to apps detect when a car is running low on gas, then help consumers find the nearest gas station with the cheapest gas, activate the pump when the car pulls up to it, and then charges the purchase to the consumer’s card on file. Offers are served to entice those consumers into buying (high margin) items in the convenience store attached to that gas station or to avail themselves of other value added services like car washes.
This same connected car can also alert a store in a mall that a consumer is pulling into the parking lot so that offers from her favorite store can be teed up — as can sales associates to greet that VIP shopper in a store. She can even be directed to open parking spots, and have parking fees, if there are any, automatically charged to her card on file.
All of this is done via apps on a smartphone, connected via software to the cloud and chips or sensors in cars. Gas stations are among the first to explore this new connected commerce reality given the costly swap out of card technology to enable EMV payments at the pump.
This is just one tangible example of how connected or distributed commerce can – and will — leapfrog the existing point of sale experience and reinvent it and the roles of the players within it. Amazon’s Dash Buttons and Echo ecosystem is another. And as I heard someone say last week, this stuff isn’t science fiction anymore, it’s science fact.
One of the best business books I ever read was “The Power of Habit.” Written by Innovation Project 2014 speaker Charles Duhigg, the book is, quite literally, an overview of how a consumer’s muscle memory is formed and why habits are so hard to unlearn.
The “habit loop” that Duhigg describes — cue, routine, reward — is both the how and the why people do what they do. In retail payments, the cue is a consumer being in a store and walking up the counter to checkout. In commercial payments, it’s having to pay someone (or be paid). The routine is whipping out a card (consumer) or writing a check (business) and the reward is walking out with a purchase (retail) and having a happy supplier (business).
If 2015 taught us anything, it taught us that the payments habits of consumers and businesses are incredibly hard to break.
On the retail payments side, the habit loop is hard to break because plastic cards work well and everywhere – and mobile payments don’t yet. On the commercial payments side and for SMBs, the habit loop rationale is similar — cash and checks work really well too, despite the plethora of electronic options available for the AP departments to pick from. In both situations, the big incumbent competitor is the status quo which – today at least — delivers the value and utility that consumers and SMBs seek. And that simply swapping out one form factor or payments method for another isn’t going to sweep those consumers or SMBs into the arms of payments innovation.
One way that it might is to play into another engrained habit that consumers have: buying online. Clicking “pay” or “buy” online is a habit that consumers have honed for two decades and are doing more frequently on mobile devices. We’re starting to see clever innovators on both the retail and commerce side of payments play to this muscle memory and use it to enable payments. “Checking out” in physical stores the same way consumers do online – or having buyers pay their suppliers the same way they buy from Amazon – could turn out to be a far easier habit to extend into the innovative payments environments of both businesses and consumers.
It’s inevitable. Mobile and digital is adding layers between the consumer and the merchant and/or the business and the payments brands that complete the transaction. The payments brands that are front and center in a plastic world – networks and issuers – are no longer what consumers necessarily see first and associate with.
That makes banks particularly nervous.
And at the same point in time that consumers are being presented with a number of new digital banking options and the many “Pay” players, including PayPal, are positioning themselves to become the “the wallet” for payment in a digital world.
But being invisible doesn’t mean being irrelevant and that’s the mistaken conclusion that drove bank mobile payments strategies in 2015.
If banks deliver great products and tremendous service, banks will still win the customer and their business since those will be the products that consumers will attach to the variety of digital “wallets” and accounts that they establish.
It’s a losing proposition for all but a small number of banks to think that they will rise to the level of becoming a “buy button” on a merchant site. But that isn’t what will win the day for them in a mobile world. Instead, banks can remain a viable and relevant option for consumers if they make their product one that the consumer can’t live without. In 2015, banks spent the better part of the year stressing over being invisible. In 2016, they should, instead, stress about how to keep from being irrelevant.
JPMC is one of those few banks that has the potential to become a powerful force in mobile payments. With the announcement of Chase Pay in October, Chase finally showed the world its digital strategy – which is to become a new closed loop network that offers favorable economics to merchants, acceptance to its 93 million consumers via a Chase Pay buy button, auto-provisioning into a mobile wallet and data that can help deliver relevant offers and incentives to grease their ignition flywheel as it scales. Chase Pay eschewed NFC in favor of an app powered by a QR code read by scanners that most merchants have already in their stores.
The devil is in the details, of course, and Chase has set the expectations bar very high. By mid-year, it is supposed to be in market with 100K merchant locations turned on. As we’ve seen with every other big announcement like this, execution of anything in the merchant environment is harder than it sounds. Getting 100K merchants lighted up, even if Chase can leverage its acquiring arm, is ambitious. And, getting consumers to try it – and stick with it – will require a strategy that changes the cue-routine-reward habit loop that has kept so many other schemes from getting traction.
But for sure, Chase Pay will be the one to watch in 2016 for many reasons. Chase has to decide how much (and nicely) it wants to play with others now that it has declared its ambitions to be a new payments network. Will Chase still play nicely in the Apple Pay sandbox, especially given the P2P rumors swirling around Apple Pay’s next mobile payments moves? With PayPal? My guess is that Chase will most likely let the consumer decide how and where to use their Chase cards, and work like crazy to get them to use them to establish preference for their Chase Pay products.
How the networks will play with Chase will now be fascinating to watch too. Chase is no longer just an issuer of Visa-branded cards, they are an issuer that will operate a closed loop network that runs over Visa Net. That makes them more like Amex or Discover. And networks typically compete more than they collaborate. 2016 will be totally consumed by getting Chase Pay off the ground but it could also offer some clues as to how this new network normal might play out over time.
There was a lot of that being served around the FinTech world in 2015. With access to capital at an all-time high, millions upon millions of dollars were being thrown to innovators with a clever idea designed to change the world. More unicorns were inducted into the unicorn FinTech club in 2015 than in any other year – so many, in fact, that a company throwing off revenue and a market cap of $300 million or $400 million was something that innovators felt that they had to apologize for.
And in 2015, the great puzzle was the rhyme or reason to the multibillion dollar valuations of those unicorns. It certainly wasn’t the revenue numbers that belied them.
Five-year-old Stripe at a $6 billion valuation and no disclosed revenue numbers – clocks in at $3 billion less than the valuation of Vantiv, which processes 15 billion transactions a year and $1.5 billion less than WorldPay that processes ~3 billion transactions a year. It’s about a third of First Data which processes 42 percent of all merchant transactions in the U.S. Maybe it puts Stripe in a situation that many “unicorns” face when they hit the public markets: a valuation that’s hard to support and sustain given the reality of their business and the highly competitive arena in which they operate. Then again, maybe more Kool-Aid will be drunk and it won’t matter much.
But perhaps what punctuated the pervasive passing of the Kool-Aid in 2015 is the story of Theranos – and its 10-year, $9 billion or $10 billion market cap, without anyone ever challenging the merits of its scientific claims. Its Silicon Valley pedigree, high-profile board members and founder mystique was enough to sustain the calls for hundreds of millions of dollars in capital raises, drive partnership deals with big named retailers and fuel the ongoing media hype over a 10- year period. Only now are the questions that should have been asked and answered years ago, starting to surface.
In 2015, we saw the risks and even the dangers of groupthink. Critics say that the only people who are being hurt are the private investors who are playing with their own money. That’s not necessarily true. Companies spend time and money courting partnerships with unicorns so that they aren’t left out, at the expense of other things that they could be doing with companies that are “better” but don’t belong to the unicorn club. With the experience of Square in our rearview mirror, the instructive lessons taken from Theranos, the lack of ROI in bitcoin investments, and the rumors of the tech bubble softening, maybe 2016 will be the year that we spend less time propping up unicorns and more time celebrating the workhorses of payments and commerce that have the prospect of moving our industry forward.
Let’s face it. Loyalty needs a makeover. When we published our annual review of the 100 most innovative companies in payments last year, loyalty as a category, and loyalty firms, came in dead last. Deal platform after deal platform, digital coupon platform after digital coupon platform, points redemption platform after points redemption platform — all looked and operated the same. The barriers to entry are low and effectiveness with consumers is, too.
Yet what we learned in 2015 is that consumers don’t have to get “a deal” to be a loyal customer. Consumers value service just as much and don’t even mind paying more when they get it. As the travel industry has taught us, intangibles like boarding first, and getting upgrades are among the perks that keep consumers loyal to a brand. As Amazon has taught us, consumers will even pay to become a loyal customer, provided that they get value when they ante up.
And, when service and price are served up to consumers in a combo package – like letting a retailer’s best customers know when super sales are starting before others do – the impact on consumer engagement and their loyalty to the brand goes through the roof.
But when we asked 4,000 consumers last summer what really drove loyalty, we found that the answer is trust – trust that the brand will deliver value for service, the products and services that they want – and not the cheapest price.
2015 (and 2014 before that) taught us that consumers are price conscious, for sure, and they will follow the best deal if that’s what we force them do to. But the “best deal” is increasingly a function of value delivered: service, price and the experience with that brand overall – which builds the trust which delivers loyalty.
2016, I think, will begin to unlock some of those opportunities as brands, issuers, networks and merchants all experiment with the ways in which they can use data to deliver the value and the experience that builds trust. Loyalty, as a term of art, will fade to the background, as brands reexamine the ways in which they must get and keep consumers engaged.
You know this better than anyone — the mobile device is the centerpiece of the change taking place throughout payments. Its power and potential is touching every aspect of a consumer’s (or a business’) payments and commerce life. Mobile is what has blurred the online and offline worlds and opened many new opportunities for every facet of the ecosystem to reimagine how they interact with their customers and stakeholders. Mobile devices help consumers find products and influence purchase, turn checks into deposits, monitor banking and transaction activities while on the go, pay friends, and pay for purchases – even in physical stores. They have become point-of-sale devices, enabling transactions with anyone at any time.
Mobile, and the apps that are part of the mobile platform, have made it possible for whole new categories of business to emerge that solve other problems for consumers: getting a taxi – and paying for it without taking out a card, finding a plumber – and paying for him without writing a check, having someone else shop and deliver groceries – and paying for it online, making a reservation for a table for two at a restaurant – and paying in-app at the table.
Mobile is also giving apps that have nothing to do with payments – yet assemble large groups of consumers – the ability for those apps to become commerce apps such as texting and social networks.
On the business side of payments, the ease with which consumers use mobile devices is also forcing businesses to adapt mobile strategies to their own operations. The “consumerization of commercial payments,” as one banking executive describes it, is driving change inside the enterprise payments business because every commercial payments decision-maker overseeing an antiquated paper-based process is a consumer who uses a mobile phone to manage many aspects of their financial lives.
As we leave 2015 behind, 2016 could also be the year in which the way we talk about mobile’s impact on commerce starts to change, too. Just as eBusiness became just “business” in the early 2000s, mobile commerce and payments is likely to evolve over the next couple of years to become simply commerce and payments. Consumers won’t make the distinction since the mobile device will be an increasingly important part of their daily routines. And soon, neither will the brands they interact with.
In 2015 we saw mobile drive the digital revolution in payments and commerce, In 2016 and beyond, we’ll see that on steroids as mobile blurs the online and offline worlds even further and every device becomes capable of enabling commerce. The challenge for payments providers next year and in the years to come will be to not only keep pace, but stay a step ahead. That means working now to enable the same method of payment across all of their shopping channels.
2015 was an interesting year for the card networks. Visa and MasterCard made friends with investors as their stock prices and market cap soared. They’ve made a few more enemies on the retail side of the house, or maybe just made some enemies a bit more peeved, with the move to EMV and a timetable that held firm and called for a liability shift a month before the busiest time in a retailer’s year. They’ve probably also made a few consumers confused, at least for now, since they don’t know when they have to use those cards and when they do, they may not understand why using cards has become a bit more inconvenient. Guess they’ll have to use NFC … but don’t get me going …
They made the mobile wallet wars a little more interesting by offering digital enablement platforms to help third-party mobile wallet services scale, at the same time they doubled down on getting distribution of their own “buy” buttons. They invested in developer platforms and open APIs to entice innovators to code to their platforms and build products and services bearing their card brands.
They’ve invested in new ventures – including the blockchain – to get an inside look at how innovation could change or complement their place in the payments ecosystem. They’ve made a point of letting the world know that faster and secure payments is their core competency, launching products that enable the digital disbursement of funds from businesses and governments to consumers. They experimented with different engagement strategies and tactics to help issuers engage consumers to make their branded cards top of wallet – physical or digital.
They lost the interchange fee war in Europe but look like they may continue to dodge the bullet here in the U.S.
However, if you’re American Express and Discover the story is a bit different.
American Express can only characterize 2015 as annus horribilis. The storied brand with a market cap that was kissing $100 billion not that long ago has seen nearly a third of that valuation disappear. Yesterday, Amex’s market cap was $69.5 billion. Between the loss of key accounts like Costco – and the transaction volume that went with it — their seemingly unfocused mobile strategy (outside of Apple Pay which isn’t exactly saving their bacon), and beatings taken in the courts over merchant discounts, it’s been a year worth forgetting.
On the Discover Network side, their deal with Ariba to power payments along their B2B procurement network is starting to show some serious volume and tangible evidence of its strategy to white label its network to others. Ariba’s buyer/supplier network sends trillions of dollars of invoices across their network every year – a small fraction of that volume would deliver a tidy return to Discover.
In 2015 – and even before – we heard lots of players claim that they are going to make the networks irrelevant—see “blockchain” or troll the bitcoin pages on reddit for a laugh. But I think the networks can sleep tight in 2016. Their biggest worry? Getting merchants all fired up again.
Online to Offline
We started talking about the blurring of the on and offline worlds in 2006, even before there was the iPhone and app store that made that concept seem more real and even more possible. The combination of the mobile device, the cloud and data made it possible for consumers to move seamlessly between their on and offline worlds with ease. And no longer did that consumer have to be at a certain place sitting in front of her desktop or laptop to experience the pull and the power of a digital world.
Nowhere is this pronounced than in retail where consumers shop with their phones even while they’re standing in a store. The “showrooming” threat that paralyzed merchants in 2010, has taken a big backseat to merchants sharpening their omnichannel strategies to give consumers a consistent experience anywhere that they can touch a consumer. And, as we point out in the OmniReadi Index, powered by Vantiv, merchants are investing heavily to fill those gaps, actively blurring the lines by encouraging consumers to buy online and pick up in-store, where the data says that those consumers spend more 60 percent of the time.
Like my comment in the mobile section, 2016 could be the year that we start to lose the distinction between omnicommerce and commerce – commerce is the experience that follows the consumers across any channel. Just like with mobile, consumers don’t make the distinction, and their expectations are that merchants don’t either – both raising the bar for merchants and setting the agenda for everyone in the payments ecosystem to do their part to enable that experience.
2015 was the year that we saw a lot of P2P players double down on building their consumer bases. clearXchange expanded the number of banks on its platform and was acquired by Early Warning in October. PayPal’s Venmo platform racked up $2 billion in volume in 2015. Square Cash says it has topped $1 billon in volume, Snapcash (which rides on Square’s rails) is about a year old. Then there’s MasterCard’s MoneySend, Visa Direct, Amazon (which opened and closed P2P in the space of six months), Facebook Messenger, WeChat and a bunch of other emerging players that I have probably left out.
But what we learned in 2015 is that P2P is both a niche play and pretty unprofitable as a standalone offer.
Which makes it the proverbial Trojan Horse of payments.
Players are using P2P to build a consumer base that they serve as a foundation for other methods of payments that can crank out some revenue. Venmo will soon become an acceptance mark. Dorsey is said to be eyeing a Square Wallet Redux and Square Cash could be the platform for enabling that. Facebook Messenger is Facebook’s not-so-veiled-attempt to get debit accounts on file that could be later turned into a method of payment on Facebook for other commerce-related activities — like, say, event tickets.
And clearXchange, with its Early Warning security cred and hooks into a fair chunk of of the U.S. mobile banking consumers, may also have payments ambitions in its eyes. And if the rumor mill can be trusted, the Apple of Apple Pay’s eye as it is said to have both P2P and payment via the checking account on their roadmap.
In 2016, we’ll be watching how P2P platforms are used to enable B2P payments. Disbursements from insurance companies, government programs, rebates, incentives, settlements, disaster relief and payouts related to demand services platforms have shown adoption and a robust business model. Not surprisingly, innovators and emerging platforms are using new rails, network rails, faster rails or a combination thereof, to stake out their piece of that P2P/B2P pie.
If you really want to see the future of retail, look no further than the QSR space, where the mobile device is transforming the consumer and retailer experience in the store.
The hottest thing in mobile payments right now is mobile order ahead – a concept that has positively transformed the Starbucks in-store experience literally overnight. Not three months into the experiment, Starbucks says that it is driving more than 20 percent of all transactions and pulling in demand for its mobile app, and all of the merchant (better economics) and consumer (loyalty!) benefits attached to it.
Dunkin’ rolled out something similar just a few weeks ago, and says that it is seeing some of the same benefits, including bigger ticket sizes. Previously, consumers who wanted to avoid the long lines in the store stood in the express/drinks only line. That meant that they didn’t order an “attachment” (aka doughnut or breakfast sandwich). With its new mobile order ahead service, now consumers at Dunkin’ can have the best of both worlds – no line, coffee plus a doughnut and higher ticket. Chipotle has also found that mobile order ahead reduces their costs at the same time it increases order size – which improves their margins.
The consumer benefits are obvious – it’s great to skip the line and get exactly what they want (since they are ordering it themselves online) using a payments experience that’s familiar to them: shopping and checking out online on any phone. It also builds loyalty. What better way to engage a customer than to ask them to use an app and an experience that turns them into a VIP that can just walk in and pick up their stuff without standing in line?
Which is likely to spell the beginning of the end of the “counter checkout” as we know it. Maybe not in 2016 and maybe not even in 2017, but certainly in not-too-distant future as store operations see the value in embracing a process that delights the consumer and improves their throughput and efficiency. In QSR sooner, but eventually most retail establishments, the counter will become the place in a store where consumers mostly pick up stuff and not pay for it.
In the U.S., the year in regulation can be summed up in four letters: CFPB.
Under the rubric of protecting the consumer, they have proposed a series of regulations that will have the unintended consequence of denying many consumers the financial services they need and/or price them out of their reach. From prepaid products to payday lending, the CFPB’s initiatives would characterize a 24 hour $30 “overdraft” on a prepaid card that always gets a direct deposit a loan, and require that the borrower prove creditworthiness before getting it. This is, of course, asking the same financial institution that is challenged to make a small business loan for $30,000 due to the high costs of servicing such a loan, to do that for a $30 overdraft.
The full court press on payday lending treats all payday lenders as scumbags who are out to swindle the borrower and will deny those who need small dollar, short-term loans, the chance to get them from legitimate lenders who are providing a necessary service and price their product both fairly and consistent with the risk they are taking.
Their position on auto dealer reserves has revealed an embarrassing chink in their armor. As it turns out, their method of operation was to “guess” which names corresponded to certain racial and ethnic groups, resulting in a highly suspect set of conclusions about just who was being “wronged” by these programs. That’s of course, before questioning whether the CFPB’s reach could even extend into auto lending.
But that’s what happens when Congress creates an agency with a generous budget and no real appeals process, unless you count an appeals process as an Administrative Law judge appointed by the Director and who can be overruled by the Director.
Meanwhile, the who’s who of banking has paid tens of billions of dollars in fines, most of the time totally uncontested. Even Jamie Dimon has said he’s given up on pushing back on the regulators – since, in his words, it costs money either way and the banks come out on the short end of the stick.
2016 will likely see more of the same – since nothing about the agency will change. Perhaps Santa will deliver the final ruling on prepaid cards and payday loans. Then again, maybe it will be the Grinch who stole Christmas – and financial inclusion – from those who need it most.
Well, one thing could change — a Republican president with a veto-proof Congress could get their wish and shut down the CFPB or, more likely, put a bipartisan commission in charge of it, like the FTC, and actually give Congress the power to decide its funding like every other part of the government. (Reminder: The CFPB gets an almost-guaranteed share of the Federal Reserve Board’s budget — a sweet deal that I’m hoping to get someday.)
Yes, I know, you were expecting security.
But software is at the heart of the payments and financial services disruption that we witnessed in 2015. Software makes it possible to embed payments into apps that make commerce and payments both possible and portable at any connected end point today and in the future. The combination of software-powered apps and embedded payments is reinventing where and how consumers shop and clearly how they pay. It’s disrupting the delivery of financial services and giving birth to new players who live only in a digital world. Software makes it possible for entirely new industries to emerge that, with the addition of payments, expand trade in a merchant category or a business sector in a region or even around the world.
The future of payments will belong to those who think software first and devices second.
That also implies that the future of payments and commerce isn’t likely to be the domain of a single mobile operating system, like Apple’s iOS or Google’s Android, either. That would assume that consumers treat their mobile wallets as utilities, a generic app that comes preloaded on their phone like the weather app or a flashlight. And, that consumers don’t care that those wallets aren’t portable outside of that mobile OS. Mobile wallets, like their physical counterparts, contain digital credentials that consumers want the freedom to use wherever they shop – online, offline and every other place that might present an opportunity to make a purchase. This year, and next, consumers aren’t going to want that mobile wallet tied to a mobile operating system that limits their choices.
Tokenization isn’t a new concept in payments. In fact, it’s been a part of payments since the mid-2000s to protect data at rest. But when the networks launched payments tokens as part of the launch of Apple Pay and later to support the launches of Android Pay and Samsung Pay, debates raged across the ecosystem. And those debates were centered mostly on whether as goes the payments tokens, so goes the ownership of the customer.
The card networks, who operate the secure servers where payments tokens are stored and provide payments tokenization services on behalf of issuers, believe that payments tokens and the cryptograms that mask the cardholder PAN offer superior protection. Merchants don’t necessarily debate that point but fear a loss of easy access to cardholder PAN data. That data, they say, is critical to linking transactions with consumers and their loyalty programs. They fear problems in doing simple things like returns. Some believe that since there are still places in the transaction where data is in the clear, PAN data is still exposed, even if briefly, so the risk remains.
But mostly they fear being dependent upon the networks for access to that data and the costs that may come along with it down the road.
On the flip side, advocates say that payments tokens remove the risk from the merchant of enabling a fraudulent transaction since consumer authentication is not their burden to bear. And that reduces fraud overall.
At the moment, the volume of mobile payments is low so the tokenization issue is all but mute and merchants have other and bigger fish to fry. But fear not, the tokens tug of war will continue in 2016 as the ecosystem works through the practical issues of how living with and managing payments tokens are sorted.
Uber has become the “gold standard” for how we talk about “invisible payments.” And, that is the experience that digital payments players want to replicate – payments is just something that happens in the background without the consumer giving it much thought – or any. The big question for payments players to explore in 2016 and beyond is what commerce experiences are best suited for an Uber-like experience – and which one’s consumers want and need intervention. Having a $15 or $20 car ride post to a consumer’s account automatically is quite different than having that $550 pair of shoes and scarf get magically charged to her account without a consumer clicking “buy” or “yes.” There is a delicate balance to be struck between removing friction entirely so that the process becomes totally invisible to the consumer and making it seamless for a consumer to transact.
But Uber is also important for a couple of other reasons.
It single-handedly defined the “on-demand” economy, which is unleashing entirely new sources of value around the world. Uber has demonstrated the power of a software platform that can efficiently match supply with demand. As a result, there are now hundreds and hundreds of “Ubers of XXX” proliferating all over the world. Not all of them will succeed, but Uber inspired many creative thinkers to develop new companies with new business models in their image.
Uber also demonstrated the power such platforms have when they achieve critical mass on both sides of their platform. For instance, Uber drivers with capacity are now delivering packages to consumers from retailers who want to enable same-day delivery. Uber is also bundling ride services with ticket purchases for events promoters who want to fill seats at the last minute and it enables passengers to listen to their Spotify playlists.
Uber is also the poster child for the challenges of innovative companies entering regulated industries and winning. Uber’s biggest headache (and probably its biggest expense) isn’t recruiting drivers, it’s battling the regulators. They’re winning more than their losing, and their strategy of asking for forgiveness and not permission is why they’re in 300 cities around the world today, with a service that, should regulators take away, has the risk of creating huge consumer backlash.
2015 saw Uber raise billions and become one of the most valuable startups in the world. Hey, it’s worth almost as much as America Express! In 2016, we’ll see how they expand their geographic and platform reach.
The very first letter of the alphabet – Apple Pay – made the point that payments is hard, which is why the speed at which new innovation moves through payments is actually very slow. Velocity and payments innovation often operate at cross purposes.
That’s for all of the reasons you know really well. And also why igniting innovation in payments is the hardest trick in the book.
Igniting innovation in payments isn’t magic and it isn’t luck. It’s hard and it usually takes a long time. One big clue is understanding which side of the platform needs to embrace the innovation the most – and then what you must do on the other side to get them to fall in love – or to at least make it easy for that to happen. In retail payments, that’s, hands down, the consumer. When enough consumers start asking for something or adopting something new, merchants will follow suit.
But getting “enough” is hard and in 2015, we saw more misses than hits. Consumers dropped one big hint though – getting them to adopt mobile payments means making mobile payments less about payments and more about something else. Hopefully, in 2016 we’ll see more evidence that innovators have picked up on that hint.
Smartwatches include a whole host of features and functions but are widely considered mobile payments’ kissing cousin – a convenient way for payments to be made without rooting around a pocket or a purse for a mobile phone. That’s also why they’ve become such a big priority for manufacturers. Whoever makes the best watch and gets a consumer to buy it could end up influencing the purchase of an entire portfolio of devices that run the same operating system and support the same apps.
Yet as a category, smartwatches have failed to impress the consumer. Most haven’t yet convinced themselves that using their mobile phone can make payments lives easier, never mind what they might be wearing on their wrist. Battery life and tiny screens make usability challenging overall and in some cases limiting. And, since many people regard their watch as an important accessory, not a utility, they aren’t convinced that they really need one for anything, never mind as an additional payments tool.
Where smartwatches have made inroads is as a substitute for fitness bands since they offer the same tracking and monitoring benefit, with added and useful functionality.
In 2015, we saw a whole host of new and/or revamped watches hit the market from storied brands: Apple, Samsung, LG, Sony and Pebble. By the end of 2016, NPD says that 9 percent of the U.S. population will own a smartwatch. That may be — and consumers may buy them for lots of different reasons. But unless and until acceptance at the point of sale improves, like mobile phones, being able to pay using one won’t be the key driver. That will make watches as payments utilities a tough sell to consumers. Unless, of course, payments is app and not device/operating system and technology dependent.
Welcome to China!
While in the U.S, the conversation about smartphone handsets tends to be dominated by a discussion of Apple vs. Samsung, zooming out to the global picture changes the view of the landscape considerably. Though largely invisible to the U.S. consumer, Xiaomi has exploded in recent years and is now the third largest handset manufacturer in the world, controlling about 5.3 percent of global handset market.
And while that is admittedly a small number, it represents stunning growth for a handset maker that didn’t even exist six years ago. This manufacturer of an affordable handset, Xiaomi is increasingly making the smartphone “on ramp” for customers in China, India and the developing world.
They also offer a pretty good metaphor for the massive explosion of the Chinese mobile and digital ecosystem in the last half decade. The narrative about China as the world-beating economic engine is well-worn (if somewhat in doubt of late), but the story of China as the global hub of mobile and digital commerce innovation is undeniable.
Take this data point. While Americans spent about $7.5 billion online between Thanksgiving, Black Friday and Cyber Monday, Alibaba’s Singles’ Day (the shopping holiday the eCommerce giant pretty much invented) saw sales of over $14 billion. Alibaba made its first $5 billion — $2 billion more than all of U.S. digital commerce snapped up on Cyber Monday in total — in about an hour and-a-half.
And this is in a slowing Chinese economy.
But the takeaway is obvious. Chinese digital payers, players and shoppers have seen the evolution of digital capitalism alongside the local evolution of capitalism. They have fewer habits to unlearn, are eager to experiment and like to leverage technology to get a hold of the best goods — even if those goods originate on the other side of the world.
In 2015, we saw Facebook Messenger take its inspiration from WePay, the powerful messaging app that is the digital walled garden of communication and commerce for the Chinese consumer. We also saw everyone from Apple, to Google, to the card networks move West in order to tap into this growing pool of digital consumers despite the complexities of doing business there. And Alipay become everyone’s new favorite payment method. In 2016, that will only continue.
While every up and coming generation is closely watched for the imprint they are leaving on the world, millennials — the generation born roughly between 1980 and 2000 — are among the most watched, studied and commented upon generation in American history.
Often referred to as the generation of digital natives – meaning that the youngest generation of American adults having lived with the Internet for most (or all) of their lives – millennials are far more likely to use email than the postal service (unless they are getting a Sunday delivery from Amazon), experienced cellphones (and then smartphones) as a standard method of communication, grew up on Facebook (then Twitter, Snapchat, Pinterest, etc.) and perfected the art of the selfie.
These digital natives are driving the shift to digital commerce – and are inspiring the innovators and innovation that hopes to tap into their digital-as-second-skin personas. This, the generation that would rather lose their car or house keys than their mobile phones, has forced a refocus of how financial and payments services must be delivered to a generation who will only become more – and not less – digitally savvy in the years to come. Many millennials may still live at home in their parent’s basements, but their habits and preferences are driving the development of payments and financial services writ large.
And that they have, but only to a point.
They “Venmo” money to each other but haven’t yet scratched their mobile payments at the point of sale itch, unless it’s to pop open their Starbucks app to buy a cuppa joe – and probably now order it ahead. Millennials spend hours on Facebook but haven’t yet jumped into the social commerce waters. They say they don’t like or trust banks, yet most of them have debit cards and use them – and the mobile banking services that come along with them.
Gee, at the core, are millennials really that different?
In 2015, we saw an array of new products and services targeted to “millennials” in an effort to build a relationship that will remain intact as their financial and payments needs evolve – the gamification of this, the digital version of that. In 2016, millennials will be a year older, maybe a year wiser, maybe with a better job – and maybe even moved out of the basements of their parents. And, maybe even starting to develop the kind of financial and payments habits that their older siblings and <gasp> their parents have. Maybe the focus in 2016 and beyond isn’t making products for millennials so different, but how they access them more in keeping with their status as “digital natives.”
Zimbabwe is a country in Africa most famous for Victoria Falls, the dramatic waterfall that is described by natives as the “smoke that thunders.”
It’s also a proxy for the impact that mobile money has made on financial inclusion in a country where 65 percent of the population earns $100 or less a month.
Seventy-seven percent of the citizens of Zimbabwe now have a mobile money account and use it to send and receive money, top up mobile accounts and pay bills. This is up from 60 percent three years ago. And all thanks to the efforts of innovators who’ve made access to stored value accounts with bill payment and P2P payments capabilities accessible to the citizens in that country.
Mobile, of course, has been – and will remain – the catalyst for enabling financial access to those who need it. Today, there are 2 billion smartphone users in the world, and 7 billion mobile phone subscribers. In a few short years, it is said that 6 billion will own a smartphone.
Yet as much progress as has been made in Zimbabwe and countries like it, much work remains to give the 2 billion consumers around the world who aren’t part of the financial mainstream with affordable access to financial services. Over the years, more than 200 initiatives have been launched by a variety of players around the world with the hopes of making access to financial services real, cost-effective and useful. Sadly, most of them have failed to achieve their stated objectives, but not for lack of trying.
Regulators often make it difficult to get these programs off the ground and banks and telcos and non-bank innovators battle over who should lead such efforts in these countries. The economics of launching and sustaining these programs are challenging given the limited financial means of the customers these programs serve. And, surprisingly to many, the lack of enough cash in and cash out facilities have made access to the physical currency inconvenient and therefore the practicality of mobile money schemes less so. One of the great misconceptions of mobile money is that cash is no longer needed, yet consumers still need a method of payment when buying things in their local markets – and that remains cash. In fact, the availability and density of cash in and cash out networks is one of the key factors attributed to the success of Kenya’s MPesa, the model to which all other mobile money schemes aspire.
In 2015, the collective payments ecosystem recognized that it actually takes an ecosystem to overcome the challenges of financial inclusion in the developed and developing worlds. And that digital and data are two of the most powerful tools this ecosystem can deploy to deliver the right mix of services to the underserved, with economics that drive profitable business models for participating players. We saw mobile money schemes accelerate, and regulatory barriers relax in key countries like India as well as an increased emphasis on improving financial literacy and service usability. We saw the glimmers of microlending services using novel data assets to extend loans to individuals and businesses that spurred economic growth in their countries and helped smooth cash flow.
In 2016, we only hope that we see all of that – and more – continue.
The 5 Biggest Changes to Hit Your Money in 2015
The 5 Biggest Changes to Hit Your Money in 2015
Shoppers sought out simpler, smarter, and safer ways to pay in 2015.
By Jason Oxman
IMAGE: Getty Images
The payments industry truly made history in 2015. Unprecedented technological growth and innovation made payments the focus of FinTech, bringing it to the forefront of consumer consciousness as shoppers sought out simpler, smarter, and safer ways to pay. Here are the year's highlights:
The Rise of Mobile Payments
The idea of a digital wallet has been around for about a decade, but it didn't become part of the average consumer's vocabulary until 2015. The 2014 launch of Apple Pay catalyzed interest, and the new payments platform easily found its footing in a market that was well prepared for its arrival. The arrival of Android Pay, Samsung Pay (utilizing LoopPay technology), and Current-C (by MCX) has propelled mobile payments into the mainstream. It only makes sense: it's easy for people to pay using a device that's within reach day or night. Undeniably, 2015 is the year that mobile payments took hold. Capgemini's "World Payments Report 2014″ predicts that mobile payments transactions will increase to 47 billion through 2015, up from 29.2 billion in 2013.
October 1st was a banner day in the fight for data security and consumer protection. That day, EMV--or "chip cards"--became the new standard in the United States. Having a "chip" means that the customer's payment method includes a tiny but powerful microprocessor, working around the clock to store and secure consumer data. As of October 1, 2015, any merchant that hasn't installed a chip card reader will face liability for counterfeit card fraud if the card issuing bank has upgraded to chip cards. Conversely, if a retailer has installed chip readers, fraud liability will remain with the card-issuing bank. As always, consumers are 100% protected against card fraud liability. Currently, 60% of U.S. cardholders have received EMV cards from their banks/card issuers and it is projected that 44% of merchants will be EMV ready by the end of the year.
Enhanced Security though Biometrics
As chip cards wipe out in-store counterfeit fraud, industry experts anticipate an increase in online fraud (also known as card-not-present fraud). Counterfeit card fraud in the U.S. is projected to fall more than 50% to $1.77 billion between 2015 and 2018 while card-not-present fraud will jump $3.3 billion (+106 percent) to $6.4 billion. Even though chip cards will address counterfeit card fraud, we must remain vigilant against criminals by deploying new in-store fraud mitigation tools. For example, multi-factor identification methods like live-time facial recognition and biometric social data mining are replacing static PINs as the best means of verifying identity. MasterCard is currently in a trial phase for facial and fingerprint biometric payments in Europe and the United States and Verifone offers a biometric sensor in its VX 520 point of sale terminal
Established payments companies are embracing change and forming partnerships with technology companies--in some cases, they're turning into technology companies themselves. Industry titans are recognizing the vast opportunities for growth and innovation in the payments sector, and acting accordingly. The pace of mergers and acquisitions deals rose 2.8% in volume this year, while the value of those deals increased nearly 40% between 2014 and June 2015. Partnerships shaped the new face of payments this year.
Establishment of Payments Caucuses in House and Senate
Thanks to the unprecedented growth in payments, members of Congress and regulators are interested in - and enthusiastic about - understanding advancements in the industry. This year saw the formation of the Congressional Payments Technology Caucus in the House and the Senate Payments Innovation Caucus. Founded by U.S. Senators Gary Peters, Mike Rounds, Tom Carper, and Johnny Isakson, and Representatives Randy Neugebauer, David Scott, Kyrsten Sinema, and Lynn Westmoreland, both caucuses recognize the benefits that the payments industry confers on consumers and merchants alike by processing $5 trillion in payments every year. The two groups will explore issues around new and innovative technologies in the payments industry and field questions about data security, financial inclusion for the unbanked and underbanked, data collection, the Cybersecurity Information Sharing Act (CISA), uniform standards for data breach notification, and more.
As consumers continue to embrace electronic payments, there are multiple segments to watch: Peer-to-Peer payments are on the verge of a huge breakthrough. Alternative lending platforms for merchants are creating new cash flow management tools that allow small businesses to invest in their growth. Blockchain technology is attracting attention from financial firms seeking more efficient ways to record and manage transactions. Innovation is making the movement of money across borders more seamless and affordable. As the payments industry grows, payments will become even more frictionless and invisible.
I anticipate continued growth in technological developments and creative partnership opportunities in the immediate future--2016 will be another year of excellence in electronic payments.
Speed, Compliance and Encryption Can Combat Holiday Payments Fraud
Speed, Compliance and Encryption Can Combat Holiday Payments Fraud
Exciting growth opportunities exist for small and medium businesses taking advantage of the ever-increasing holiday shopping season. However, amidst this positive backdrop, lurks the negative threat posed by hackers and cyber criminals that prey on holiday shoppers and businesses.
Small and medium businesses can’t ignore the fact that they’re, in many ways, an easier and more alluring target than big-box stores for a cyber attack. In fact, one study notes that one in five small and medium businesses will fall victim to a cyber criminal.
With the variety of payment options available to customers, the growth of mobile purchases, and the increased sophistication of cyber attacks, small and medium businesses must take extra precautions to ensure customer information is protected from all angles. Your customers need to know their personal and credit card information is safe when making a purchase from your business.
Here are eight payment security recommendations that all small and medium businesses should follow throughout this holiday season and beyond.
Be vigilant. Keep detailed records of all sales transactions, including the date, time, and names of employees involved in the sale. The contact information for the customer should also be recorded. Detailed notes will become invaluable if a data breach does occur.
Act fast. In the event of a data breach, the key is to get to work right away to determine the cause of the breach and implement solutions. If you’ve taken detailed records, these notes will help you determine exactly when the breach occurred, allowing you to immediately take the necessary action to fix the situation and let affected customers know.
Communicate. A Bizrate Insights study from earlier this year found that the more than two-thirds of buyers worried about data security are more confident when making online purchases when a well-known trust symbol is visible. Tell your customers about the precautions your business is taking to protect their personal and credit card information. Communication, especially when it comes to data security, can go a long way to boost customer confidence.
Pay special attention to online orders. When a card isn’t present at the point of sale, such as during an over-the-phone or online transaction, they’re inherently riskier; thus, small and medium businesses should be even more aware of possible fraud. Be on the look-out if any of the following occur: the order is larger than normal; an order includes several of the same item; items are being shipped to an international address; transactions include similar account numbers; transactions are placed using multiple credit cards; multiple transactions are placed on one credit card during a short time period; sales are processed through the Deaf Relay System; cardholder asks for Wires or funds through a money transfer service, such as Western Union; or the sale seems “too good to be true.”
Train employees. Your employees are the eyes and ears of your business. Train them on your payment processing program so they’ll be able to detect when something doesn’t seem right. This will not only help prevent internal problems but also external threats. Consider having employees complete a payment checklist every time a purchase is made. The checklist should verify that address verification (AVS) is a match; confirm the 3-digit CVV security code; and ship to the AVS-verified cardholder billing address.
Don’t keep credit card information. Storing credit card numbers at your business site or on your software is a breach waiting to happen. Don’t rely on data security to be completely safe. If you don’t store sensitive credit card data, you’ve already taken a major step toward lessening your fraud threat level.
Don’t slack on compliance. Ensure your software is updated and that your businesses’ payment security programs are compliant with the Payment Card Industry (PCI) Security Standards Council. New PCI regulations came out earlier this year. To find out more about them, visit this PCI Security Standards Council site. Your software should also be certified by the Payment Application Data Security Standard (PA-DSS). And, don’t forget about EMV (Europay, MasterCard, and Visa) regulations, which went into effect on October 1. You can learn more about those in our Sage resource center.
Use end-to-end encryption. Keep sensitive information safe from hackers and cyber criminals with end-to-end encryption. Encryption is one of the best protectors small and medium businesses can use to keep importation information from getting into the wrong hands. This is especially important when sending sensitive information from one device to another as it can ensure the data is scrambled before transmission.
If you can’t implement these best practices before this holiday season comes to an end, make a point of focusing on payment security as one of your top business resolutions for 2016.
Card Fraud Myth Busters: 5 Common Misperceptions Your Members May Hold
Card Fraud Myth Busters: 5 Common Misperceptions Your Members May Hold
CO-OP Financial Services
Here in the U.S., card fraud is rampant. In fact, according to a recent Barclay’s report published in Security Magazine, 47% of the world’s credit card fraud happens in the U.S., even though Americans account for just 24% of total credit card volume worldwide.
While technologies such as EMV and tokenization will eventually play a key role in curtailing U.S. card fraud, experts agree that their best weapon against this threat is an informed consumer.
“In life, information is powerful,” said Bill Freer, risk manager for CO-OP Financial Services. “Nowhere is this better illustrated than in the fight against card fraud. Teaching members proper security protocols should be a top priority for every credit union, especially with so many misperceptions out there about how fraud occurs.”
Myth #1: I’m Safer Onsite Than Online
According to Freer, the number one misperception most consumers have about card fraud is that online transactions pose the greatest risk.
“Online fraud is always a concern, but most of the fraud we see occurs because of skimming devices and malware at merchant sites and ATMs,” he said. “These tools allow fraudsters to record all the card data information they need often without ever touching a physical card.”
Myth #2: I Know Exactly Where My Card Was Stolen
Another common misperception is that the last transaction made before fraud is detected is the source of the compromise.
“This is not usually the case,” Freer said. “Most of the time, card information is stolen weeks or even months before fraud surfaces. This is because the data is frequently posted on illegal websites and sits out there on the Internet until a fraudster decides to purchase it.”
Myth #3: PIN Transactions Create Less Risk Than Signature Transactions
This is not necessarily true, Freer said. “During a debit transaction, it puts less card info at risk for compromise when signing for a purchase rather than to enter a PIN,” he said. “In addition, if a PIN is captured, it’s even more valuable to a fraudster, as it makes it that much easier to turn that card data into cash. It can be devastating to have a checking account drained, and having access to the cardholder’s PIN makes it much easier for a fraudster to do just that.”
Myth #4: There’s No Way to Stop Fraud Myself
While credit unions and their service providers work diligently to prevent fraud, Freer noted that their efforts are more successful when cardholders contribute to fraud monitoring efforts. He encouraged credit unions to make new, advanced technologies for card controls and alerts available to members.
“With these tools, members can determine exactly when, where and how their cards can be used, and they can block unauthorized transactions themselves,” he said. “This practice alone can save credit unions and their members immeasurably in terms of time, money and aggravation.”
Myth #5: I Should Avoid Digital Wallets
EMV chip cards are a must, according to Freer, but he also emphasized the benefits of new tokenized payment options.
“Many consumers are not aware that tokenized digital wallets such as Apple Pay are highly secure,” he said. “In a tokenized transaction, digital tokens replace card data throughout the transaction, which means actual magnetic stripe data from a card never changes hands. As a rule of thumb, the less information that is transferred during a transaction, the less risky the transaction.”
He continued, “To educate members about fraud, take advantage of all your communication tools. Post security reminders on ATM screens that catch the eye. Use the information banner on your website to promote your card controls and alerts solution. Let members know about your fraud detection services, and advise them to respond immediately whenever they are contacted by a fraud analyst. Ultimately, detecting card fraud is an inexact science that is much more precise when cardholders participate in the process.”
Key Trends To Plan For This Holiday Season
Key Trends To Plan For This Holiday Season
While the holiday festivities are right around the corner, the shopping season has been underway for a majority of the U.S population since the beginning of November. According to a recent survey by CreditCards.com, about 23% of holiday shoppers anticipate to finish shopping by the end of this month. With that being said, as a business owner, it is important to stay on top of what’s happening in the retail industry and to consistently look for innovative ways to meet consumer demands as well when you plan for the holiday season.
Mobile commerce will remain a popular investment for business owners
As the holiday season approaches, it is important for retailers to be prepared to keep up with the crowds and the tech savvy demands of consumers. According to a report by Custora, on Thanksgiving of 2014, 52.1% of consumers used mobile devices for transactions which continued through the end of December. Mobile commerce is a great opportunity for retailers to provide meaningful customer service beyond the check-out line. Nowadays, having a responsive and mobile-optimized website is not just a competitive advantage; it is a competitive requirement.
Coupons keep consumers coming back for more
During the holidays, a large number of consumers spend less money. Whether purchasing in-store or online, consumers of all types are always looking for a bargain, making coupon promotions a quick and smart way to upsurge holiday sales. According to a recent survey conducted by RetailMeNot, 62% of consumers search for coupons for online retailers prior to buying. For example, Banana Republic differentiates their coupon promotions, offering 30% off of sale items using coupon code BREXTRA30. The store offered free shipping in conjunction with this coupon in conjunction which is a great way to build strong customer engagement and appeal.
By continuing to offer coupons in-store or online for weeks or months at a time (especially throughout the holidays), you can encourage further transactions and attract new consumers. By providing an expiration date, coupons deliver a built-in visual appeal and bring a sense of urgency to customers to buy immediately.
Showrooming will continue to take center stage
Throughout the last few years, a number of large retailers have shown concern about this “showrooming” trend in which consumers shop in-store, then take to the web to purchase from a discount competitor. However, during this upcoming holiday shopping season, many merchants are utilizing showrooming as a positive opportunity and with the help of in-store analytics, will aim to transfigure showroomers into brick-and-mortar shoppers.
Today, customers expect a lot from their relationships with retailers and brands. Retailers with physical stores offer consumers a meaningful and engaging shopping experience that no online store can. When searching for the perfect present, shoppers often look to sales associates to assist them with specific details about the merchandise, gift wrapping, etc. Having your store associates pull product and inventory data will help engage busy holiday shoppers and ultimately provide exceptional customer service.
Email marketing will be a popular promotional tool
In 2014, a survey from MailChimp showed that 100% of measured retailers used email marketing as part of their holiday promotions; including businesses that didn’t typically send promotional emails utilized the tool. That being said, this year, we will expect to see a number of retailers sending automated emails in which shoppers will receive follow-up messages when they make a holiday transaction. The specific follow-up emails are intended to generate additional sales and keep those holiday shoppers coming back throughout the entire year. Additionally, each piece of your consumer’s shopping journey should be customized; including the emails they receive from your business. In order to push growth for eCommerce, email marketers are personalizing each email that goes out to each individual consumer.
In order to help better forge stronger relationships with shoppers to keep coming back, it’s important to stay in the know about the latest trends and do whatever it takes to provide an enjoyable shopping experience for your customers all season long.
The Millennials Are Coming: Exceed Their Expectations with Mobile POS
The Millennials Are Coming:
Exceed Their Expectations with Mobile POS
Nowadays, most business owners view millennials as the driving force behind a majority of their sales, so it requires them to utilize a number of different marketing techniques to grab this new generation of shoppers. Merchants who want to target this group should invest in mobile commerce as the Gen-Y market segment has the largest percentage of smartphone users. It is important to establish an efficient digital engagement strategy in order to stay ahead of the market and meet the ever-changing demands of these specific consumers. Here’s how you can exceed their expectations with mobile POS.
Mobile commerce is a mandatory element of providing a seamless shopping experience for customers. This eCommerce approach can allow customers to access your store by way of a mobile-optimized website or a custom built mobile app. In today’s society, it is common to see most individuals within the 18-34 age range to be glued to their mobile devices, so it is important to provide them with convenience and ease of access and navigation of your products. Millennials often prefer to make transactions by phone and pay while they are in the aisle to avoid having to wait in line at the cash register. They are more likely to purchase when an item is put right in front of them and easily accessible to buy.
For millennials, cash is becoming obsolete, as they are now requesting new payment options that permit them to avoid paying with traditional credit cards and that offer a more customized experience. Although credit cards are currently the most widely used method of payment, other mobile payment methods such as e-wallets are becoming more popular for this new generation. According to a recent survey by Bankrate, approximately 63% of millennials don’t own a credit card due to their lack of trust in credit card companies. This large percentage demonstrates the need to offer additional mobile and card-free payment options.
Additionally, offering customers the ability to connect with your company via social media through their mobile devices plays a large part influencing customers to visit your store. By using social media platforms, retailers have shifted from traditional advertising and sales techniques in order to drive customer engagement and attract new customers. In the last few months, merchants have added “selling” to the list of functionalities they can do on social sites. Recently, Facebook, Twitter and Pinterest have added “buy” buttons along with the launch of Curalate’s Like2Buy platform on Instagram. By participating in this social shopping trend, you can eliminate the transition from one channel to the next and purchases will be completed quicker and easier. Millennials have high expectations for their shopping experiences and demand it be interactive and offered across all digital channels.
To capture this Gen-Y market, it is essential to offer convenient mobile technology in order to deliver a seamless shopping experience. Additionally, by meeting the needs of this new generation you can build traffic, sales and loyalty for your business.
The explosion of mobile commerce
The explosion of mobile commerce
Image Credit: Shutterstock
Mobile commerce is exploding, driving a flurry of innovations in mobile payments processing. Driven by new global markets, rapid consumer adoption of tablets and smartphones, and significant evolutions in secure mobile payments, mobile commerce now accounts for 7 percent of all e-commerce sales, roughly a 7x increase since 2010. That will rise to more than 50 percent in the next three years.
Since 2013, several of the world’s leading technology brands, including Apple, Google, Samsung, and Amazon, have flooded the market with mobile payments solutions — all jockeying for a share of the expected $800 billion worldwide market for mobile commerce in 2018. By that same year, more than 1 billion people in markets around the world will routinely use mobile payment solutions to buy both in-store, and online, via web, native mobile, and in-app.
The rise of contextual commerce, in particular, is expected to have a significant impact on how and where mobile consumers conduct transactions. With several large social platforms, such as Pinterest, Facebook, and Twitter all introducing ‘Buy Now’ styled buttons that leverage digital wallet technologies, there is expected to be a significant spike in mobile consumer payments. This will create several positive outcomes for web and mobile merchants, including lower Customer Acquisition Cost, increased sales conversions, and higher customer Lifetime Values.
This, combined with the introduction of several ‘off-the-shelf’ technical tools — such as Braintree’s v.zero sdk which offers a complete, readymade payment UI for easy integration into apps and websites — have given online merchants of all sizes and in any market the ability to tap a wellspring of monetization opportunities.
Braintree, acquired by PayPal in 2013, which already provides support for 135 currencies in 45 countries, currently powers some $50 billion in mobile payment volumes per year, and is expected to be a dominant force in the future of global mobile payments.
Black Friday Was a Crash Course in EMV
Black Friday Was a Crash Course in EMV
By David Heun
The introduction of EMV cards didn't significantly slow transaction times at U.S. retailers during the Black Friday shopping event, but there are still many wrinkles to iron out at the point of sale.
Mostly, consumers and merchants are both learning that timing – when to dip and when to remove an EMV card from a reader – is everything.
"Sometimes the terminal will time out if the cardholder inserts the chip card too soon. If the cardholder inserts the card while goods are still being scanned, the transaction will have to start over again," said Stephanie Ericksen, vice president of risk products for Visa Inc.
Before the card networks' Oct. 1 liability shift took hold this year, some retailers prepared for EMV by testing the new process and educating sales clerks about the best transaction sequence, Ericksen added.
Today, the party not able to handle EMV chip card transactions assumes the liability for counterfeit fraud on purchases. The liability shift marked the first time merchants potentially could be stuck paying chargebacks, a process that banks previously handled.
So it's in the merchant's interest to get the EMV payment right rather than fall back to less secure payment methods. One of the biggest issues they face is "tearing," which happens when a shopper takes the card from the reader too soon, nullifying the transaction.
This is happening because consumers think the payment has been accepted when the terminal prompts them to approve the amount, Ericksen said. But at that point, the transaction has not yet been sent to the bank for authorization.
"A smoother process occurs when showing the transaction amount first and having the customer confirm the amount, then asking the cardholder to insert the card," Ericksen said.
Another issue is that the customer-facing screen and the clerk's screen aren't always in sync with each other. "A lot of this is timing as to when you prompt the customer to do certain things," she said. "Sometimes, those screens don't match."
However, despite these issues, Visa's latest numbers on EMV transactions indicate that merchants and consumers are figuring out the process.
Visa merchants reported a 42% increase in chip-on-chip transactions from September to October, jumping to $8.9 billion from $4.8 billion.
Though numbers for chip transactions on Thanksgiving were not yet available, Visa noted that cardholders spent $1.5 billion overall on Thanksgiving, a 22% increase over last year's $1.2 billion.
That finding is important to Visa because it indicates shoppers are not waiting until Black Friday to do their spending, and thus there are smaller crowds in the stores on that vital day. Shorter lines make the learning process for EMV more manageable.
"We are seeing a lot of people opting to stay home and shop online on Thanksgiving and we should be seeing a lot more of that kind of activity," Ericksen said. "A lot more people are realizing how easy it is to shop through their mobile phones and apps as well."
Visa said its issuers have put 180.6 million EMV cards in the hands of customers through the end of October, while the number of merchants accepting chip cards rose to 592,000, a 49% increase over September. Visa projects that seven in 10 Americans now have at least one chip card in their wallets.
"On the merchant side, adoption has really been great," Ericksen said. "And we had many more enabling chip in the first weeks of November."
Small businesses have been slower to adopt EMV technology, but Visa reported that 50% of its EMV transaction volume was coming from smaller merchants prior to the start of the holiday season.
"There are a lot of chip- and Near Field Communication-capable terminals [for contactless payments] out there to help merchants future-proof their systems," Ericksen said.
Small merchants have generally been turning to First Data, Square, Revel, ShopKeep and other mobile point of sale providers for EMV and contactless payment acceptance.
EMV education is an ongoing process, and it will will take longer for some than others, Ericksen said.
Some smaller retailers have been put on a waiting list to get their terminals certified for EMV acceptance because of the late push leading up to the liability shift.
EMVCo, the standards body for EMV, is involved only in the Level 1 certification of the terminal as part of the hardware manufacturing process, said Randy Vanderhoof, director of the EMV Migration Forum.
"Once the make and model of EMV hardware is shipped and delivered to the merchant, EMVCo is done," Vanderhoof said.
Some of the testing logjam is likely occurring when Level 2 and 3 tests take place for terminal software through an acquirer or independent sales organization, Vanderhoof said.
"That is a legit bottleneck because the EMV terminal software comes from the acquirer for standalone devices and from the software vendor or ISO and then to the acquirer for semi-integrated or integrated merchant systems," Vanderhoof added.
Mobile Security Tips: What Are The Threats And How To Combat Mobile Frauds
Mobile Security Tips: What Are The Threats And How To Combat Mobile Frauds
Posted by Staff Reporter
According to a source, an estimated figure of 15 billion pounds will be spent by Britons on their mobile devices in this year alone. This big figures, of course, will attract the attention of fraudsters who are waiting for a chance to attack. And with the rise of the Chip and PIN, alongside the more intricate security systems of physical retailers, these fraudsters are also beginning to evolve their modus, shifting their focus on mobile commerce.
Mobile Related Fraud, What Are The Threats?
Just like what happens in desktops and laptops where malwares and virus attacks are a thing, mobile devices can face the same threats. On a related note, since many transaction are done over wireless connections via a network, these networks are likewise targets of fraudsters
According to an estimate, there are about 16 million devices worldwide infected by malware, and this malware is getting more sophisticated with stronger commands and control systems. And as what most people may suspect, majority of these infections take place on Windows and Android. iOS' walled system approach may actually pay off as it is the least attacked OS when it comes to malware infections.
How To Avoid Mobile Transaction Frauds
Disadvantages of using browsers
Using mobile browsers in pursuing a transaction opens you up to a bigger chance of experiencing mobile frauds, because it is practically the same as using your desktop that is prone to malware infections. In using a mobile device in your transaction, it is better to use the app versions of your desired retailers as it is often more secured than browsers. However, do keep in mind that the app developer or selling company should be a trusted one, as sending credit card info to an unfamiliar company risks you of fraudulent transactions, whether done within browsers or apps.
Your password is a very important factor when it comes to your mobile transaction, which is why, having a secured one is very crucial. When talking about password security, it's not only about getting an unpredictable one, because that only saves you from fraudsters who have at least 'second level knowledge' of you. One of the most efficient way to secure your passwords is changing them often. That way, fraudsters who take multiple steps in acquiring your password have a higher chance of getting an outdated one.
Use of authentication and verification systems
Multi level authentication and verification systems should be used in every one of your mobile transactions. The more steps, the better. May it be SMS code verification, phone calls, etc. - each of these will help identify your identity, hence increasing the difficulty level for the fraudsters. Ask your credit card company about this.
How Bricks-And-Mobile Is Transforming Retail
How Bricks-And-Mobile Is Transforming Retail
‘Tis the season … for mobile shopping. Mobile shopping while in-store, that is.
Bricks-and-mobile is the latest trend that’s sweeping the bricks-and-mortar retail scene this holiday season, particularly as retailers race to keep up with eCommerce giants like Amazon.
While there’s a push from those traditional retailers to draw in an audience online, there’s also a push to keep those digitally minded consumers engaged while in-store. That means turning to smartphones to enable consumers with the tools needed to make their shopping experience fit into the omnicommerce goals retailers are striving for.
A Reuters article that digs into this trend discusses some of the retailers that are innovating this concept. For retailers like JC Penney — which has had its share of struggles in the past year alone — keeping up with the times means enabling their consumers to use their camera to snap a photo of a person’s shoes in the store to see where else they are in stock.
Staples, which has all but declared war on Amazon, has equipped their staff with devices to show customers online rivals’ prices to show if their prices are beating the eCommerce giants, or at least how they’re comparing.
And then there’s Macy’s, which has created a Tinder-like retail app that allows consumers to swipe through items to either approve or reject what they’d actually buy. Target has been a leader in digital commerce and has been consistently enhancing its app to enable more consumers to shop while in-store. Best Buy’s app lets customers text a store representative for help while in stores.
What these retailers are doing, of course, is trying to prove that there’s still an in-store experience that can’t be duplicated online. The ability to see, feel and check the quality of physical goods in-store is still one thing that Amazon can’t compete with. But with that in mind, retailers have also caught on that their consumers are coming into their stores with the power of the Internet — and other shopping sites — at their fingertips.
But what retailers risk in this digitally focused era is enabling technology that comes with glitches.
“Poorly executed plans can be worse than no mobile strategy at all,” Perry Kramer, VP at Boston Retail Partners, told Reuters. “The dangers are losing those customers for the rest of the year or for a long time.”
From apps to beacons, retailers have been working for years to find innovative ways to make their mark in the crowded digital space, but the slumping foot traffic and lackluster in-store sales have shown retailers it’s time to give their customers a connected in-store experience. Otherwise, companies like Amazon will continue to gain greater market share.
An IBM research stat shows that mobile commerce retail purchases have jumped 34 percent in the past year. That research also projects that on Thanksgiving weekend, of the 40 percent of online shopping traffic, more than 20 percent of sales will be driven from smartphones.
That same research indicated that slightly more than half (51 percent) of consumers (from a survey of 3,426 adults) will be turning to Amazon for a majority of their online holiday shopping. The big-box retailers rang in far below, with respondents listing Walmart second (16 percent), Target third at 3 percent and Macy’s at just 2 percent. Those figures, however, are just for online shopping.
What this poll reveals is most of what retailers already know: That it’s getting harder and harder to keep up with Amazon’s growing ecosystem that’s adding more customer-centric services that are making retailers find new ways to draw consumers into physical stores (or even to their websites).
While physical retailers look to upset Amazon’s business model by providing shoppers with something they can’t get online, Amazon is attempting to do the same by giving into what shoppers want most.
And, according to IBM’s research, retailers who fall behind on the mobile commerce shift will be missing out big on securing consumers’ attention.
“Retailers that can’t deliver a more personalized experience on mobile devices will start losing customers to businesses that can,” said Jay Henderson, head of IBM’s cloud-based marketing platform.
The latest data from Reuters/Ipsos shows that, of the 3,000 respondents surveyed, half would be using their smartphones for shopping while in-store. That means comparing prices, researching the goods and taking photos. Last year, around 42 percent said the same thing.
Who suffers most from false positives?
Who suffers most from false positives?
False positives in payments are a growing problem – arguably bigger than fraud itself.
But just how big a problem and who suffers the most from them are important questions that need answering as increasingly consumers are not prepared to put up with a transaction being declined wrongly.
Merchants, especially those operating online, have to strike a difficult balance in making transactions easy, quick and convenient for the consumer but maintaining strong anti-fraud measures. Customers want one-click ordering, but they expect it to be secure.
As a result, merchants are perhaps getting a little too restrictive in their anti-fraud measures. According to a new study from Javelin Strategy & Research, one in six (15 per cent) of all cardholders experienced at least one false positive decline in the last year. Three times as many consumers are affected by a false positive as fraud, while the values involved are even more telling – $118 billion was incorrectly declined compared to $9 billion lost to fraud in 2014.
For merchants this was not a good thing as, for starters, it resulted in a total of $118 billion of sales being declined. Most importantly for the firms in question, a third of consumers (32 percent) stopped shopping with the merchant after the declined purchase.
As the report notes, merchants are more liable for card-not- present (CNP) transactions than before, which makes them keen to stamp on any suspected fraud. “But merchants cannot afford to alienate consumers purchasing through these channels and should tread carefully when considering a purchase decline,” argues the Javelin team.
Banks and issuers
False positives are, of course, not just merely a merchant problem. Banks and issuers need to be wary of the risk to customer satisfaction and loyalty. Moreover, high false positives may be an indicator of an inaccurate fraud detection system.
“Card issuers face a sticky situation: employ lax card authorisation strategies and risk losing revenue to fraud, or use strict authorisation rules and risk losing legitimate revenue. Both options have the potential to alienate their customer base, as no consumer wants to deal with either fraud or falsely denied transactions,” notes Javelin.
What drives cash demand today?Javelin suggests that technology like EMV and mobile “can help improve card authorisation practices and reduce false-positive rates.” For online merchants, secondary authorisation using SMS or a password sent to a mobile phone can help, but it’s risking the customer experience becoming overly cumbersome.
Visa and MasterCard are looking to improve online customer verification methods with biometric identity, which could also be an important step.
Among customers, there are certain groups more likely to trigger a false positive than others.
According to Javelin, so-called Gen Y consumers are the most at risk for false positives, with 24 percent experiencing at least one decline in the past year.
Again, for merchants this is a problem as this group are more likely to go elsewhere after a decline – 42 percent abandoned a merchant after their transaction did not go through.
Likewise, issuing banks ought to beware of the propensity for this group to seek alternatives if they’re not happy. “Gen Y consumers represent the future powerhouse shoppers and merchants cannot afford to lose their long-term loyalty,” notes Javelin.
High-income customers are also more likely to report false positives on big purchases than other groups. And again, banks and merchants would do well to keep this group happy.
All for one, one for all
It’s clear that all three groups suffer from false positives. Consumers get frustrated, while banks and merchants lose customers. As ever in payment security and fraud, it’s a matter of everyone doing their bit to improve detection of fraudulent transactions without becoming too restrictive.
Why Both Consumers and Businesses Love Gift Cards
Why Both Consumers and Businesses Love Gift Cards
Both merchants and consumers love gift cards. For merchants, gift cards provide additional profits. For consumers, they are an easy gift for hard-to-please family and friends. Particularly as the holiday season approaches, businesses should get their gift card processing programs in gear to prepare for increased traffic to their stores.
Holiday shoppers spent more than $31 billion on gift cards in 2014. The average person spent about $170 on gift cards during the 2014 holiday season.(1) No matter what industry business owners are in, it's likely they and customers can benefit from a gift card program.
The benefit for business owners
There are a number of benefits of gift cards for business owners. Gift cards provide an additional stream of revenue on top of normal products or services. Much of the time, shoppers don't restrict themselves to just the funds on the card. In order to make the most of their gift card balance, they will often spend more. As a result, business owners benefit from more revenue. Another benefit of selling gift cards is increasing brand awareness and attracting new customers. When stuck for a present idea, a customer may buy a loved one a gift card to a favorite restaurant, hoping the recipient will like it too. In this way, gift cards can increase awareness of a business by bringing in new customers.
Why consumers love them
Holidays and birthdays can be stressful for consumers. They often have long shopping lists and still want to make gift recipients happy. Gift cards allow them to do this more easily. According to National Retail Federation's survey, consumers seek out gift cards for numerous reasons (1). Gift cards allow recipients to select the gift they like best. In addition, they are easy and fast to buy. For last-minute shoppers, gift cards are an ideal present. Shoppers can purchase gift cards quickly and be sure the recipient will find a way to spend the money in a way that makes them happy. Some consumers may even choose to reload the funds on their gift card and use it as a personal debit card for a store, which makes it seamless and easy for them to pay.
It's clear that both consumers and businesses benefit from gift cards. Consumers love the ease of purchasing a gift card, while businesses are able to gain more revenue and increase visibility with this strategy.
3 Last-Minute Tips to Optimize for Black Friday and Cyber Monday
3 Last-Minute Tips to Optimize for Black Friday and Cyber Monday
By Dennis Callaghan
The 2015 holiday e-commerce season is upon us, and for some leading retailers, it has already arrived: Amazon began offering Black Friday sales last Friday, November 20, a full week prior!
By now, most retailers have finalized their e-commerce site code for the holiday shopping season and have completed testing to ensure fast, reliable end-user experiences that drive conversions. But even for those in a code-freeze, a few simple, additional steps can provide greater assurance and peace of mind during this make-or-break season.
The harsh reality is, it’s impossible for retailers to protect themselves from everything that can possibly happen during the online holiday shopping season. Performance issues are a fact of life, especially at this time of year — and as in years past, there are sure to be some hiccups as the holiday season progresses.
But, there are ways (and still time, though fleeting) for retailers to proactively protect themselves as much as possible, through the techniques described below.
Subscribe to a Web Acceleration Service
This is a very quick and easy step to increase site performance (speed). Website acceleration services require no hardware or software installs or code changes to a site. These services run in private clouds as edge services hosted close to major metropolitan areas around the world. Once a retailer subscribes, their own site can take advantage of the web accelerator’s content delivery networks and caching services to reduce network latency, remove Internet bottlenecks and optimize content for geographically dispersed end users.
Web acceleration services are available as plug-and-play and require little to no implementation – all they need is a retailer’s URL. Services like Akamai, Cloudflare, Fastly, Instart Logic, and Verizon Edgecast are all good choices, and can have the added benefit of protecting sites from security risks as well. Some of these services can also run a site on the faster HTTP/2 protocol, without a site requiring any code or API changes.
Optimize Images and HTML
This may seem like a no-brainer, but images that are too large continue to bog down web pages. During the Back to School season, Catchpoint Systems saw one major retailer hosting a 5.3 MB JPEG, when a simple image optimization could have reduced its size to 28K while retaining 90 percent image quality. Images remain the largest content element on most web pages, accounting for 1.4 MB of the 2.2 MB average site content total, according to the HTTP Archive.
Site images should constitute no more than 80 KBs for a desktop site, and 20 KBs for a mobile site or app. For those images that are desired but don’t make the size cut, free tools including Image Optimizer, RIOT and Site Report Card can bring size under control. During the holidays, it’s especially important to optimize images that are “above the fold” (where a quick or slow image load can have a huge impact on end-user perceptions of a site’s overall load time), as well as images that are deal-related, since site visitors will be looking for them.
Audit Third Party Tags
Third-party tags, whether for advertising, social media, or content services, remain a potential pitfall for Web performance as Catchpoint Systems’ benchmark study from earlier this year demonstrates. If a single third-party service goes down or experiences a performance degradation, it can bring down all the sites that depend on it as well – a true domino effect. While third-party services can enhance a site’s feature richness, the fact is that each one of them presents a performance liability. And these risks associated with extra bells and whistles may not be worth it during such an important sales period.
For this reason, keeping the leanest possible inventory of third-party services during the holidays is a good rule of thumb. Site speed and availability are paramount and take precedence over any value-add (but not truly necessary) features. Advertising tags in particular are one area where most retailers’ sites can afford to slim down. For retailers with a compelling business reason for keeping these tags, it’s important to at least make sure these services are not delivering Flash, video or large images, which can put a major drag on the end-user experience. Additionally, it’s important to keep an eye on services delivering these tags (often cloud services) for performance issues that could extend through to sites.
Top Features Found In Today's Best POS Systems
Top Features Found In Today's Best POS Systems
Choosing a point of sale system for your business can be daunting. Many different types of technology have flooded the market, each with its own pros and cons. The best solution for your company and industry often comes down to determining what tasks you'll use the POS system for. When comparing systems, certain amenities are standard, while others will stand out as elements that will help your business flourish. Here are six of the top features in the market's best POS systems:
Every business hopes to grow over time, so it's important to select a POS system that will adapt with your company rather than hold it back. While you may only have one location now, the future could bring multiple stores in the same state, across the country or around the world. With the additional locations, your customer base will grow, requiring a POS solution that will be able to handle and store that vital data. The best POS system will evolve in tandem with your company, meeting each need that arises down the road.
A business's success frequently depends on customer experience and perception. Both of those can benefit from a mobile POS system, as the software makes shopping more convenient. Customer information can be captured from any location within the store, effectively cutting down waiting time, as well as how long each transaction takes. With a mobile POS system, your company won’t be limited by the number of physical cash registers you have in your location. Instead, such a system will deliver service directly to the customer, providing a paperless experience. Emailed receipts allow businesses to collect more data on clients and also store it for future use.
3. Low swipe rates
Many of the best POS systems have reduced credit card processing fees. A low swipe rate means the processor receives less of your company's profits, allowing your business to reinvest that money in the enterprise. A rate of 2.75 percent or less is the norm (1). Each company's rate is different, depending on the relationship with the processor, as well as the type of card used.
4. Customer support
Choosing the best POS system for your company depends on many variables. Phasing out your old method and implementing a new technology can be difficult for employees, so having advisors available to help with solution issues is important. While some vendors offer 24/7 support, more provide help Monday through Friday during business hours. The importance of this depends on what kind of support you're looking for (email or phone), the type of company you have and your operating hours. Furthermore, user support can sometimes come at an additional cost. The price of support is another element to consider when deciding which POS solution to implement.
5. Ease of use
Perhaps one of the most important aspects when choosing the best POS system for your business is how simple the solution is to operate. You may need to customize the software to make it effective, but at the end of the day, it should be fairly easy to utilize and understand from the day it is introduced. The more difficult your selected POS system is to operate, the more complicated it will be for employees to learn, which can lead to downtime and increased costs
6. Inventory management
One of the biggest responsibilities of your company's POS system will be to keep track of stock. The system should be able to immediately update inventory when an item is running low and alert you when it's time to reorder certain products. Additionally, with records of past purchases stored in a single system, you can easily compare purchase prices against your inventory needs so you don't overpay for products.
Choosing the best POS system for your business requires foresight into important aspects of your company's future. The solution should have features that will help boost your business's bottom line. In order to make everyday processes easier for you and your staff, certain features are necessary, including scalability, mobility and customer support, among others.
4 Ways Point of Sale Software Makes Your Life Easier
4 Ways Point of Sale Software Makes Your Life Easier
Switching to a point-of-sale system is a smart step for many companies, as the software offers a variety of benefits. The terminal streamlines several processes for businesses, allowing business owners to keep their focus on their products or services, rather than their bookkeeping. Let's take a look at the four areas point of sale software simplifies for companies:
Stock can be a point of contention for many businesses, but with the implementation of a point-of-sale system, you can simplify this often daunting process. One of the key benefits that the terminal provides is the ability to see inventory data in real time. The terminal will automatically update after each transaction, each time an item is pulled off a shelf to be sent in an order and if a customer returns a product.
Since the data is updated immediately, the POS system can also alert business owners when it's time to reorder certain products, as well as the previous cost of the item. Automated inventory also reduces the amount of errors in a company's system because employees no longer have to manually enter the information.
Integrating a POS system with accounting software can help companies further streamline their financial processes. Customer information and account balances will be updated in real time, and sales tax charges will always be applied correctly with the assistance of this program (1). An integrated POS terminal will also ensure that ledger account entries—including accounts payable and receivable and customer deposits—are up to date, saving a business from making data entry errors in the future.
3. Customer interaction
A POS terminal can make customer interaction and communication much easier for businesses. To begin, the software will keep track of a customer's purchase history, allowing employees to recommend relevant goods or services based on past preferences. Since inventory is updated immediately, there is a less of a chance a company will run short on a product, thus increasing client satisfaction.
Former payment information can be stored, so a customer only needs to designate the payment he or she wants to use, without pulling out a credit card. Furthermore, many POS systems now come with a mobile option, which enables workers to complete a transaction remotely, such as out on your showroom floor.
With the ability to run real-time reports, companies can enhance their marketing efforts. You can easily analyze customer information, including purchase history, for trends and opportunities. Businesses can use that data to market their goods or services in an appealing way (2). Companies can see what advertising endeavors worked in the past and should be repeated, as well as the ones that weren't as well received.
Point of sale software can make business practices easier for companies. Nearly all aspects of your business, ranging from marketing and customer interaction to accounting, can be better understood using today’s POS software. And thus, you can use these findings to improve your business practices.
3 Resources to Increase Your Margins
3 Resources to Increase Your Margins
by Courtney Foster
For retailers, maintaining profit margins is very important in order to understand the full scale of your company. Having knowledge of which products or services generates the largest profit margins is critical to developing a thriving retail business and determine which resources will ultimately ensure future expansion of your company. Below we have shared three main components that you should utilize in your point-of-sale (POS) software that can help you increase your margins.
Margin Analysis Reporting
Retailers who utilize margin analysis reporting, can gain valuable insight into what products are driving your margins. By taking advantage of this in-depth reporting tool, you can pinpoint where you need to address issues and help you identify where you need improvements.
Enhance your marketing strategy while increasing sales all through targeted email marketing. By leveraging customers’ previous sales data and managing all contacts from one tool, you can encourage repeat visits with higher sales margins. Use customer information and purchase history from your system to set up customer segments, such as VIPs, loyalty card members, or purchasers of specific products. Understanding their preferences and shopping habits lets you send more personalized emails to your customers and yields higher sales.
A loyalty program can be a powerful tool in advancing consumer engagement and keep shoppers coming back to your store again and again. Loyalty programs are often utilized in order to grow customer share, improve consumer retention and increase profits. Typically, loyalty programs have an adjustable cost related to the program, which is the cost related with the rewards provided to loyal customers.
It is important to offer loyalty programs across all channels to address customers' needs. Whether they are shopping online, in-store or by mobile, shoppers should have their relevant data synchronized and readily available for their viewing pleasure. Offering customers these options enables a better understanding of how they interact with the brand and what motivates their shopping behavior.
By investing in these three resources you can grow your company, increase marketing, improve technology and ultimately improve your gross profit margin.
3 Cash Flow Tips For Retailers In November
3 Cash Flow Tips For Retailers In November
AUTHOR Bob Phibbs
Selling a great product while providing exceptional customer service, makes up the nuts and bolts of building an ever increasing flow of customers.
Unfortunately, managing a retail store takes a heck of a lot more than an awesome sales team; it also takes solid cash flow management and attention to the details.
November, and the all important "Black Friday," marks the day when many retail stores show a real profit, for the first time all year. How do you manage cash flow? What do you do with your November earnings? Deciding how to allocate your cash flow is a big part of what determines your success.
Here are 3 mistakes independent retailers make during the November rush, and how to avoid them:
1. Uncontrolled payroll spending - Many retailers over book employees during the holiday rush. After all, you build good customer relationships by keeping your lines short, right? Wrong! During the holiday season, shoppers expect to wait a little longer. Sure, you need extra coverage during the busiest times, but don't just add full shifts. Be like the bigger retailers and build a budget, then stick to it. That will keep you on target for your cash flow goals.
2. Buying too much extra inventory - Placing vendor orders in November means you didn't plan ahead in August through October. This is never a good sign. It usually means added shipping costs which reduces margins. Placing a few, normal fill-in orders is great, stocking up your store for the next three months is not. Inventory sits on shelves gathering dust. The money you earmarked for a massive inventory buy could have been earning you interest, not losing value with every day.
3. Paying vendors now - Staying current with vendor payments ensures timely shipments and increasing lines of credit, but that doesn't mean you need to pay them off, in full, during the holiday rush. Even if you are a bit behind on vendor payments, carefully consider your cash flow and determine how much to allocate to each vendor. If you are already current, there is no benefit to early payment unless the vendor is willing to offer a substantial discount.
Avoid these cash flow mistakes, and you will see a positive improvement to your cash flow in November, and through the rest of the year.
An EMV Education: Educating your guests to mitigate slowdowns
An EMV Education: Educating your guests to mitigate slowdowns
By: Andy Sirmon
In our recent posts, we’ve discussed the operational impacts of EMV, how EMV will affect the guest experience and speed of service and finally how you can educate your staff to help mitigate these impacts. Now let’s discuss the final piece in offsetting the operational impacts of EMV: guest education.
Guest education remains essential to minimizing operational impacts that result from implementing EMV. Those who have already adopted the technology, or have conducted an EMV transaction as a consumer, have undoubtedly seen consumers stumble over “dipping” the new chip cards, removing the cards too early from the payment terminal device, and even repeatedly trying to swipe the card, since consumers are used to the behavior associated with older magnetic stripe cards. These minor events can compound upon one another to cause a serious delay in a restaurant’s speed of service. That’s why you have to make certain your staff remains ready and available to help guests with their new cards by educating them in the areas below, especially in environments where customers are using payment terminal devices themselves, such as quick or counter service restaurants:
Show Customers how to Dip the Card
As mentioned in our last post, staff members should identify whether a guest’s credit card is a new chip card or an older magnetic stripe card at the outset of every transaction. This helps determine the next steps in the transaction –the card will either need to be swiped if it’s an older magnetic stripe card, or “dipped” if it’s a newer EMV chip card.
EMV-Staff-Training-chip-card-imageTo begin a transaction with the new chip cards, the cards must be inserted chip-end first, facing up – a process known as “dipping” the card. This allows the terminal to engage with the microchip, which is how an EMV transaction verifies that the card is not fraudulent. Your customers may not know this, but taking the time to explain the security benefits of the new system while politely showing the customer the right way to insert the card will help them to understand the need for the process change.
Customers may try to swipe their new chip cards out of habit; after all, it’s a process they’ve been used to for many years. However, a helpful prompt on the payment terminal device will also let them know they’ll need to dip their card, as opposed to swiping. Another thing to look out for will be guests still using traditional magnetic stripe cards. They will need to continue swiping these cards until they receive their newer chip cards; however, these guests may see EMV-card bearing customers dipping their cards and try to follow suit with their magnetic stripe cards. Quickly explain to them that their cards still use the magnetic stripe for transactions and request they swipe their card instead.
As more consumers continue to receive their new chip cards over the next several months, more will be using these cards for the first time – and that first time may be in your restaurant. So your staff should be prepared to help guests understand the proper use of their new chip cards, specifically how to insert them in the new payment terminal device.
Leaving the Card in the Terminal
It’s important to help your customers remember that they must leave the chip card in the payment terminal device for the duration of the transaction. Be forewarned, however; old habits die hard. As we’ve grown accustomed to the fast transaction times of the older magnetic stripe cards, we’re used to swiping our card and then immediately returning it to our wallet or purse. The act of inserting the EMV-card into the payment terminal device and letting the card rest there while the transaction is processed is new to many consumers, and this will be a continual learning process as more and more consumers receive their new chip cards and begin using them.
However, you can take steps to keep your transaction times at a minimum. At the outset, have your staff instruct guests to leave the card in the terminal until the transaction is complete. If the customer removes the card too early, the transaction process must be restarted.
Direct Guests’ Attention to the On-Screen Prompts
As mentioned, many payment terminal devices provide easy-to-follow on-screen instructions to help with the new payment process. These alerts should cover everything from identifying when to insert the chip card, to when it can be removed, to instructing guests who try to swipe a chip card to insert it instead. One of the simplest ways to ensure your speed of service doesn’t take a major hit is to simply make sure the guest is engaging with the on-screen prompts.
Particularly at quick-service restaurants where customers may be engaged in side-conversations with family or friends while waiting, it becomes critical to make certain the customer is paying attention to the screen. This small act can pay dividends into the overall guest experience.
Avoiding Left Behind Cards
Leaving the new EMV chip cards in the payment terminal for the duration of the transaction can have additional, unintended consequences: guests may forget to retrieve their credit cards after the transaction is completed.
Some payment terminals will alert the customer once the card can be removed, either through on-screen notifications or through an audible alarm. However, take the extra step and have your staff members verbally remind customers to collect their card at the outset of the transaction. Your customers will be grateful for it, and so will your staff as they won’t have to store a multitude of forgotten cards.
Explaining the change
Change is inconvenient and sometimes painful. Restaurants are well-positioned to alleviate consumer discomfort with EMV by anticipating customers’ frustration and training cashiers and staff thoroughly on new processes and the benefits of EMV. This is key to making your EMV implementation a success. Your employees will not only need to learn how to use the technology themselves, but they will also need to know how to help customers with inserting their EMV chip cards, making sure not remove them before transactions are finished. Your staff should also be available to help guests should a PIN be required to complete the transaction.
Even with your best efforts in educating your guests, unfortunately delays may still occur; this is to be expected when making such a major transition to the way your guests pay with credit cards. In moments when guests are confused or frustrated with this new process, it may be helpful to remind them of the reason for these new procedures: EMV brings a more secure transaction for consumers, which protects them from fraudulent card use. Reminding your guests that the small delay is providing them an additional layer of security may help ice any potential frustration.
EMV has seen success in other global markets where it has been implemented. The burden is on all of us to make sure that the story is repeated in the U.S. It all starts with a sustained, collective effort to educate consumers about what’s coming and continuing to provide the same level of exceptional service that has drawn guests to your restaurant in the first place.
Loyalty Can Bring Digital Wallets to the Masses
Loyalty Can Bring Digital Wallets to the Masses
By Christopher Barnard
Digital wallets present a classic chicken-and-egg problem.
Neither merchants nor consumers want to dive in head first: Consumers are hesitant to give up their physical cards for a number of reasons including security and ease-of-use. And merchants aren't willing to switch to digital wallets if consumers aren't, leading to a lack of infrastructure, which then circles back to give consumers another major reason not to switch.
But for merchants, mobile wallets are an extremely efficient and cost-effective payment technology and, perhaps more importantly, open up an invaluable channel for consumer engagement. For consumers, mobile wallets can offer a seamless, hyper-personalized shopping experience.
So how can digital wallet providers get both parties excited about this new technology? The key is to integrate loyalty.
And here’s how:
Incorporate loyalty tracking and transactions into digital wallets right out of the gate.Initially incorporating loyalty into digital wallets gives customers a real incentive to transition to the new form of payment as they see even more incremental value from the switch.
And as more and more consumers jump on to the digital wallet bandwagon, merchants will be able to justify the cost and time of the point of sale investment. In addition, digital wallets must have the ability to include all of a shopper's loyalty programs. Merhants can't just pick one or two popular loyalty programs to hitch their wagon to.
Offer shoppers incentives to switch to digital wallets.Since such a small percentage of consumers currently use digital wallets, offer higher rewards and points for those consumers who use their digital wallets.
This might include rewarding points/miles for registering a digital wallet, every digital wallet transaction or every dollar spent, or even exclusive offers and events. Also consider rewarding early adopters who refer friends or family members to use a digital wallet. This extra nudge of exclusive offers can be just what you need to bring digital wallets to the mainstream. And because all of the user's loyalty info is loaded, these incentives are guaranteed to be meaningful.
Position digital wallets as a new customer engagement tool for merchants. A major reason why merchants are reluctant to adapt to digital wallets, in addition to slow consumer adoption, is the cost and time it takes to upgrade their point of sale hardware to accept these transactions. And because digital wallets have yet to take off with consumers, spending valuable resources on integrating a digital wallet is a risk.
To get merchants on board, digital wallet providers must prove to be an invaluable new resource for customer engagement. With digital wallets, merchants have a direct access to their shoppers’ transaction data, and they can use that data to specifically engage with each individual shopper according to their transaction history. And what’s more engaging to customers than hyper-personalized loyalty offers and rewards?
Overall, digital wallets have the potential to be looked at as more than just a new tool for payments. Instead, there are countless opportunities for digital wallets to be used as both a marketing tool and a new and exciting way to increase customer engagement and loyalty.
Christopher Barnard is president and co-founder of Points.
Contactless Payments are Here. Are You Ready?
Contactless Payments are Here. Are You Ready?
Contactless payments are rapidly gaining momentum in today's business environment. According to the Smart Card Alliance, the first contactless payments in the U.S. (1) were introduced in 1997, when consumers would use small wands to pay for gas at the pump. Contactless payments have since evolved, and near field communication (NFC) technology that leverages radio-frequency identification has been integrated into credit and debit cards as well as an array of mobile devices.
Today, contactless payments are finally gaining momentum, and data from Deloitte serves as a strong reminder of this evolving business reality. Deloitte predicts that by the end of 2015, five percent of the base of 600-650 million NFC equipped smartphones (2) will be used at least once a month for contactless payments, which is a 14 percent increase from what was seen in the middle of 2014.
As more consumers worldwide begin to leverage contactless payments when making transactions, business owners need to be prepared to adapt their own technology and stay ahead of the game.
Benefits for consumers
Contactless payments offer many consumer benefits which have largely driven their increased adoption. The two main benefits to consumers are convenience and security. Let's take a look.
•With contactless payments, consumers don't need to dig through a purse or wallet to find their cash or cards, especially since NFC technology is being so commonly utilized through mobile devices. Smartphones are easily accessible and wands or tags can be attached to shoppers' keychains to make transactions easier.
•Contactless payments offer increased security because the technology uses encryption to help securely transmit data. This is especially important to business owners, as new standards in PCI compliance and EMV chip integration are placing a heavier burden on merchants to prevent fraud. Additionally, contactless payments provide added security in the following ways:
•The customer never has to hand over a physical card to the cashier.
•It's less likely a consumer will leave their card behind.
•Many contactless payment methods offer advanced identification technology, such as fingerprint readers.
•Payment networks that process contactless payments have the ability to detect attempts to use the same transaction information more than once.
•Contactless payments do not require the cardholder's name to be passed between the card and the terminal.
•Many contactless payments do not use the customer's actual account number when processing a payment.
Business owners win, too
As contactless payments continue to gain popularity, businesses that accept this technology will have a competitive advantage over other merchants. In fact, both Google Wallet and MasterCard PayPass offer users the ability to locate stores that will accept their technology. In addition to standing out in the marketplace, there are a few additional benefits to accepting contactless payments, such as:
•Contactless payments process faster than traditional payment methods, which equates to shorter lines and better customer service. Similar to the security benefits to consumers, contactless payments make business owners less vulnerable since contactless payments do not transmit consumers' card information to the POS system.
•Since contactless payments can be used quickly and easily, they have the potential to increase unplanned purchases and sales overall. In fact, a study released by MasterCard showed consumers may spend up to 30 percent more with contactless payment methods (3) than with traditional credit cards.
How businesses can prepare
Considering the benefits contactless payments have for both consumers and merchants, business owners should be prepared to begin adopting this technology. This is especially true in light of the upcoming EMV liability shift. Effective October 1, 2015, merchants who have not made the investment in chip-enabled acceptance payment technology may be held financially liable for in-store fraud that could have been prevented with the use of an EMV acceptance device. Many EMV-enabled payment terminals are already equipped with NFC technology.
There are several important steps you can take to prepare to start accepting contactless payments:
•Review your average sales and traffic to determine if contactless payments are right for you.
•Consider ways to make contactless payments in your business as simple to use as possible.
•Find out if your payment terminal already accepts contactless payments.
•Make sure the payment terminal you use supports the latest NFC specifications.
•Use in-store advertising to promote contactless payments in your business.
•Train your employees to use contactless payment processors.
•Partner with an experienced payments provider who is up to date on the latest technology that will provide your business the best ROI.
Contactless payments are likely to stick around, especially as the Internet of Things brings the convenience of using technology even more to the forefront of modern life. Business owners should investigate the benefits of contactless payment technology and begin taking steps to integrate the technology into their operations.
How Does Mobile Pay Impact Marketing Teams?
How Does Mobile Pay Impact Marketing Teams?
Photo Credit: Pexels.com
As a marketer, I am always thinking about how smartphones can be used to disseminate content and engage with the customer. If I think about the first customer touch point on mobile and follow the customer path all the way through to a purchase conversion, I end up at a destination that includes mobile pay. Every marketer wants all customers to purchase, right? We should all be thinking about mobile pay and how it will soon become the norm for consumers.
Mobile Pay May Require A Shift In Habits
Mobile payment methods are soon to become the norm for brands and consumers. Before this occurs, there needs to be a shift in consumer habits because some generational groups are not accustomed to swiping their smartphone and paying instantly. The older the customer, the less likely mobile payments will occur.
As mobile usage increases and becomes an hourly occurrence for some people, it has also proven to be a robust tool for marketers. CMOs looking to reach out to the Millennial generation are exploring mobile marketing strategies designed for that generation and their digital behaviors. According to a Mitek and Zogby Analytics study, this generation spends a great deal of time with their smartphone both day and night (87%). A high percentage of Millennials (78%) spend over two hours a day on their device.
Has Smartphone Usage Behavior Created The Perfect Storm?
If you're not convinced that mobile drives habitual behavior, just ask any person walking the street with their smartphone clutched in their hand and their face looking down at the screen. Or take a look at the dating couple in a restaurant having dinner together. They are gazing into their small screen instead of their mate's eyes. The smartphone is not only creating a habit people are unable to break, it's created what some call the perfect storm for addictive behavior. This is good news for marketers.
"The confluence of increased access and greater sharing of personal information, and at higher transmission speeds, has created the perfect storm of addictive technology." - Nir Eyal
"Gallup found that about half of smartphone users check their phones several times an hour or more frequently; 81% of people said they keep their phones near them "almost all the time during waking hours" and 63% do so even when they're sleeping."
- Frank Newport
• 81% of smartphone owners say they keep their smartphone near them all the time during waking hours
• 63% report keeping it near them at night even while sleeping
• 52% of smartphone owners check it a few times an hour or more
• 20% ages 18-29 check their phone every few minutes
Have you ever counted how many times each day you took your smartphone out of your pocket or purse and started staring at it needlessly? It's probably a scary statistic that many of us are really not interested in knowing the answer to. If we were honest with ourselves, we would probably admit our smartphone tends to monopolize our time and attention. When we do engage with it, most likely it's on impulse and not because we actually have a real need to do something. Addictive mobile purchasing behavior is a good sign for marketing teams. That means increased sales revenues and higher efficacy for mobile marketing campaigns.
Cash still ranks
Cash still ranks
Maybe not king, but still royal. Tech innovations aside, people still appreciate greenbacks
How does one make any kind of sense of the retail payments system revolution going on today?
Good luck with that.
There are in-store payments, online payments, peer-to-peer payments, mobile point-of-service payments, and payments using mobile wallets.
Within all these are all sorts of permutations, dependent upon technologies, security innovations, proprietary functions, regulatory requirements, and more. Of course, trumping everything else, payments are ruled by the vicissitudes of consumers who generally don’t know how they will get what they want but certainly do know that they want—something.
In response, payments providers have scrambled and continue to scramble to offer their best guesses as to what that something might be—or will be, in the near future.
With NFC, EMV, HCE, tokenization, biometrics, payment apps, mobile wallets, and other such terms making the rounds, it’s no wonder there is such chaos—the buzzword now is “disruption” but that seems like a lame term to describe what’s going on.
Which may offer a glimmer of some sort of sense as to what may happen next, at least in the short term. And that is, as the saying goes, what’s old can be new again.
Specifically, cash and checks—but with 21st century twists.
How people are paying
This summer, Blackhawk Network Shopper surveyed more than 1,000 Americans to examine how they pay today, their preferences for traditional and emerging payments tools, and how safe Americans believe different payments tools to be. Results:
• 93% used cash.
• 68% used debit cards.
• 68% used checks.
• 67% used credit cards.
• 62% used PayPal.
• 48% used retailer gift cards.
• 45% used Visa or MasterCard gift cards.
• 33% used prepaid debit cards.
• 14% made mobile payments on smartphones or tablets.
The survey concluded that cash and cards are considered the most convenient. To be fair, it also sensed a decline in cash and check use. On the other hand, gift cards of one form or another—which are obtained in exchange for cash or its equivalent—are rising in popularity.
“Consumers still have a strong preference for traditional payment methods like debit cards and prepaid cards. Those payments tools are not going away anytime soon, even as interest in and usage of new payment methods grows,” says Teri Llach, chief marketing officer at Blackhawk.
ATMs: Where cash and digital play together
The persistence of cash, either in the form of currency, debit, or old-fashioned checks that can be electronically captured—certainly hasn’t been lost on the ATM manufacturers.
Colin Gordon, a manager at NCR headquarters, quotes an industry survey that concludes that “any shift from cash to mobile between 2015 and 2020 will be negligible.” The survey estimates that the equivalent of $13.5 trillion is withdrawn from ATMs globally each year.
“What we will likely see in the future is further convergence of emerging digital and traditional physical channels, such as a mobile phone and the ATM,” Gordon says.
That’s already happening. NCR, Wincor-Nixdorf, and Diebold offer this technology, which is starting to show up at street level.
Generally, these services work like this: Consumers stage transactions from their mobile device by choosing which account to access and the amount to be withdrawn. Then, at the ATM, they scan a quick response (QR) code on the ATM screen with their device and the transaction is completed without a card. Multifactor authentication keeps transactions secure.
Such systems can also be used to dispense cash to third parties. Transaction data is transmitted to the recipient’s mobile terminal. The recipient can then collect the cash at the ATM.
“Transaction times are in some instances up to 40% less than a standard card reader and pin entry transaction at the ATM—a clear example of how cash, the ATM, and mobile are beginning to converge,” says Gordon.
Mobility with a P2P twist
However such exchange of monetary value between peers occurs, mobility takes a central and controlling role. Javelin estimates that the number of mobile peer-to-peer users will grow to 126 million by 2020 from 69 million in 2015. By 2019, Javelin expects that more than half of all mobile device owners will be using mobile P2P.
Michael Moeser, director of payments, retail and small business, puts it this way, in analyst-speak: “Traditional payment organizations and financial institutions now compete with nimble newcomers and need to maintain design, experience, speed, and security in order to stay competitive. Many existing and potential P2P vendors are contemplating what new features or services will resonate best with P2P users.”
All of which certainly may be true, but doesn’t diminish the chaotic nature of payments development today. Again, as was mentioned, the one glimmer of sense that can be discerned right now is the continued presence of that bedrock of payment: cash.
Sources used for this article include:
The Smart Way To Cash: Newly Designed ATM Offers Fast Service Via Mobile Phone
Diebold's Mobile Cash Access Software Bridges Physical And Digital Worlds Of Cash For New York Financial Institution
Mobile Payments “Won’t Impact Cash Demand”?
How America Pays In 2015
Mobile P2P Projected To Skyrocket In The Next Five Years 180%
Your EMV Questions Answered
Your EMV Questions Answered
Candace Lee - The Sidewalk
By now, hopefully you have heard about the EMV changes that occurred on October 1.
If not, here are the basics:
◾Consumers now have new chip-equipped credit cards that allow for more secure transactions.
◾In order to accept chip-enabled payments, merchants need an EMV card reader and an EMV “gateway” service.
◾If your business has not upgraded, and a customer uses a chip card on your traditional magstripe reader, you could be liable for costs in fraud cases.
Still need more information? NCR Silver’s resident EMV expert Mark Critchett was recently on hand to provide the latest insight on what it all means for your small business.
What is one thing that merchants might not know about EMV?
MC: It’s a common misconception that the liability shift applies to all credit card transactions. The liability shift only applies when a consumer presents an EMV card. If a magnetic stripe card is used, the liability remains the same as it did before October 1.
What are the benefits of upgrading to EMV?
MC: The primary benefit of EMV lies in its ability to prevent fraudulent transactions from counterfeit cards. Companies who are more likely to be at risk for card fraud are the ones that achieve the highest benefits.
What is an EMV gateway?
MC: Think of the EMV gateway as a traffic cop. Your customers will come to you with a number of cards from different banks. In order to authorize the transactions, you need a service that is able to route the transaction to the issuing bank’s processor, and direct the approvals into the point of sale system. And to further the “cop” analogy, the gateway ensures that all the card data is encrypted and kept safe along the way.
Which small businesses need it the most?
MC: Companies that are at highest risk for credit card fraud are typically those who sell items that have value on the black market. For example, electronics stores and jewelry stores.
Why aren’t more people using EMV?
MC: EMV technology represents a large change, and because of its cost and complexity, small businesses will be slower to adopt the new technology.
The vast majority of businesses that are accepting EMV payments are the big box retailers like Walmart, Target and Best Buy.
On the consumer side, not all shoppers have EMV cards in their wallet. The latest research indicates between 30-50 percent of households still do not have a chip credit card.
Why don’t the new chip credit cards require a PIN?
MC: The move to EMV represents a significant learning curve for both consumers and merchants. To help ease the initial impact on consumers, most banks have decided that a chip and signature will be easier on their customers than chip and PIN.
Overtime we expect more banks will move toward chip and pin, which has an even higher level of security.
Any advice on easing the transition?
MC: Both consumers and merchants need to recognize that the transition to EMV is a process that will take months, if not years, to become fully deployed.
In fact, there are newer technologies, namely mobile wallet technologies like Apple Pay and Google Wallet, that might actually leapfrog card-based transactions.
In short, merchants need to remain flexible and work with partners like NCR that will continue to keep them ready for the future.
Have more questions? Let ‘em fly below.
What an EMV Chip Card Transaction Looks Like
What an EMV Chip Card Transaction Looks Like
The future of electronic payments is changing. Credit card issuers and merchants are working together to provide new ways to combat fraud, and chip and PIN technology is one of the most important developments to come along in years.
Chip card technology, also known as EMV, helps reduce the risk of fraud during card-present transactions. Adopted years ago in Europe and Canada, the U.S. is the last major economy in the world to make the transition. Beginning on October 1, 2015, merchants who have not adopted chip card technology will face increased liability for certain payment card fraud that could have been prevented with chip card technology.
While most merchants have heard of chip cards and have a general sense of how they work, many people do not understand how this system changes the transaction process for both store personnel and customers.
Security protections in chip cards
Chip cards offer a number of protections that standard magnetic stripe cards lack. Chip cards generate a unique code with every transaction, so even if a hacker manages to steal the authentication code, it will be useless for future transactions. In addition, the embedded microchip makes duplicating cards for counterfeit purposes nearly impossible.
Another benefit is that the cardholder can retain possession of the card throughout the transaction. There is no opportunity for unscrupulous employees to pass the card through a skimmer that records personal data.
How chip card transactions are processed
Chip cards are read by a new type of credit card terminal that features the latest in card and transaction authentication. During a transaction, the customer inserts the payment card into the terminal, chip-end first. The chip and the card reader “talk” back and forth through dynamic speech to authenticate the transaction. Magnetic stripe cards, by contrast, simply “tell” the card number and expiration date to the card reader. This is why data from magnetic cards is easily stolen and reproduced into counterfeit cards.
After inserting the card, the customer follows on-screen instructions that further validate the transaction. This process will vary depending on which type of verification method the card-issuing bank chooses. Some issuers use a chip-and-signature system where patrons sign a printed receipt like they always have. Others will require the customer to enter a PIN to complete the transaction, just as they would with a debit card purchase or ATM withdrawal.
Adopting chip cards and secure technologies
To learn more about chip cards and other payment security solutions that can help protect your customers’ card data, as well as your business, contact Mercury today.
7 ecommerce trends to watch out for in 2016
Image by Jason Howie via Flickr
7 ecommerce trends to watch out for in 2016
Brian Zeng - Venture Burn
Trends are always changing and ecommerce trends are no different. While this is a great thing, it also presents a challenge.
Changing technology can improve and impress, which is why ecommerce store owners need to constantly be on their toes, and keep their eyes and ears open for what’s in the pipeline and figure out how it can help them better their products and services.
One can say that technological trends are like fashion. Women’s costumes and men’s suits are always changing, and you need to keep up with the latest to stay relevant. This principle applies to ecommerce technology as well.
2016 is fast approaching and is being touted as the year which will witness the emergence of a host of new trends in ecommerce, as well as experience the impact of those that made waves in 2015.
According to Forrester, consumers will spend US$327-billion per year on online shopping by 2016. It is, therefore, crucial to stay abreast of the developments in this field and tap the market.
Mentioned ahead are a few trends that are expected to evolve over the course of the coming year.
The Rise and the impact of mobile shopping
In today’s day and age, mobile phones are considered a necessity. Over the last few years, mobile phones have seen a surge in their use, with people using them not only to communicate or text, but also to shop. In keeping with this, an m-commerce store will no longer by an additional feature, but a requisite by 2016.
As noted by Kissmetrics, one-third of all ecommerce purchases were made on a smartphone during the holiday shopping season in 2013. Another noteworthy statistic is that 78% of mobile searches for local business information result in a purchase.
A business that undermines the importance of providing mobile shopping support will probably end up losing customers and facing obsolescence in no time. This means websites will need to be optimised to offer high-resolution and suitable touch control options that enable a seamless shopping experience.
Such must-have features will keep your customers coming back. Using services such as Google Analytics will give you a fair idea of how many customers are browsing your store on their phone. The number may just take you by surprise.
Multiple channels for shopping
Taking a cue from the above point, another device that is growing in popularity among online shoppers is the tablet. Gone are the days when people used only desktop computers and laptops to make online purchases. Apart from using mobile phones, they’re also using tablets. In fact, phones are increasingly becoming phablets i.e. phone and tablet amalgam, thanks to their ever-increasing screen size.
This, however, does not mean shoppers make use of only one device to make a purchase at all times. Say someone stumbles upon your brand through an online ad whilst browsing on their desktop computer at work. They leave it at that, and on their way back home, Google your brand on their mobile phone. They decide to look at some of your offerings on their tablet once they get home, and finally convert on their laptop later that evening.
According to ICSC, omni-channel customers tend to shop more frequently and spend 3.5 times more than single-channel shoppers.
So, even if customers aren’t converting on their desktop computers, several of them will still use their mobile devices or tablets to browse, research, and make their decisions.
More often than not, the online purchase cycle works like this. This is the reason why ecommerce stores of the future have to be flexible and responsive.
Automation in marketing
When it comes to marketing automation in online stores, the scope includes not just good old’ email marketing, but extends to customised landing pages, tailor-made discounts and promotions, easily-accessible shopping carts, and automatic display of related recommended products for customers.
This does not mean that emails need not be used. If implemented properly, automated marketing will enable you to send out customised emails to each customer, informing them of new products and promotional offers on the basis of their shopping history.
Automated recommendations are directly determined by what a particular customer bought or clicked when they visited your store previously.
Using content to engage and sell
Using content in B2B online sales is crucial. That’s because B2B buyers are always looking for details. They don’t just want a product; they also want specifications, helpful videos, rich images, and comprehensive product guidelines. All these elements go a long way in convincing them to buy from you.
This can be extremely beneficial as you can use content not only to educate customers about your products, but also to notify them of new products and promotions. Further, this is key to a more continuous communication between your brand and the retailer.
An important factor to consider here is personalisation. When you offer your customers personalized content, you share with them valuable knowledge, which provides them with solutions to their problems. This, in turn, can be highly instrumental in increasing your sales, inspiring website visitors to stay for longer, and garner customer trust and loyalty.
Customer data analysis through algorithms
One of the major challenges that plagues ecommerce stores, in terms of automation and personalisation, is customer segmentation and identification of patterns based on the buying history. Algorithms can help here.
The precision of the data returned by algorithms, however, depends on the quality and the size of the data analysed. This can work against small ecommerce businesses that do not have large amounts of data to be evaluated. However, such businesses can collaborate with third-party providers with access to vast amount f data to minimise this limitation.
This isn’t a new concept, but its widespread effect certainly cannot (and should not) be ignored. Flash sales have become a habit and an expectation of online customers, especially during special occasions.
Although the success of flash sales isn’t guaranteed, it can be assumed that if flash sales become rife, customers will be more than happy to lap them up with both hands and in small timeframes.
While the public will expect huge discounts across a plethora of products, you need to ensure that you do not end up damaging your brand in a bid to organise a flash sale.
Flash sales can last from anything between a few hours to a few days. Some even take place within the timeframe of 60 minutes. If your website is mobile optimised, more customers will be able to have faster and easier access to your store, thereby revving up your sales.
For most ecommerce retailers, shipping options are just starting to evolve. It was only during 2013 that a lot of delivery services started to offer same-day delivery. The concept of ‘crowdsourced deliverers’ came up as well, with the larger retailers experimenting with drone delivery services.
All said and done, specialised services remain the most reliable and fastest modes of delivery. As far as the future is concerned, regulation approvals for drone deliveries haven’t been ruled out. This, however, will depend from country to country. The impact of this trend can be understood by Amazon’s announcement a few months ago to recruit new agents for crowdsourced delivery i.e. regular people like you.
Today, we live in a world that is well-informed and its people are no longer willing to settle for anything that does not live up to their expectations. The sooner online retailers realise that the customer is king, the better chance they stand of winning them over. Customers are spoilt for choices and switching to other brands takes no time. The amount of time and money they spend when shopping online matters most to them. Factors such as convenience and security also play a huge role. The future belongs to the retailers who engage them by providing value, thereby earning their trust.
The above pointers should enable you to understand what the future of ecommerce looks like, and strategise accordingly to metamorphose into something bigger and formidable that makes your customers and competitors take you seriously.
Retailers Can No Longer Ignore M-Commerce Payments
Retailers Can No Longer Ignore M-Commerce Payments
By Anuj Nayar - PAYTHINK
As retailers gear up for a busy holiday shopping season, many are wondering how much e-commerce, and more specifically mobile commerce payments will contribute to overall sales this year. The quick answer is retailers need to embrace m-commerce.
Retail ecommerce is expected to be strong during this year’s holiday season: eMarketer estimates sales during the core holiday November–December period will reach $79.4 billion, an increase of 13.9% from the same time in 2014, continuing a multi-year trend of double-digit growth. E-commerce’s share of overall retail sales will rise to 9% during the holiday shopping season, well above its predicted 7.1% share of total retail sales for the year.
Many shoppers use mobile devices to compare prices, research a local store or business, search for product information, and make purchases. M-commerce sales will grow 32% in 2015 according to eMarketer, far more quickly than ecommerce as a whole. This growth will be driven by increased use of smartphones for holiday purchases as larger screens, mobile-optimized webpages, newly-developed retail apps and easier mobile checkout processes are making buying on smartphones and tablets easier than ever.
So how does all of this information translate for retailers? There are a few trends that everyone interested in maximizing holiday sales should understand in order to take advantage of the growth in mobile commerce.
In a recent PayPal global mobile survey of shopping trends, 47% of those who have shopped by mobile said that they prefer to use an app over a browser, for convenience and speed. So while many businesses have been focused on creating mobile-friendly sites, it is important to have an app strategy also. The same survey also found that a younger demographic, 18-34 year olds, accounts for 59% of mobile shoppers. For businesses whose demographic includes millennials, having a well-developed, easy to use app will be especially important.
The most successful retailers will give shoppers a seamless experience and be able to work with customers whether they walk into a store, order online, via mobile browser, via an app, or call on the phone. Being able to make a purchase on one channel and return to another is also important to consumers.
So that could mean ordering online and picking up or making a return in-store. The most successful retailers will unify their online and in-store merchandising, meeting and recognizing shoppers wherever they choose to engage with the brand.
If your business already has a mobile app, congratulations! You’re in a good position to benefit from the coming surge in m-commerce. If you still don’t have an app, don’t let another year go by before you solidify your app strategy and start building your presence in the mobile marketplace.
Anuj Nayar is senior director of global initiatives for PayPal.
EMV Adds a Dash of Tech Flexibility to Card Security
EMV Adds a Dash of Tech Flexibility to Card Security
By Drew Luca - Payment Source
October 1 marked the dawn of a new era in the U.S. payment card marketplace. While there are not yet rules from the card brands that demand all parties utilize EMV technology, the financial liability shift is a significant first step across a line in the sand that cannot be erased.
Not only are EMV cards more resistant to compromise and counterfeit, but the chip technology also makes it possible to embed on a single card multiple payment applications—debit and credit, for instance— and nonpayment applications such as loyalty points and membership accounts. Issuers also can remotely manage cards: If a card is reported stolen, the issuer can remotely block the account; if the card is subsequently found, the issuer can unblock the card.
The EMV standard involves the use of embedded microprocessor chips on each card that protects customer data by creating and encrypting a unique code for each transaction. As a result, they are much less vulnerable to compromise and counterfeiting compared with magnetic-stripe cards.
A string of massive and high profile data breaches of merchant systems in recent years galvanized support among card brands and issuers to move away from magnetic stripe-based cards and strengthen the security of the payments infrastructure by implementing a more advanced standard for cards.
In addition, the re-terminalization which has occurred alongside of the preparations for EMV have dramatically increased the number of contactless capable terminals which paves the way to support a wide variety of EMV compatible mobile transactions. While not every merchant has deployed contactless capable terminals – and many have deployed their capable terminals without actually enabling the contactless capability – many have used this opportunity to upgrade their infrastructure to be ready to support future innovation.
While much of the world converted from magnetic stripe-based cards to "chip cards" years ago, the U.S. was a lone holdout … until now. For the first time, merchants that accept EMV compliant cards via non-EMV capable point of sale (POS) terminals will be liable for losses regardless of whether they were actually liable for the loss under the pre-EMV rules.
For merchants, the magnitude of the financial liability depends on several key factors such as the number of EMV cards issued in the market, the percentage of chip versus magnetic stripe cards that are used at their POS locations and, of course, the actual amount of counterfeit magnetic stripe card fraud (and the resulting chargebacks) that is perpetrated at their POS locations.
Over the past 6 months, consumers have gotten used to receiving new cards from their issuers with the now very recognizable microprocessor chip on the front of the card. These EMV compliant cards have both the chip on the front of the card as well as the traditional magnetic stripe on the back of the card, which serves as a “fall back” means of initiating a card transaction authorization if the EMV process fails for some reason.
In its report “EMV:Lessons Learned and the U.S. Outlook,” Aite Group estimates that 70% of credit and 41% of debit cards in the U.S. will be EMV compliant by year end 2015 and it predicts that 59% of retail locations will be chip-enabled at year end based on merchant surveys.
EMV ready merchant locations have trained their cashiers and sales associates to prompt chip cardholders to insert – or “dip” – their cards into POS reader devices instead of swiping their card as in the past. New consumer-merchant behavior is being practiced and learned in tens of thousands of locations across the country as more and more people learn, for instance, that they must keep the card inserted in the reader device until the authorization process is completed.
Beyond just training their customer-facing staff, becoming EMV compliant can be a complex, lengthy and expensive process for merchants and, while many have made the necessary investments, many others have not for various reasons. Unlike past payment acceptance upgrades, EMV certification requires modifications to and/or replacement of systems, technology, processes on a transformative scale. Because of the enormity of the undertaking, some merchants have chosen to add other strategic initiatives to their EMV migration such as the installation of mobile payment capabilities and the implementation of point-to-point encryption and tokenization solutions.
Although the current card network brand requirements do not mandate that merchants be EMV compliant, they clearly stipulate additional risks beyond the liability shift to consider. One of the biggest risks for merchants that are not EMV compliant is that they could be singled out and targeted by criminals who are passing cards with counterfeit magnetic stripes that have been encoded with sensitive payment card data stolen in various breaches. This risk illustrates the primary reason the why the U.S. market finally embraced EMV.
To Find The Needle, Chop Down the Haystack: 5 Steps For Effective Threat Monitoring
To Find The Needle, Chop Down the Haystack: 5 Steps For Effective Threat Monitoring
Jeff Schilling - DarkReading.com
Would bank security screen everyone entering the building then leave the vault door open with no one watching the money? Of course not!
At what point does the proverbial “haystack” get too big to find the “needles”? Many of the best security teams have hit that breaking point. They simply have too many sources and event types to process. It’s impossible to manage information at this scale and accurately decide which are truly the important events requiring action.
It is time to narrow the aperture of data collection in your environment. This will help remove as much “hay” from the “haystack” and allow for the “needles” to come to the surface. To do this, I recommend a five-step process.
Step 1: Consider Your Environment Contested Space
The banking industry has become quite good at fighting fraud from their customer base by operating as if their customers’ home systems are contested. Banks and financial institutions also have placed advanced login analytics on their online banking sites and highly encourage two-factor authentication for customers.
Enterprise IT teams can take this same approach to protecting data from compromised employee systems. In fact, most have even more control by ensuring their hosts are using hardened, updated operating systems and are following sound patch management processes. (That said, if an organization still has instances of Microsoft Windows XP in the user environment, it will live in a constant state of compromise.)
If you execute on this strategy, many (or all) of the host-level security events detected can fall to the cutting-room floor. This is because you can assume your user devices are compromised. This is a very effective strategy for companies supporting a mixture of BYOD, corporate-provided devices and Internet of Things (IOT) solutions.
Step 2: Ensure Proper Remote Access Authentication
Remote access is only safe through multifactor authentication. Period. No exceptions. Most successful advanced persistent threat (APT) attacks over the last four years have used this vector to such an extent that once they have a remote user account (normally username and password), threat actors pull back their tools and just log in as a valid user with elevated privileges.
Some will argue that multifactor is no longer effective; that it is merely a speed bump. I review every intrusion I hear about where multifactor is allegedly compromised. In each case, there was a mistake in how the multifactor authentication controls were applied. The threat actors took advantage of the flawed implementation.
When properly implemented, multifactor authentication presents a significant challenge for attacks. It helps eliminate the need to track all remote user login activity and focus on specific events to narrow the “haystack.”
Step 3: Take Control of Elevated Privileges
Threat actors are compromising elevated privileges and creating accounts with admin rights at will. This, in turn, requires security teams to closely monitor login activity at critical points in the infrastructure. This generates an astounding number of events to assess.
For access to critical systems, all admin users should be required to log in via a proven method of multifactor authentication to a single “jump host” (e.g., Bastion host). From a jump host, admins should connect to a permission access manager (PAM) that monitors and records all activity. This method also will help limit elevated access to match the amount of time the administrator needs to accomplish their task.
In short, we should eliminate any and all scenarios where elevated privileges are open-ended and unmanaged.
Step 4: Direct Traffic
Shape your network traffic to filter out as much known malicious traffic “on the wire” as you can without impacting business. This may be effectively achieved via an aggressive Internet protocol address reputation management (IPRM) program. Such an approach will help limit the amount of bad traffic — sometimes by as much as a factor of 10 — that layered security devices must inspect.
Step 5: Learn from ‘Successful’ Events
No security posture is 100 percent impenetrable. But for events that do circumvent established controls, it’s critical to learn from the experience. By turning an eye toward network-layer events, we can better understand what’s successful against a given environment. Monitoring “traffic blocked” messages from the firewall provides little context and can serve to distract from real issues. Truly dissecting and studying successful events will serve organizations far better in the long run.
Unfortunately, many security departments expend too much time and energy managing alerts from their user base, remote access, elevated privilege use and network traffic. As a result, , they have little time to focus on the most important events occurring on critical applications and databases that overload security information event management (SIEM) systems or mask real issues. Would banks security screen everyone entering a bank then leaving the vault door open with no one watching the money? Of course not. And it’s why it’s critical we fine-tune our focus.
The Benefits of Your New EMV Credit Cards
Copyright: alice-photo via Shutterstock.com
The Benefits of Your New EMV Credit Cards
The news has been abuzz with the new smartchips that are being rolled out for credit card users across the United States. They have caused a major disruption to how Americans interact with their old trusty pieces of plastic. Netflix, the online video streaming service, has even gone so far as to say that these new chips were in part to blame for their poor fiscal performance last quarter -- causing slower than expected subscriber growth. For all this ruckus surrounding them, one question that sits on the minds of many is: "are these new cards any good?"
Outside of the headaches it brought along with its migration, EMV brings many advancements and benefits to U.S. consumers. Despite the positive traits that smartchips bring with them, many individuals are unaware of them. According to a recent survey conducted by Fiserv, a global financial services technology company, 29% of people have no idea what the benefits of EMV are -- 8% confuse EMV cards with prepaid debit cards. What readers should know is that the benefits of EMV to consumers fall largely into two categories, which are explained below.
•Greater Global Acceptance. EMV is not the new kid on the block. While the technology may be new to the United States, it is old news to the remainder of the world. In the United Kingdom, EMV has been the standard for close to a decade. Even North Korea has beaten the U.S. to the punch, when it came to putting smartchips on credit cards. Lagging behind the rest of the world carried negative impacts for U.S. travelers, who hoped to use their credit and debit cards abroad. In the past, without these chips, it would be impossible to pay in certain locations throughout Europe and Asia, forcing tourists and travellers to rely solely on cash transactions.
Despite the U.S. moving forward with EMV, some U.S. consumers may still run into trouble abroad, due to the differences between chip and pin and chip and signature EMV cards. The United States has moved to adopt the chip and signature variant of EMV technology -- a slightly less popular and less secure feature. In places around the world, where chip & pin is the standard, using U.S. EMV cards may still create issues at unmanned terminals, such as automated ticketing stations. For example, according to research by ValuePenguin, places like France, Ireland and the U.K. are predominantly pin-based.
•Greater Security. EMV credit cards are much more difficult to counterfeit, and have less potential vulnerabilities than the old magnetic strip cards. The improved security in EMV cards has to do with how your personal data is stored on the cards. With magnetic strips, the card information was static. Therefore, once the information of the card was grabbed - such as through the use of a skimming device - a fraudster could easily create a duplicate copy of the magnetic strip/card to use as his own. With smartchips, the process is a lot more complicated. EMV chips are small computers on your card, which encrypt and generate data on the fly, with every transaction. Since the data is constantly in flux and changing, it becomes exponentially more difficult to create an exact copy of a credit card.
It is estimated that in 2014,3 billion was lost due to counterfeit card payments. This number certainly hurt issuers and businesses a lot more than the average consumer since, after all, most consumers are protected against their cards being used fraudulently. Where people will feel the difference is on the smaller, day-to-day dealings. Every time you fall victim to credit card fraud, a new card and number must be issued. This can create hassles for individuals who had auto-pay features set up with their previous credit card for various subscription and billing services. Going back and updating all the outdated card information can be quite time-consuming.
Most Consumers Still Don't Have an EMV Card
Banks are still in the process of rolling out updated cards, and most consumers are yet to receive theirs. According to the same Fiserv study mentioned earlier, approximately 38% of credit card consumers received an EMV card by now. This represents a substantial year-over-year growth. When this survey was conducted in 2014, just 13% of respondents had an EMV card.
If you still have not received a chip-enabled credit card, you can try calling your issuer. And requesting one Some banks will be reluctant to issue new cards, unless their customers explicitly submit a request. Keep in mind, however, that if a new card is issued with a new number, you will have to go through and update your auto-payments - hopefully for the last time ever. Just don't forget to do the same with Netflix - their next fiscal quarter depends on it.
3 Ways Retailers Should Accommodate the Mobile-Obsessed Customer
3 Ways Retailers Should Accommodate the Mobile-Obsessed Customer
Entrepreneur -Jeff Trachsel Contributor - Chief Marketing Officer at NextWorth
Smartphones are no longer just a trendy piece of technology. For many consumers, they’re practically an appendage. Eighty percent of 18 to 24-year-olds bring their phone to bed every night. Seventy-five percent of Americans fess up to using mobile phones while using the bathroom. And 12 percent even use their smartphones in the shower.
Faced with these stats, retailers can’t be shocked that 68 percent of adults check the Internet on a smartphone while shopping to enhance their in-store experience. From comparing prices to looking up user reviews, this hybrid in-store online / purchasing experience is the new normal for retailers.
This new smartphone-centric status quo isn’t such a bad thing for retailers, especially those willing to adapt their go-to-market strategy. In fact consumers who use smartphones when out shopping are 14 percent more likely to make a purchase in the store than those without, according to a study from Deloitte. And roughly half of all smartphone users surveyed said their phones have influenced their decision to buy an item in a physical store.
Related: Men's Warehouse Founder George Zimmer Wants to Change How You Rent a Tux
Instead of being threatened by this new breed of buyer, retailers need to see this behavioral change as an opportunity. To stay ahead of the game, retailers need to be finding ways to share the shopping experience with a customer’s screen.
Following are three tips to help create a converged online / in-store customer experience that appeals to today’s consumer.
1. Make mobile payment easy.
Within 72 hours of its launch, one million payment cards were activated on Apple Pay. With a mobile payment structure that is simple and secure, Apple Pay has created a new breed of shopper -- one who actively seeks out retailers that accept this new form of payment. In this new environment retailers that don’t offer Apple Pay, or another form of mobile payment like Google Wallet, risk losing sales.
Forrester Research projected the mobile in-person market, or people using phones to pay in-store, to be valued at $6.8 billion in 2015. This form of payment is fast and easy for consumers, but it presents a challenge for many traditional retailers who must find ways to accommodate mobile payment capabilities into brick-and-mortar locations. Those willing to make the investment should be at an advantage as more consumers demand mobile payment options.
2. Make being mobile friendly your M.O.
Developing a mobile-friendly website is critical for retailers to cater to this new breed of buyer. One study from comScore found that 27 percent of smartphone users read customer reviews while in the aisles of a store, 23 percent call, email or text family and friends for feedback on a purchase and 22 percent read product details on their device. Optimizing this online experience for the in-store shopper is critical for success.
Related: Target Is Getting Into the Beacon Game
Apps also win under the new regime. Fifty-five percent of shoppers who responded to Cisco's fifth annual retail survey said they will use a retailer’s app while shopping, and 34 percent claimed to use a third-party app for the same purpose. With a mobile app, retailers can effectively cater to customers’ needs for convenience and efficient shopping. Apps can effectively deliver special offers, or money-saving coupons once customers are in the store. Retailers can also offer utility services that would otherwise need to be researched on a customer’s own time including interactive store locating tools, information on store hours and customer service contact information.
3. Promote early device upgrades via (what else?) mobile.
Mobile-friendly programs can tie a customer’s love for smartphones to her love for shopping. For example, retailers can leverage in-store trade-in programs to accelerate a customer’s device upgrade timeline. Well-timed trade-in promotions can help retailers cut through the clutter during new device launches, such as the upcoming iPhone 6s launch, while increasing foot traffic from buyers looking for money-saving specials tied to new technology investments.
Retailers looking to motivate mobile-obsessed customers should look for ways to use their brand’s online presence to amplify in-store promotions, and offer customers mobile promotions that can only be redeemed in store. Promoting in-store trade-in through digital channels ensures the trade-in messages reach consumers who are tied to their smartphones, then helps to drive them in the store.
SmartMetric Developing Biometric USB Interface for EMV Chip Cards
Image credit: Stefano Mortellaro
SmartMetric Developing Biometric USB Interface for EMV Chip Cards
The biometric credit card maker SmartMetric, has announced plans to develop a miniature chip card connector for recognizing its chip cards for online computer or smartphone purchases.
The company has made it clear that the product would be meeting the new requirements established by the launch of EMV chip and PIN cards in the U.S.
“We know from overseas experience that as the new EMV chip cards are introduced into a market a huge increase in online fraud takes place. By bringing the security of the SmartMetric biometric EMV chip card to the world of online shopping we will provide a safer shopping process for the public and online merchants alike,” commented SmartMetric’s President and CEO, Chaya Hendrick.
The SmartMetric biometric card comes equip with a mini fingerprint scanner that is built inside the card that is used to activate the card’s EMV chip.
There is an estimated 3.4 billion chip cards issued throughout the globe, with the U.S. accounting for 1 billion of all EMV cards. The EMV chip technology is used for its credit and debit cards mainly.
The SmartMetric Biometric Payments Card is interoperable with already in place chip card readers and ATMs. As such, it is able to benefit from the already established global chip card banking.
Selfie Generation overtakes Me Generation
Selfie Generation overtakes Me Generation
Millennials are different—so adapt, already
Written by John Ginovsky
There is one thing you can say about the millennial generation—they are not nearly as self-obsessed or self-absorbed as the baby boomer generation was in its prime. You don’t see many hipster surveys about millennial trends and such conducted by millennials.
Why should they conduct them? Lots of us old fogey baby boomers are doing it for them!
Not only that, one of the prime subjects of these older generation-younger generation surveys focuses directly on the relationship between the 75-84 million millennials (estimates vary) and financial services, including banks and payments.
Of course, the objective of these studies is to help advise those older institutions that want to woo the younger and increasingly affluent customers.
Note the recent report from Ipsos that the slightly older and smaller in numbers Generation X already outpaces the baby boomer generation in the “affluent” category—millennials, also roughly known as Gen Y, in turn likely are gaining on the Xers.
What experts have been saying
Here’s a quick rundown of some of the recent studies:
American Express—In its “spending and saving tracker” study, millennials were found to have the highest level of optimism for financial wellbeing over the next six months—70% vs. 53% for the general population. American Express attributes this in part to the finding that more millennials depend on second jobs to help increase their existing savings (21% vs. 11%).
“Over the past few years, we’ve seen consumer spend confidence improve steadily,” says Jed Scala, senior vice-president, consumer lending. “Millennials especially are feeling more optimistic than ever, and they are apparently ahead of the savings game, too.”
Independent Community Bankers of America—The association teamed with research partners Conversion and The Center for Generational Kinetics in an online poll of more than 1 million Americans, focusing mostly on those aged 19-37, but including samples of Gen Xers and baby boomers. Some findings:
• 74% said mobile banking is “very important” to them (compared with 42% of baby boomers).
• 24% said they carry less than $5 in cash per day seven days a week.
“Millennials are destined to become a key battleground for banks of all sizes—getting ahead, and staying ahead of this important shift in the economy is going to be crucial for any bank,” ICBA says.
Inlet—This offshoot of Pitney Bowes and Broadridge Financial Services looked specifically at millennial bill paying habits. Some findings:
• 32% of millennials do not look at bills before paying them.
• Only 23% of millennials actually use paper checks to pay utility bills and send them through the mail. That percentage goes down dramatically for paying cable/internet bills and cell phone bills.
• 46% have no formal system to remember to pay their bills on time. Just 9% receive email reminders, and 5% get push notifications on their phones.
“Now is the time for bill-pay providers to create a customer-driven, user-friendly bill-pay solution to win millennial loyalty,” says Chuck Cordray, CEO of Inlet.
Scratch—This is an offshoot of Viacom, which arguably could be categorized as a millennial or at least a Gen X entity, although Viacom itself has roots that go back to Gulf+Western and Westinghouse Electric Corp. Whatever, Scratch’s findings from what it calls the “Millennial Disruption Index” would probably be the most troubling to old-school bankers. It surveyed more than 10,000 millennials from 73 companies in 15 industries. Some examples:
• 53% don’t think their bank offers anything different than other banks.
• 71% would rather go to the dentist than listen to what banks are saying.
• One in three are open to switching banks in the next 90 days.
• 68% say that in five years, the way we access our money will be totally different.
• 70% say that in five years, the way we pay for things will be totally different.
• 33% believe they won’t need a bank at all.
• 49% are counting on tech start-ups to overhaul the way banks work.
“Millennials … use technology, collaboration, and entrepreneurship to create, transform, and reconstruct entire industries. As consumers, their expectations are radically different than any generation before them,” the Scratch pollsters say.
So, now that you know all that…
That’s just a sampling of the data. What can the old-school bankers do to adapt to this new generation? Bank of America, in a blog by Meredith Verdone, a BofA enterprise marketing executive, offers some advice:
“For a company to succeed with millennials, it can’t just shout ʻWe’re innovative!’ and ʻWe care!’ We have to listen, we have to analyze data and, most important, we have to take risks to be relevant—and maybe make each other a little uncomfortable by saying, ʻWe’re trying something new. Maybe it’ll work, maybe not.’”
Specifically, Verdone observes that despite their coolness toward big institutions, millennials do seek guidance for big financial decisions and want to easily access that information. That’s where social media can afford a connection.
Other research by BofA reveals millennials place value on community involvement—“They want the companies they patronize to have a greater sense of purpose, to be focused on not only making a profit but also doing their part to improve the world.”
Finally, she says, realize how much millennials value mobility.
“Among Bank of America customers, millennial households are twice as likely as others to be active on mobile devices, using them to pay bills, transfer money, and deposit checks.”
Let’s face it. Millennials are much different from previous generations, with different motivations, different priorities, and different tools with which to work. While baby boomers were once described as the “Me Generation,” millennials have been described as the “Selfie Generation.”
Get with it, get on it, and get to it.
The Payments World Really Wants To Know Who You Are
The Payments World Really Wants To Know Who You Are
Crunch Network - Crunch Network
In the early 1960s, Scottish engineer James Goodfellow was given a problem to solve. A colleague had invented a way to insert a card into a machine and get money out. Goodfellow’s task was to figure out a way to ensure that only the card’s legitimate owner could use these new “ATM” machines to obtain cash. So he created the personal identification number, what we call the PIN, the most secure implementation of card access the world had ever seen. Goodfellow was awarded the patent on the PIN and, later, Queen Elizabeth II awarded him the Order of the British Empire.
Point of sale payments technology has changed quite a bit since the 1960s, and although PINs still play an important role in securing many transactions, we are moving technology forward with incredible advances in security. Recent advances in payment technology give us the convenience of paying with our phones and watches, our credit and debit cards contain embedded microchips that will essentially wipe out counterfeit fraud and we can now initiate, verify and secure a payment with the swipe of a finger.
What’s next for payments security technology? How do we know it’s really you swiping the finger, dipping your card or pushing the buttons?
The generation that brought the obsession of snapping facial photos, uploading to social media channels and terming it “selfies” has unknowingly launched a new platform of cyber security for the world, a kind of biometric termed, “pay with your face.” This is a fitting legacy for millennials, who impart knowledge one click at a time.
The answer to payments security is found in the mirror — and a not-so-little something called live-time facial recognition and biometrics social data mining.
Socure, an industry leader in identity verification solutions, just introduced Perceive, its patented real-time facial biometrics product that instantly matches media profile data, with the potential to end the need for passwords.
Perceive works with the click of a front-facing camera on any smartphone, instantly proving who you are by recognizing facial features.
Socure’s Social Biometrics Platform, which is already in use by financial institutions in more than 175 countries, provides analytics, assessing information about you from other public online sources, producing a social biometric profile, matching to your photo, and generating a score to determine the authenticity of your identity.
The system simultaneously performs “liveliness checks” that prevent the spoofing of a photo or video animation of a face. Within milliseconds, results are returned with a significant degree of accuracy and confidence.
Whether you have an established credit history or not, the one thing most of us have, especially millennials, is an online social platform presence. Biometrics data mining for payments security also reaches the unbanked crowd, those who have healthy online histories but might not necessarily use financial institutions or carry proper government-issued credentials.
The 2016 Olympics will provide a powerful platform upon which to promote biometric payments technology to the mass market. Visa recently announced that Team Visa Rio, a group of Olympic hopefuls, will promote wearable and biometric payment solutions during all events leading up to next year’s Olympics. Among the athletes being sponsored are such heavyweights as America’s Ashton Eaton, Canada’s Ryan Cochrane, Korea’s Kim Jae-Bum and many others.
Visa has ramped up its exploration of mobile payments and biometric security in other ways with an announcement of a new biometric specification for transactions involving EMV or “chip” cards. Other established players are also joining the biometrics trend. MasterCard is in a trial phase for facial and fingerprint biometric payments in Europe and the United States, and Verifone offers a biometric sensor in its VX 520 point of sale terminal.
We live in an age of unprecedented technological discovery and change. If recent data breaches have taught us anything, it’s the need for more secure payments technologies as cybercriminals become increasingly more sophisticated. As “chip” cards wipe out counterfeit fraud, industry experts anticipate an increase in online fraud, which requires technology beyond chip cards to prevent. Multi-factor identification methods, like biometrics and social data mining, are the future of payments.
EMV is Here: Tips & Tricks You Need to Know
EMV is Here: Tips & Tricks You Need to Know
by Banking.com Staff
The EMV (Europay, MasterCard, Visa) shift went into effect on October 1, 2015 and a majority of large retailers and merchants have upgraded POS terminals to accept EMV chip cards. Despite this new mandate, many consumers are still waiting for new EMV cards. Whether you have gotten your card or not, here are some tips from Carolyn Balfany, Group Head for U.S. Product Delivery at MasterCard Worldwide, on the switch and how you can protect yourself.
•Join the Chip Card Revolution: Chip cards, with embedded computer chips in the card face, are replacing traditional magnetic stripe cards in the U.S. Chips provide better protection because unique codes are generated with each purchase, making cards and transactions nearly impossible to counterfeit. The Payments Security Task Force estimates that 63% of all U.S. credit and debit cards will contain chips by the end of this year, expanding to 98 percent by the end of 2017. You may already have one in your wallet – look for the embedded chip on the card face, and note that the card will still have a magnetic strip on the back. If you don’t have a chip card, request one from your issuing bank.
•Make Your First Chip Card Transaction: As banks are issuing chip cards, most retailers are simultaneously chip-enabling their payment terminals. Look for a telltale slot for inserting your card when you make your next purchase instead of swiping. Once you insert your card with the chip toward the terminal – facing up – you must let the card and terminal “talk,” which requires leaving the card inserted in the terminal until you’re prompted to remove it.
•Swap Out Old Passwords: According to a recent MasterCard survey on the Emotion of Safety and Security, while nearly all consumers (92%) feel they take precautions to protect themselves from their financial information being lost or compromised, roughly half (46%) rarely or never change passwords on online financial accounts, and nearly half (44%) use the same password for multiple online accounts. Use different passwords and change them regularly to protect your financial information from falling into the wrong hands.
•Take 5 to Protect Yourself: Take advantage of ID Theft Alerts, a service that MasterCard offers its cardholders at no additional cost. ID Theft Alerts sends email or text messages if it detects that a cardholder’s personal information such as credit or debit card, social security number, driver’s license and other highly personal information is being bought or sold on the dark web. The tool continually monitors thousands of sites, chat rooms, forums and networks, and cardholders can opt in or out at any time and decide how much and which information they want monitored.
•Be In The Know: Whether you’re a consumer, merchant or issuer, visit www.gochipcard.com to learn more about what the chip card migration means for you.
New EMV chip card scam emerges just days after deadline
New EMV chip card scam emerges just days after deadline
Scammers target non-chip card holders via e-mail
By: Russell Haythorn
DENVER - Just three days after the deadline for businesses to install new smart chip credit card readers, scammers have already found a new way to target you and your money.
The scammers are trying to capitalize on the millions who haven't received a chip card yet.
For every two chip cards in circulation in the U.S., there are three still without the chip.
"I have a chip card," said consumer Aaron Cohen. "I'm glad to know that there is another level of security. We'll see what happens with it. I'm not sure, but it does seem a little easier."
The new technology makes consumers safer because unlike swiping, which transmits your card number, the chip card creates and encrypts a new number for every transaction.
But just as the technology is newly unfolding, scammers have found new opportunity to take advantage of you.
Only about 40 percent of Americans have received the new EMV chip cards. That leaves the majority without them.
Scammers are contacting people via e-mail - posing as your credit card company or bank - informing you that in order to get a new EMV chip card, you need to update your account by confirming some personal information or clicking on a link.
If you provide personal information in response to the e-mail, you have just made yourself a target for identity theft. If you click the link, you may end up downloading keystroke logging malware that can steal your personal information.
"Knowing that makes me want to actually follow up and get an updated card with the new chip technology to make sure," said Cohen.
So how can you tell if the e-mail is from a scammer?
Follow these tips from the AARP.
1. Legitimate emails from card issuers should be short, to-the-point notifications that your new EMV card is being mailed, perhaps with an “expect within 10 days” timeframe. They should not include links or attachments promising details or urging action to “update your account” or the like; that’s the calling card of scammers.
As a general rule, don’t trust links in emails — and before clicking, always hover your computer mouse over the link; if it doesn’t display the sender’s company name, assume the worst. It’s also safer to access any business website by typing its url yourself, not via provided links. Or call the phone number listed on your card, not provided in emails.
2. Bogus paypal emails are making the rounds, with malware-laden “update your account” attachments. Legit paypal emails never include attachments.
3. Authentic emails from card issuers will address you by name and include some specific reference to your credit card, such as the last four digits of your account number. Those from paypal, ebay or other businesses will also include your name. Emails vaguely addressed to dear “cardholder,” “customer” or “account holder” are scams.
4. Even if the email includes your name, don’t trust it unless you previously provided your email address to that business (for instance, when you enrolled in online banking). Email mailing lists — with account holder names — can be purchased by scammers.
5. Be suspicious of phone calls or text messages supposedly from card issuers about EMV cards. These could be “vishing” (for voice phishing) or “smishing” (named after SMS technology that sends text messages) attempts aiming to glean account and personal information.
The History of the Bar Code
The History of the Bar Code
Inventor Joe Woodland drew the first bar code in sand in Miami Beach, decades before technology could bring his vision to life
Every few years, the small town of Troy in Miami County, Ohio celebrates an historic occasion that for a few giddy weeks puts it on the world map of the grocery trade. At the time, National Cash Register, which provided the checkout equipment, was based in Ohio and Troy was also the headquarters of the Hobart Corporation, which developed the weighing and pricing machines for loose items such as meat. It was here, at just after 8 a.m. on June 26, 1974, that the first item marked with the Universal Product Code (UPC) was scanned at the checkout of Troy’s Marsh Supermarket.
It was treated ceremonial occasion and involved a little bit of ritual. The night before, a team of Marsh staff had moved in to put bar codes on hundreds of items in the store while National Cash Register installed their scanners and computers. The first "shopper" was Clyde Dawson, who was head of research and development for Marsh Supermarket; the pioneer cashier who "served" him, Sharon Buchanan. Legend has it that Dawson dipped into his shopping basket and pulled out a multi-pack of Wrigley’s Juicy Fruit chewing gum. Dawson explained later that this was not a lucky dip: he chose it because nobody had been sure that a bar code could be printed on something as small as a pack of chewing gum, and Wrigley had found a solution to the problem. Their ample reward was a place in American history.
According to those who recall the historic occasion, it was possibly that very pack, and not some equivalent, that was collected by the Museum of American History at the Smithsonian, to be put on display there at a special exhibition. If that is the case, then a second, identical, pack was preserved by Marsh Supermarkets for their ritual celebration of the UPC and it has been brought out of the cupboard a number of times over the years.
Joe Woodland said himself it sounded like a fairy tale: he had gotten the inspiration for what became the bar code while sitting on Miami Beach. He drew it with his fingers in the sand. What he was after was a code of some sort that could be printed on groceries and scanned so that supermarket checkout queues would move more quickly and stocktaking would be simplified. That such a technology was needed was not his idea: it came from a distraught supermarket manager who had pleaded with a dean at Drexel Institute of Technology in Philadelphia to come up with some way of getting shoppers through his store more quickly. The delays and the regular stocktaking were costing him his profits. The dean shrugged him off, but a junior postgraduate, Bernard "Bob" Silver, overheard and was intrigued. He mentioned it to Woodland, who had graduated from Drexel in 1947. Woodland was already an inventor, and he decided to take on the challenge.
So confident was he that he would come up with a solution to the supermarket dilemma that Woodland left graduate school in the winter of 1948 to live in an apartment owned by his grandfather in Miami Beach. He had cashed in some stocks to tide him over. It was in January 1949 that Woodland had his epiphany, though the brilliance of its simplicity and its far-reaching consequences for modern existence were not recognized until many years later.
It was Morse Code that gave him the idea. Woodland had learned it when he was in the Boy Scouts. As he was sitting in a beach chair and pondering the checkout dilemma, Morse came into his head:
I remember I was thinking about dots and dashes when I poked my four fingers into the sand and, for whatever reason—I didn’t know—I pulled my hand toward me and I had four lines. I said ‘Golly! Now I have four lines and they could be wide lines and narrow lines, instead of dots and dashes. Now I have a better chance of finding the doggone thing.’ Then, only seconds later, I took my four fingers—they were still in the sand—and I swept them round into a circle.
Back in Philadelphia, Woodland and Silver decided to see if they could get a working system going with the technology to hand. They first filed a patent in 1949, which was finally granted in 1952. Although the patent illustrates the basic concept, there is only a smattering of anecdotal evidence about what Woodland and Silver actually built. A crude prototype in Woodland’s own home used a powerful 500-watt incandescent bulb. An oscilloscope was used to "read" the code; the whole thing was the size of a desk. Allegedly, it worked, up to a point. But an objective evaluation judged it to be 20 years ahead of its time. Woodland and Silver had the right idea, but they lacked the minicomputer and, critically, a very bright light with which to "read" the black and white bar code.
On July 16, 1960, when he first saw the laser, the head of public relations at Hughes Aircraft Company of Culver City, California, Carl Byoir, declared they were in big trouble: "It looks like something a plumber made." But the next day, at a press conference held in the Delmonico Hotel in New York, the company made one of the most sensational announcements in the history of science. One of their research scientists, Theodore Maiman, had made an "atomic radio light brighter than the center of the sun." Maiman produced for the newsmen his "laser," an acronym for Light Amplification by Stimulated Emission of Radiation.
Most of the reporters were eager to learn what the laser was for, and what it could do. It was like science fiction. Maiman said the laser beam was so concentrated, so "coherent," that if it were beamed from Los Angeles to San Francisco it would spread only 100 feet. The tiny beam was hot and sharp enough to cut through materials. Could it be used as a weapon? That was not the intention, Maiman assured reporters. Nevertheless, the Los Angeles Herald headlined its story: "LA Man Discovers Science Fiction Death Ray." This became a popular theme in the newspapers.
Maiman had won the race to build the very first laser, beating fierce competition from around the world. It is possible to imagine the extreme excitement that he and his associate Irnee D’Haenens experienced when they produced that first fickle beam. They did not know then what it might be used for, but they imagined it would have many applications in science and communications, in industry for cutting and welding, and in medicine for delicate surgery. But, as Maiman wrote, "I did not foresee the supermarket check-out scanner or the printer."
A booklet produced in 1966 by the Kroger Company, which ran one of the largest supermarket chains in North America, signed off with a despairing wish for a better future: "Just dreaming a little . . . could an optical scanner read the price and total the sale. . . . Faster service, more productive service is needed desperately. We solicit your help." Kroger’s business was groceries, not electronics, so the company went looking for a partner with the necessary expertise.
A small research team at the powerful Radio Corporation of America (RCA) was looking at a few new projects, including the possibility of an automatic bank cash machine, which they decided would not go because "the customer would not buy the concept." Finally, they lighted on the bar code. A search of the history turned up some apparently hare-brained schemes: in one, customers picked out punch cards that identified what they wanted to buy and presented them to a cashier, who retrieved the goods from a store. This did not survive long in the grocery business. Then there was the patent for a system in which the supermarket shopper threw everything into a basket, which was pushed under a scanner that identified each item and printed out a bill.
They soon found the Woodland and Silver patent. This was not the rectangular bar code that Woodland had first envisaged on Miami Beach but the "bull's-eye" of concentric circles he thought would be a better design. When he and Silver worked on it, they decided the bull's-eye was the better symbol because it could be read accurately from any angle.
Printing the bull's-eye bar code proved to be one of the greatest difficulties, because any imperfections would make the whole system unworkable. A rotating turret of ballpoint pens, and a pen designed for astronauts that could write upside down, solved some of the problems. All this technical development, involving several companies commissioned by RCA, was to lead up to the first real-life test at the Kroger Kenwood Plaza store in Cincinnati. On July 3, 1972, the first automated checkstands were installed (One of RCA’s pioneer checkstands is in the Smithsonian collection.) More checkstands were installed and a comparison with other Kroger stores told an undeniable and very promising story: the bull's-eye bar code hit the target, with superior sales figures. But this was just one store in a nationwide grocery and supermarket business worth billions. If the laser and bar code were to revolutionize the checkout counter, they would have to be near universal.
The goal of the Ad Hoc Committee of the Universal Product Identification Code could be stated very simply. The representatives of the grocery trade were charged with finding a way to introduce a Universal Product Code, a bar code of some description that would be common to all goods sold in supermarkets and imprinted by the manufacturers and retailers. The code would carry information about the nature of the product, the company that made it, and so on. In-store computers would "read" this information with scanners and introduce their own variations, which might involve special offers and reductions. The vision was there but the difficulties in the way of its realization were daunting.
Manufacturers were often resistant to the idea of a universal code. They had existing methods of identification of products, which would have to be discarded or adapted. Cardboard manufacturers worried that a printed code might spoil their product. Canners did not want to be obliged to put bar codes on the base of cans. It took four years to arrive at a workable proposition to put to the whole industry.
In the end, seven companies, all of them based in the United States, submitted systems to the Symbol Committee, a technical offshoot of the Ad Hoc Committee. RCA, having demonstrated to the committee its system in Cincinnati, took the view, not unreasonably, that it was the only real contender.
However, at the last minute, International Business Machines (IBM) made a surprise bid. It had no technology at all to demonstrate to the committee, and the decision to enter the competition appears to have been an afterthought, despite the fact that it had in its employ none other than Joe Woodland. As it turned out, although he was involved in IBM’s submission, he was not the creator of its version of the Universal Bar Code. That fell to George Laurer, who, in his own view, had an advantage over his rivals because neither he nor IBM had given supermarket checkout systems or bar codes much thought and his company had no ready-made technology. Starting from scratch, Laurer had no prejudices about the appearance of the bar code, though his bosses had assumed it would be some version of the circular bull's-eye in Woodland’s patent and RCA’s pioneer system in Cincinnati.
Laurer was handed the specifications for a bar code that had been determined by the Symbol Selection Committee: it had to be small and neat, maximum 1.5 square inches; to save money it had to be printable with existing technology used for standard labels; it had been calculated that only ten digits were needed; the bar code had to be readable from any direction and at speed; there must be fewer than one in 20,000 undetected errors.
Although there was skepticism in IBM, Laurer was convincing enough to be given the go-head with a rectangular bar code. A division of IBM built a prototype scanner, and Laurer’s Universal Product Code was tested. "There were many skeptics in IBM," Laurer recalled, "not the least of whom was [his boss] B.O. Evans himself. However at the end of a flawless demonstration for Mr. Evans, we had our ace softball pitcher pitch beanbag ash trays, with symbols on the bottom, as fast as he could over the scanner. When each one read correctly, Mr. Evans was convinced."
It was another matter to convince the Symbol Selection Committee, which was under huge pressure to accept RCA’s already functioning bull's-eye symbol and technology that had done much to inspire confidence that a universal product code could work. After asking for an appraisal of the rival symbologies from scientists at the Massachusetts Institute of Technology, on March 30, 1973, in a New York hotel close to Grand Central Station, the committee met to make its final and fateful decision. The committee’s chair Alan Haberman asked them first to declare how sure they were that the symbol they had chosen was the correct one. There was a very high level of confidence—about 90 percent all round—and the winner was Laurer’s rectangular code.
For Woodland, who died in 2012 at the age of 91, it must have been a strange experience to witness the reincarnation in sophisticated form of the elongated lines of Morse Code he had drawn in the sand in 1949. There was now a modestly priced laser scanner to register with a concentrated beam of light the coded vertical lines of alternating black and blank and a microcomputer to decipher the information.
Like so many inventions, the UPC was not an immediate success. It was when the mass merchandisers adopted the UPC that it took off, Kmart being the first. In fact, bar code technology was almost made for companies like Walmart, which deal in thousands of goods that need to be catalogued and tracked. The bar code took off in the grocery and retail business in the 1980s, and at the same time began to transform manufacturing and to appear like a rash on anything that benefited from instant identification. In 2004, Fortune magazine estimated that the bar code was used by 80 to 90 percent of the top 500 companies in the United States.
Though the inspiration for the bar code was the plea by supermarkets for technology that would speed up the checkout, its greatest value to business and industry is that it has provided hard, statistical evidence for what sells and what does not. It has transformed market research, providing a rich picture of people’s tastes, and it has made production lines more efficient. The once-dreaded "death ray" laser beam now comes in handy gun-sized scanners that instantly read and log anything from hospital drugs to newborn babies.
After many years of anonymity, the man whose knowledge of Morse Code inspired the familiar black and white stripes finally got some recognition. In February 1992, President George H.W. Bush was photographed at a national grocery convention looking intently at a supermarket scanner and having a go at swiping a can with a bar code over it. The New York Times correspondent wrote this up as evidence that it was the first time Bush had seen a supermarket checkout. In other words, he was out of touch with everyday American life. His aides insisted that he was not struck by the novelty of the technology but by the fact that it could read a damaged bar code. Apocryphal or not, the story stuck and was regarded as damaging to Bush. However, as Woodland’s local newspaper put it: "George Bush isn’t one to hold a grudge. No Sir." A few months after the checkout incident, Bush presented Woodland with a National Medal of Technology.
For Mobile Payments, Wearable Computing Will be the Real Game-Changer
For Mobile Payments, Wearable Computing Will be the Real Game-Changer
Mobile payments have made a lot of headway in recent years, but it’s still, in a lot of ways, a very young and very niche technology.
That, however, may be about to change as another early-stage technology is advancing forward, one that poses a significant opportunity for synergy with mobile payments. That technology is wearable technology, and the two together may pose a game-changer for the field that’s impossible to ignore.
Those who follow the wearable technology front know that it’s a field that’s made a lot of gains, and is starting to break out of the rut of “fitness trackers and not much else” that it’s been in for some time.
Indeed, IDC reports suggest this market will jump fully 133 percent just in 2015, and there’s a potential growth of 510 percent on this front in the near term. That in turn represents a clear possibility for mobile payments to overcome one of its biggest problems: convenience.
We’ve heard about the value of convenience in mobile payments in the past, and that’s where wearables can offer a great advance. Right now, mobile payments don’t necessarily represent much of an improvement over cash or other payment methods. It’s a different way to make a payment—and as such there’s a clear appeal—but it’s not necessarily better, and so it’s limiting the appeal beyond those who crave novelty.
That’s changing, of course, and in a pretty rapid fashion. We’re seeing a host of mobile payments apps geared toward individual businesses that come with access to a loyalty program right out of the gate, and that’s going to be sufficient inducement for a lot of people to make the move to mobile payments for at least some things.
If that keeps up, it’s going to be a good move for mobile in general, but it’s still not going to be truly sufficient to get people away from all the other options.
Wearable technology has a great potential to help here, as wearables help ensure that people have the device in question used for a mobile payment along with them. It’s one thing to forget a phone, but it’s entirely another to forget some breeds of wearable device. So with the device along for the ride, convenience is assured.
The two big issues left—according to a recent report from MasterCard—are flexibility and security. While there’s only so much that mobile payment system builders can do about the flexibility—businesses do a lot of the determining on that, though the move to EMV might change things a bit—the security can be addressed with proper protections.
Thus, wearables can help provide that extra note of convenience that should help give mobile payments some extra ground. It won’t be everything that mobile payments really needs to take off, of course, but it will be a big part of the equation: convenience.
With flexibility and security in tow, meanwhile, mobile payments should be able to hold their own in the field.
5 cutting-edge retail technology trends
5 cutting-edge retail technology trends
You may not think of your local department store as a hub of innovation. But technology drives almost every step of the retail experience. Here are five ways some companies are tapping emerging tech to provide ever more value to their customers.
As retailers rev up for their busiest shopping season, they know some things never change: Holiday deal-seekers will race like mad through store aisles for the best Black Friday deals. Last-minute shoppers will wait until December 24 to make their purchases. Crowds will swarm stores the day after Christmas in a whirlwind of gift returns.
The shopping experience itself, however, has undergone massive changes over the past two decades, especially as ecommerce has won over consumers and smartphones have become the must-have accessory. These days, retailers work around the clock to navigate a digital world that continues to evolve at a dizzying pace, while tech-savvy consumers have increased their demands for seamless experiences and personalized touches, wherever and however they shop.
“In today’s increasingly connected world, brands and retailers are struggling to find ways to appeal to omnichannel shoppers,” says Mike Paley, executive vice president of shopper marketing at agency The Marketing Arm. “Technology advances have created an environment in which the line between brick-and-mortar and e-commerce is blurred and fading fast.”
Here are five cutting-edge technology trends taking retail to the next level:
With millions of shoppers toting smartphones in their pocket or purse, it’s no surprise that proximity marketing, through the use of location-based technologies such as Bluetooth-connected beacons, is becoming more than a flash-in-the-pan – as retailers look for ways to provide more personalized, real-time messages, offers and promotions. Macy’s, for example, recently rolled out beacons to 4,000 stores using Shopkick’s offering, and Swirl’s platform and hardware is being used by clients including Lord & Taylor and Urban Outfitters. According to Business Insider, beacons will directly influence over $4 billion in U.S. retail sales this year and climb 10 times that next year.
“Beacons were a novelty 15 months ago, but this year retailers are starting to take them more seriously,” says Scott Bauer, U.S. Retail & Consumer Partner at consulting firm PwC. “There’s more experimentation about how to treat users in their stores with mobile phones.” The question is how to use them, he cautions, “so it doesn’t seem creepy or annoy customers.”
Biometrics, which uses technologies like fingerprint systems, facial recognition, iris scanning and voice identification, seems like a natural fit for retailers. Brands and banks that want to improve targeted marketing efforts and boost security. Biometrics Research Group predicts the global biometrics market to soar to $15 billion this year, up from an estimated $7 just three years ago. And, technology consulting firm Frost & Sullivan forecast that nearly a half-billion people will be using a smartphone equipped with biometric technology by 2017.
“iPhone users everywhere rejoiced when Apple added the passcode fingerprint scan,” says Paley. “Expect more in this area as marketers embrace the potential.” Ecommerce security can particularly benefit from biometrics, he says – MasterCard, for example, is working to allow customers to complete ecommerce transactions with just a selfie, he explains, while Visa has introduced a specification that can authenticate EMV chip card transactions using multiple forms of biometrics.
3. Mobile ecommerce boom
Mobile phones may not be no longer be cutting-edge, but the boom in mobile e-commerce certainly is, thanks to improved technologies and strategies. By the end of 2016, 25 percent of all retail ecommerce sales in the United States will take place via mobile devices, according to eMarketer.
“The real estate on the device screen has gotten bigger, particularly in the iPhone 6, driving increased success for retailers,” says Elana Anderson, senior vice president of worldwide marketing at omnichannel commerce platform Demandware. Mobile smartphones – not tablets – drove 94 percent of the growth in shopping visits and 74% of basket creation growth, according to Demandware’s Q2 Shopping Index. “Also, retail strategies are now focused on a mobile-first consumer experience, whether it’s responsive design or increased speed,” she says. “All of that is contributing to the growth.”
4. Social networks as shopping platforms
Turns out social networks are about more than just spreading the word. Over the past year, social giants Twitter, Facebook and Pinterest have all experimented with direct “Buy” buttons on their website. For instance, Twitter tested their “Buy” button in September with a small group of sellers and are now said to be teaming up with Shopify, which has about 100,000 merchants, and other ecommerce software companies.
Pinterest’s “buyable” button, launched with Demandware, recently launched on the iPhone and iPad, allowing users to purchase without leaving the Pinterest app. “We literally had our consumers lining up, there is a lot of excitement regarding social commerce,” says Anderson. “Retailers and consumers want to remove as much friction from the buying process as possible.”
5. Digital in the store
You don’t need to leave a physical store to get your digital fix. Instead, retailers are leveraging a wide array of in-store technologies meant to draw consumers in the door. “The physical store is on the cusp of significant transformation and disruption,” says Demandware’s Anderson.
For example, retailers and brands such as Ugg Australia, Uniqlo and Neiman Marcus are using “magic” or “memory” mirror technologies, using RFID tags, which allow customers to try on virtual outfits in different colors and styles. Rebecca Minkoff has added text messaging and touch screen features in her stores that allow consumers to order drinks, browse the store catalog, and easily interact with store associates. Finally, Bloomingdale’s has experimented with mounting iPads in fitting rooms to allow customers to ask for help, read reviews and see what sizes are in stock.
“There’s a ton of experimentation with digital across the board,” says Anderson. “It’s really about serving the customer from the online experience out of the store all the way through the store.”
Why Mobile Payments Aren't Gaining Traction With Small Businesses
Why Mobile Payments Aren't Gaining Traction With Small Businesses
A year after the launch of Apple Pay and five months into Google’s Android Pay service, it seems like mobile payments have finally caught fire with the public. Thousands of banks and retail giants have jumped onboard, yet small businesses—which account for more than 90 percent of businesses in the country, according to the U.S. Census Bureau—are so far responding with a collective meh.
“I would say it’s been a fairly negligible adoption rate so far,” says Jordan McKee, senior analyst covering mobile payments at 451 Research in Boston. “There hasn’t been a tremendous amount of interest given the cost of upgrading terminals to accept NFC payments.”
Near field communication is the technology behind the new contactless payment systems. Long a feature of Android handsets, the chip lets consumers put a smartphone inches away from a payment terminal to make a transaction. Apple Pay joined the party in 2014 with the iPhone 6; the tech is also a key feature of the new Europay, MasterCard and Visa (EMV) credit card standard.
This year’s Oct. 1 deadline for the transition to EMV credit cards is what’s driving the widespread availability of mobile payments. That’s because on that date, every merchant in the country is required to upgrade the old magnetic-card-swipe terminals to new ones compatible with EMV cards (also called chip-and-PIN cards). If they refuse, they will be held liable for fraudulent purchases made in their establishments.
Still, that threat alone hasn’t been enough to force small businesses to transition to EMV card readers, let alone to mobile payments. McKee believes that may happen once the post-deadline horror stories start to pop up. “I think word will spread pretty quickly throughout the small-business space that card networks are holding merchants responsible for fraudulent transactions,” he says.
Beyond the new EMV standard, mobile promises to make payments even more secure. “Apple Pay is by far the most secure way to make a payment in general today,” McKee says, noting that it uses biometrics and tokenization (in which the credit card number is replaced with a unique code recognized by the bank). In short: Offering the system builds trust with customers. But for small businesses to accept it, they’ll need an NFC-compatible (and Apple-approved) reader.
The industry’s hope is that once businesses upgrade from their old magnetic point-of-sale terminals to smart, EMV-compatible ones, the ability for merchants to easily add a pay-by-phone option will turn mobile payments into the new normal.
Point to Point Encryption, Tokens Pick Up Where EMV Leaves Off
Point to Point Encryption, Tokens Pick Up Where EMV Leaves Off
Though the EMV transition is a significant step in the effort towards making payments more secure, this EMV liability shift won’t solve mass data breaches on merchants.
This is because credit card data is stored, processed and communicated over a merchant’s network and then sent to the processor in clear text. Because of this, criminals are constantly trying to get into merchants’ networks in order to obtain credit card data, as well as other information.
This means that payment security requires a comprehensive approach, often with multiple security solutions – extending beyond cards to both the point of sale (POS) and storage.
Point-to-point encryption (P2PE) and tokenization have become a popular addition to EMV upgrades with merchants.
P2PE and tokenization remove payment data from merchants’ networks to a point-to-point solution, where payments will go directly to a terminal over a separate communications line while being encrypted throughout the entire process. Therefore, if a merchant were to be breached, there would be no available credit card data to be hacked.
Furthermore, P2PE also reduces the PCI scope for merchants so that less time needs to be spent on PCI compliance issues and more time can be invested in growing the business. It’s clear that the payments industry is moving towards a more secure system that provides benefits to merchants and credit card customers alike.
Because of that, there are many new P2PE solutions coming to the marketplace.
For P2PE to work, the data key needs to be loaded onto the terminal before it is sent to the merchant. The key is generally loaded by an Encryption Services Organization (ESO) inside their secure room to allow for maximum security efforts.
The less stress on the reseller and the retailer when it comes to payment security, the more everyone can focus on growing the business and improving customer service.
Global eCommerce Sales, Trends and Statistics 2015
Global eCommerce Sales, Trends and Statistics 2015
Have you ever wondered what time someone in the UK checks their email or what types of products the Chinese love buying online?
What about where the most global eCommerce sales actually come from? We did. And then we made an infographic about it.
Remarkety store owners and their agencies are located across the world, in some of the biggest markets with global eCommerce sales.
And what we love about the world – besides the livable atmosphere, gravity, water supply, etc. – is the subtle differences from market-to-market.
Our eCommerce marketing report, took into account the ten biggest eCommerce markets and the emerging markets where eCommerce is on the cusp on taking off.
We researched each country individually to find unique online retail shopping behavior along with email marketing trends, since email is our thing.
That’s not all.
We also looked at online marketing trends, mobile adoption trends, internet penetration and more.
Armed with a better understanding of eCommerce trends and online shopping habits in each of these countries is valuable for a few reasons.
For one thing, many online shops have customers in multiple countries.
When it comes to email marketing, we’ve touted the importance of segmentation. A lot.
Segmenting email messages by a customer’s country or geography means communication can be even more targeted and relevant.
In turn, there will be higher open and click rates. And more purchases.
Plus, online retailers considering moving into a new market or even emerging market will be able to make smarter decisions by understanding these trends.
Let’s dive into it.
10 Biggest Markets by Global eCommerce Sales
2. United States
3. United Kingdom
7. South Korea
United States eCommerce MarketSize
The US comes in second with $349.06B in projected eCommerce sales in 2015.
Online Spending by Device
Though there are 191.1 million online buyers in the US, only 28% of small businesses are selling their products online.
Pretty crazy, no?
Even though only 28% of small business are selling products online, over half (57.4%) of the US public shop online.
Keep in mind these interesting eCommerce statistics when emailing and marketing to your US-based shoppers.
98.9 million Americans have purchased, at least once, on a mobile device.
While more Americans own a smartphone than tablet, they are more likely to purchase on tablet.
80% of people who shop on tablets will place an order on one. Only half of the people who actually shop on a smartphone will place an order on their phone, preferring a tablet or PC.
Lastly, most US shoppers place a strong value on the ability to check for product availability at brick-and-mortar stores near them.
This is where an abandoned cart campaign can do the legwork – especially if a coupon or incentive is offered. More about that here.
Top 6 Reasons Why Your Business Should Start Accepting EMV Chip Cards
Top 6 Reasons Why Your Business Should Start Accepting EMV Chip Cards
The EMV migration deadline has finally arrived in the US, and questions about why businesses should accept EMV chip cards are pouring in. A lot of these questions are based on incorrect information and myths that are rampant in the industry right now.
First, we want to make it clear, that migrating to EMV is not a government mandate, it is a business decision for the merchants. However, it is recommended that merchants of all sizes migrate to EMV.
Why – you ask? Let’s explore the top 6 reasons:
Reason #1: Better Security: Unique code reduces counterfeiting
An EMV chip card, when used at an EMV enabled payment terminal or mPOS device, uses a more secure process to authenticate the card. The microprocessor chip in the card creates a one-time unique transaction code that cannot be used again, thereby reducing the potential for credit card counterfeiting.
Reason #2: Liability Shift: Merchants can avoid chargebacks
Typically, the liability of a chargeback due to a fraudulent transaction falls on the issuer. However, after October 1st, 2015 this liability will fall on the merchants in certain scenarios. You can learn more about the liability shift by downloading our free ebook.
Reason #3: Global Interoperability: EMV adoption is global
EMV is a global standard and the technology has been rolled out in many countries around the world. The U.S. is the last developed country to migrate. Customers from other countries will feel more comfortable using their cards where EMV is supported.
Reason #4: EMV’s Success: Credit card fraud has reduced globally
Credit card fraud is a global issue and many countries have been able to curb it by deploying EMV solutions. According to an Aite Group report from 2014, the U.K. was able to curb counterfeit fraud by 56 percent since the country rolled out EMV cards in 2005. Other countries such as Australia and Canada have also seen declines counterfeit fraud by 38 percent and 49 percent respectively.
Reason #5: Consumer Behavior: Habituation of dipping the card
With the introduction of EMV chip technology, the consumer will soon become more adept to paying via this new method. It’s only a matter of time before they start expecting merchants to accept payment via EMV rather than the less secure magstripe method.
Reason #6: Lowers Risk: Targeted by fraudsters
As big box merchants are beginning to migrate their payment technology to EMV, fraudsters throughout the U.S. are more likely to focus on merchants that haven’t upgraded yet. By investing in new payment technology to accept EMV chip cards, you not only avoid potential chargebacks due to fraud, but you also reduce the possibility that fraud will even occur at your business.
Navigating the EMV Waters
Migrating to EMV can seem like a daunting task, and merchants of all sizes and across industries are looking for the simplest, fastest, and most secure path to get them where they need to be. If you would like to learn more about various other EMV related topics, please visit our EMV Resource Center. You can also ask your questions in the comments section or submit your questions to a panel of experts on our Ask an Expert page.
Get ready to dip, not swipe, your credit cards
You might have already noticed the minor change at the register.
Instead of swiping credit cards and debit cards, more retailers are asking consumers to dip them into new card readers that are supposed to be more secure. The technology uses cards with chips embedded in them, and is supposed to cut down dramatically on incidents of thieves stealing card information and making fake copies.
Businesses have been installing the new readers slowly, but more might have them up and running by Thursday, the deadline set by major credit card issuers for merchants to have the updated card terminals. Those that don’t have the readers by then could be on the hook for any losses caused by credit card fraud. (As opposed to banks being liable, as is the case now.)
The transition should be pretty straightforward for consumers, but it can still take a little getting used to. Here’s a rundown of what credit card holders need to know.
How do these chip cards work, and what makes them more secure?
Basically, chip cards are credit cards or debit cards with a computer chip embedded in them. Instead of sending retailers and card companies the same information each time they’re used, the way the magnetic stripe on cards works now, the chip sends out a unique code for each transaction. (The official name for the technology is EMV, which is short for Europay, MasterCard and Visa.)
The idea is that any thief who is able to intercept the code won’t be able to use it again to make a fraudulent purchase with a fake version of the card later on. (Essentially making it more difficult for someone to go on a shopping spree at a mall in Texas while you are physically in New York.) Anyone who would try to use a fake magnetic stripe version of the card at a chip terminal would be prompted to insert the card into the chip slot, said Stephanie Ericksen, vice president of risk products at Visa. The transaction would then fail, she said.
So what should I do at the register?
Unless you are told otherwise by the cashier, you should swipe your card as usual. Some terminals will recognize the chip and ask you to dip the card into the slot underneath the key pad, said Deborah Baxley, a principal in Capgemini Financial’s Cards & Payments unit. Swiping is typically a flick of the wrist movement, but when you are using a chip reader, you don’t want to remove the card quickly. You’ll need to leave the card in place for a few seconds until the transaction is complete, Baxley said.
Will these cards stop fraud completely?
Unfortunately, thieves are fast learners. As more and more in-store purchases are completed with chip technology, it will get harder for thieves to make fraudulent purchases inside stores. But security experts say they widely expect credit card fraud to move online, where thieves can still use the card number and expiration date to make fraudulent purchases. That’s what happened in Europe when retailers installed the technology there years ago, with online fraud doubling in some countries, said Rurik Bradbury, chief marketing officer for Trustev, a company that helps retailers catch online fraud.
Retailers are moving to catch fraud online by scanning for details, such as a person’s IP address, e-mail address and other data points, but their information is often limited, Bradbury said. Some businesses may rely more on apps or programs such as Apple Pay, which work similarly to chip cards by also creating a unique code for each purchase.
I don’t have a chip card yet. Should I be worried?
No. Your older magnetic stripe card should still work at most retailers. And banks are still in the process of sending the new cards out to consumers. Some 57 percent of consumers had at least one chip card as of July, according to a survey by Visa. Some banks are aiming to send them out by the end of the year, but for some cardholders the new cards may not arrive until 2016. Consumers who want to get a new card can call their credit card companies and request one, said Matt Schulz, a senior industry analyst for CreditCards.com.
Why haven’t I seen chip readers at more retailers?
After Oct. 1, the date set by issuers, such as Visa and MasterCard, merchants who don’t have the new readers may become liable for fraud that results from stolen data. But don’t expect all stores to have the new readers by tomorrow. About 44 percent of merchants surveyed by Visa said they had installed a chip reader as of July. That percentage will grow over the next several years, but adoption may be slow, especially among smaller stores, whose owners might feel like they can’t afford the new technology. Based on how the transition played out in Europe, Ericksen estimates it may be two to three years before roughly 70 percent of in-store transactions are done using EMV technology.
Will these cards work the same as the ones in Europe?
Almost. In Europe, cardholders are using a system known as “chip and PIN,” where the chip produces a new code for each purchase and cardholders are asked to enter a PIN. However, many of the chip cards banks are sending out in the United States are chip-and-signature cards, where people will use their cards and sign for credit card purchases as they always have. Debit purchases made with chip cards will still require a PIN.
Some security experts say the PIN system is safer, because it takes another step to verify the cardholder’s identity. The signature is supposed to do that also, but as my colleague Sarah Halzack reported, those are not always verified. Retailers are trying to make the switch as easy as possible for consumers, who aren’t used to entering a PIN when they use their credit cards. Still, the move to chip cards should provide a step up when it comes to cutting down on credit card theft.
Will people see these special card readers at ATMs and gas pumps?
Eventually. Replacing the readers attached to gas pumps and ATMs is more complicated, so they have more time — until October 2017 — to make the change.
Got a new credit card in the mail? Here's why
Got a new credit card in the mail? Here's why
Swiping your credit card could soon be a thing of the past.
Banks have been sending out new chip-enabled credit cards that have to be inserted and held in a credit card reader to complete a transaction.
These new cards look similar to your old credit cards, but now have a small metallic chip on the front. Think of the chips -- called EMV microchips -- as mini computers. They hold your payment data, which is currently held on the magnetic stripe, and provide a unique code specific to each purchase.
Chip-enabled cards aren't new, they've been around for more than 20 years and are common in many areas of the world. But they are more secure than magnetic-striped-only cards.
"The microprocessor adds additional security data to the transaction each time the card is [used]," explained Randy Vanderhoof, executive director of the Smart Card Alliance.
Here's what will change:
Thieves will have a harder time stealing your info
The magnetic stripe is easy to copy and use to create fake cards. Thieves commonly obtain a card's data through data breaches and using card skimmers they install in places like ATMs and gas pumps. You can unsuspectingly give away your data when you swipe your card at a compromised machine.
"Everything a fraudster would need to make a duplicate was available by copying the stripe itself or stealing data from the merchant data system," said Vanderhoof .
The new chips hold data specific to each purchase, so reproducing will be much more difficult.
"We have not seen a proven data breach of a chip card in an EMV market since it's been in place,"said Owen Wild, security marketing director at NCR, which makes transactional software and hardware.
It will take a few seconds longer to check out
The check-out process will be a little different and a bit longer for consumers as the card authentication process unfolds.
"If a typical transaction is three to five seconds, what we've seen with the chips is five to 10 seconds," said Wild. "It will have an impact on lines ... especially in high-traffic areas."
A signature will still be required when using a chip-enabled card.
You'll see more new card readers in stores
While there's no mandate for the new cards, retailers and banks do have a big incentive to upgrade by October 1.
That's when new liability rules go into effect. Right now, the bank that issues the card ends up swallowing the cost of fraud. But starting in October, whoever has less protection will have to pick up the tab. In other words, a store that hasn't upgraded could end up footing the bill for fraudulent purchases.
That means you're likely to see a lot more of the new readers over the coming months.
Upgrading credit card reading machines can be costly for retailers depending on their size.
"For small mom-and-pop stores, you can buy a fairly inexpensive EMV-enabled terminal," said Mark Nelsen, senior vice president of Risk Products and Business Intelligence at Visa (V).
But for big-box retailers with more complex payment systems, the cost can be much higher. After its massive data breach at the end of 2013, Target (TGT) announced it would spend $100 million to upgrade to chip-enabled technology.
The upgrade is also costly for the issuers, with cards costing about five times as much as magnetic-stripe only cards, according to Martin Ferenczi, North America president at digital security company Oberthur Technologies.
Related: Credit card of the future could stop fraud
But don't expect 2016 to be the year of no credit card fraud. It will take a few years for chip-based sales to become the majority of transactions.
While the protections are an upgrade to the current magnetic stripe-only credit cards, they still leave vulnerabilities. If your chip card is physically stolen, a thief would still be able to use it and there's no added protection when shopping online.
But the technology will continue to evolve.
"The chip has a limited shelf life and has to be replaced every couple of years," said Ferenczi.
This week, credit cards with chips are to become the standard
This week, credit cards with chips are to become the standard
Starting Thursday, most shoppers will no longer be swiping their new credit and debit cards into merchants' card readers to make purchases. They'll be inserting them instead — chip side first.
The new pieces of plastic that banks and other card issuers have been sending to customers contain a tiny metallic chip designed to reduce counterfeiting, just as similar Europay credit cards have cut such fraud throughout Europe.
The technology in the microchip makes it more difficult for criminals to forge fakes and easier for merchants to authenticate cardholders.
On Thursday, the credit card industry will add bite to its rollout by shifting liability for covering counterfeits to the party that has not adopted chip technology — either the merchant or the credit card issuer.
"To the extent that this cuts down on fraud, it's probably a win for everyone," said Michael Simkovic, an associate professor at Seton Hall University School of Law.
For merchants, this means ensuring their sales terminals accept the chip technology and contain a slot in their readers for the new cards. Unlike a card swiped quickly, a chip-enabled card must remain in the reader until the machine OKs its removal.
That longer processing time has made some customers uneasy. At a Home Depot in Burbank, Robert Montanez said he worried it would give criminals a greater opportunity to steal his data if the sales terminal were hacked.
"I don't trust it as much," said Montanez, 39, of San Fernando. "I leave it in way too long. The swipe is faster."
About 70% of credit cards will be chip-enabled by the end of the year, said Doug Johnson, senior vice president of payments and cybersecurity policy at the American Bankers Assn., the leading bank trade group.
Prepaid cards also are moving toward chip technology, but at a much slower rate because of a wider variety of offerings, lower value limits and less risk for merchants and card issuers, said Brian Riley, an executive at research firm CEB TowerGroup.
Some prepaid cards, such as those for international travel, already carry the chip technology, but many others, including low-value branded gift cards and incentive cards, will probably never convert to EMV, an industry term named after the three companies that created and developed the chip card in the 1990s: Europay, MasterCard and Visa.
The standard magnetic stripe cards will probably remain in circulation for years, said Seth Ruden, senior fraud consultant for the Americas at ACI Worldwide, a payment systems company. Full compliance on the merchant side won't happen until 2017 when automated fuel dispensers are also required to have payment terminals that read the chip cards.
The change comes as card fraud has more than doubled in the U.S. over the last 15 years while falling in much of the rest of the world where chip-enabled cards have been in place for much of that time.
The cost of fraud in the U.S. rose to 12.8 cents per $100 last year from 5.6 cents in 2000, according to the Nilson Report, which analyzes the global card and mobile payment industries. Last year, the U.S. sustained 48.2% of the world's card fraud.
The Federal Reserve further broke down some of these numbers in its 2013 triennial study of non-cash payments in the U.S.
The Fed calculated a total of about 13.7 million fraudulent credit card transactions in 2012 totaling $2.3 billion in charges. About 52% of those transactions involved cards that were presented to retailers for purchases; the rest were attributed to online and other fraud where the card isn't used at a store.
It is that on-site fraud that the chip technology is designed to prevent. About two-thirds of the fraud against Visa involves counterfeit cards, said Stephanie Erickson, vice president of risk products at Visa Inc.
Though the chip technology won't end all types of credit card fraud, experts say it's a needed first step.
"We're hoping that once we get the magnetic stripe out of the equation that we'll properly secure the environment," Ruden said.
Throughout the 2000s, chip cards were rolled out across Europe, and Britain fully implemented EMV technology in 2006. Counterfeit fraud in Britain dropped to 10% of all fraud from 26% over the decade ended 2013, CEB TowerGroup said.
Even though chip-enabled cards are difficult to counterfeit, anti-fraud experts would like to eliminate that possibility altogether. Many already are looking at mobile payment systems as possibly offering better protection.
Using a cellphone also could curtail the online fraud that chip cards can't touch, said the ABA's Johnson. Online credit card fraud has skyrocketed to 67% from 29% of all card fraud in Britain over the 10-year span through 2013, a CEB report found.
"What we're seeing in the U.S. is moving more toward mobile payments," Riley said.
For now, though, the chip card will become the predominant piece of plastic in consumers' wallets.
Large retailers such as the Home Depot Inc., Target Inc. and Wal-Mart Stores Inc. said the transition to sales terminals for chip cards is complete or on track to finish by Thursday's deadline.
But many small businesses said they aren't ready.
According to a Wells Fargo/Gallup survey in July, 49% of small-business owners said they were aware of the looming shift in liability. But only 31% said their current readers accept chip cards, and only 29% said they intended to make the change before Thursday. One-fifth said they aren't planning to upgrade at all.
Cost is one factor. Prices for the new readers alone range from $50 to $600.
Madelyn Alfano would have to pay up to $25,000 to update the sales terminals in her 10 Maria's Italian Kitchen restaurants throughout the Los Angeles area.
She said she will probably get one or two readers for each location in the next few weeks, which could slow down daily operations since the staff usually operates from five sales terminals at each restaurant.
"It's another expense, another cost of doing business," she said.
Target's bill was $100 million to install the payment devices, update the software and issue new credit cards with chips, said spokeswoman Molly Snyder. The National Retail Federation trade group estimated that across the nation, the cost of the new readers, software and other installation costs could hit $35 billion.
Retail associations also pointed out that the U.S. adoption of chip technology is not quite as it was in Europe.
In Europe, customers make purchases by inserting their chip card and punching in a personal identification number, or PIN. U.S. banks can issue cards that require either a signature or a PIN. Retailers and security experts said the chip-and-PIN is more secure because anyone could scrawl a signature with a lost or stolen chip card.
"It's like locking the front door and leaving the back door wide open," said J. Craig Shearman, spokesman for the National Retail Federation.
A PIN, however, isn't foolproof.
"If you're entering your PIN number in more places, there also are more opportunities for it to be stolen," said Seton Hall's Simkovic.
The EMV Slowdown: Changes in your guest experience and speed-of-service
The EMV Slowdown: Changes in your guest experience and speed-of-service
EMV-Speed-of-Service-blogEMV has been promoted as “a more secure solution,” and the technology will undoubtedly serve its purpose of reducing fraud. However, this enhanced security brings some expected and unexpected outcomes – especially in the short term as consumers and business owners become familiar with the technology. In our recent post on the high-level operational impacts of EMV adoption, we addressed how EMV requirements such as a customer-present payment can impact your restaurant. Here, we’re going to further explore these operational impacts, as two points of differentiation for restaurant owners – the guest experience and speed-of-service – are about to change.
Your EMV Recap
Let’s start with what EMV means for your restaurant. On Oct. 1, a liability shift (note: liability shift, not a mandate) occurs around a new type of payment transaction: EMV, which stands for Europay, Mastercard and Visa, the creators of the new transaction guidelines. EMV-compliant cards also are referred to as “chip credit cards” in reference to the smart-chip technology.
All EMV-compliant cards come equipped with a microprocessor chip that generates a unique transaction ID for each use. This makes the cards more secure than their magnetic stripe counterparts and virtually impossible to duplicate. Magnetic stripe cards will continue to work after Oct. 1. However, if your restaurant does not support EMV transactions, it becomes responsible for fraudulent transactions made in your restaurant using a fraudulent EMV card.
For a more in-depth refresh on EMV, click here or read our EMV Myths Debunked blog series in which we tackle the leading myths around the Oct. 1 liability shift.
Understanding Chip & Signature vs. Chip & PIN
EMV micro-chipped “smartcards” standards are applied in two ways: chip-and-signature and chip-and-PIN. While chip-and-PIN is the standard for much of the world, the U.S. will be implementing chip-and-signature . It’s important to note the differences between these two standards.
Chip-and-PIN EMV cards, which account for about 60 percent of EMV cards worldwide, require the cardholder to enter a four-digit personal identification number (PIN) to complete a transaction. Chip-and-signature EMV cards, on the other hand, require the cardholder’s signature to verify the sale.
All EMV transactions begin the same way at a payment terminal device. Instead of sliding the card through a cardreader, as is done with magnetic stripe-equipped cards, the EMV card is “dipped” into the reader, which collects account data from the embedded microchip.
Just as EMV cards are considered to be more secure than magnetic stripe cards, chip-and-PIN cards are a stronger defense against fraud than chip-and-sig cards because it’s more difficult for a thief to guess a card’s PIN than to forge the cardholder’s signature. In fact, according to a recent article on CardHub.com, chip-and-PIN is the most secure type of credit card technology. While there is no timeframe for migrating the U.S. to chip-and-PIN standards, operators need to be prepared for that eventuality sometime in the next few years.
Quick Service and Fast Casual: Invest in longer lines
With the implementation of EMV, your speed-of-service will likely experience slowdown. An EMV transaction is slower than that of the mag-stripe card due to various factors, including the customer’s familiarity with the solution. Operators should prepare for a lengthier queue, while looking at innovative ways to educate customers and offset likely frustration at the point of sale.
However, the counter isn’t the only location to take a hit in speed-of-service. As all EMV transactions will require either signature or PIN authentication, the transaction process will now require greater involvement from the customer. This has the potential to impact drive-thru operations due to the greater transaction times the EMV authentication process takes versus a traditional swipe. The future implementation of chip-and-PIN can impact it even more so; to obtain the required verification, restaurant staff would need to pass a payment terminal device from the window to the customer, obtaining verification from the customer in the form of their PIN.
With modern expectations of lightning-fast service and a simple guest experience, EMV has the chance to create ripples of dissatisfaction throughout your customer base.
Table Service: EMV Brings the Payment to the Table
In the U.S. the movement to chip-based cards has evolved overwhelmingly toward the chip-and-signature approach. However, table service operators, as a best practice, should prepare for the eventuality for a chip-and-PIN world. Additionally, in preparation for a chip-and-PIN world, table service operators should consider using a wireless payment device for 3 reasons: 1. When chip-and-PIN is implemented, customers will then be able to enter their PIN at the table. 2. If a restaurant is in an area with a lot of international customers they will be able to use their chip-and-PIN cards. 3. Currently in the U.S., operators will not know which type of chip-card (chip-and-signiture or chip-and-PIN) a customer has until it is “dipped”. If the card is a chip-and-PIN card, the guest experience may be like this:
– Waiter drops off bill
– Customer puts credit card into portfolio
– Waiter brings a pay at the table terminal (when available) to the table
– Waiter opens check from the terminal and inserts customer card
– Waiter hands terminal to customer to complete transaction (while remaining nearby in case the customer has questions)
– Customer adds tip into terminal
– Customer enters PIN into terminal
– Customer hands terminal back to waiter
– Waiter completes transaction, prints receipt and delivers to customer
The new payment process also requires payments be finalized before removing the card. This alters the payment flow for tips, as well as bar tabs. For bar tabs, this means operators will no longer be able to return a card to a customer before completing a transaction. This can result in confusion for the customer, as well as increasing the chance customers forget their cards and leave them behind.
On the Path to Success: The Importance of Staff Education
Even with the potential delays in speed-of-service for fast casual, quick service and table service restaurants, there are practices you can take now to minimize slowdown in the future. Step one? Training your staff. In our next post, we’ll discuss the importance of a quality staff education and how you can prepare your staff for a smooth transition to EMV compliance.
How the Newest Generation of Credit Cards Protects Your Information From Getting Stolen
How the Newest Generation of Credit Cards Protects Your Information From Getting Stolen
Have you had your credit card info stolen recently? You’re not alone. It’s happened to me a couple of times in the past year, and it’s annoying as hell. Thankfully, credit card companies are finally tackling this issue head on, with technology that’s just now reaching the U.S. in full force.
If you’ve gotten a credit card in the mail recently, you’ve probably noticed it has a little chip on it. Or maybe you’ve heard of people talking about “chip and PIN” technology. These chip cards—also known as EMV cards (which stands for “Europay, MasterCard, and Visa”) are designed to cut down on credit card fraud. Many countries in Europe have had this technology for a while now, but it’s finally taking hold in the U.S. This is a good thing, since last year, the U.S. accounted for 72 percent of all credit card data breaches in the world. Here’s how these new cards work.
Forget the Stripe. You’ll Have a Chip
With a traditional credit card, the data associated with your magnetic stripe doesn’t change. If someone accesses it, they have access to your credit card info until you cancel it and get a new one. With this new chip technology, every time you use your card, the chip creates a code unique to that transaction. If a hacker steals that code info, it’s useless. Other countries have been using chip cards for years, and it’s been really effective in bringing down fraud.
You’ll Still Use Your Signature, For Now
Other countries have been using “chip and PIN” technology with these new cards. In addition to having the chip, this technology requires you to remember a PIN for each credit card you use. In the States, most new cards won’t come with required PIN numbers. We’re using a “chip and signature” method for now, which means we’ll use our signature to close the transaction, like we did with our old cards. Sushil DaSilva, co-founder of Highline Software, says we will eventually use PIN verification, probably within the next few years. According to him, issuing banks wanted to roll out the chip technology first, then introduce the PIN method once consumers get used to the change.
Yes, There are Some Drawbacks
Our “chip and signature” method could pose a problem if you’re visiting a “chip and PIN” country. Since other countries use PINs to verify purchases, you might not be able to process your card at some overseas merchants. It’s uncommon, but still something to keep in mind if you’re traveling. Some travelers request a PIN from their credit card issuer to use for cash at ATMs, but this is not the same PIN. As one expert puts it over at CreditCards.com:
“If I go to France, where chip-and-PIN is sometimes the only choice in these terminals, then many times I’m going to need to get a new card.”
You should be able to use the PIN you requested at an ATM for a cash advance, but not for a purchase at, say, a train kiosk that requires a chip-and-PIN card to make a purchase.
Unfortunately, if you’re traveling without a PIN card, other than using cash, your only other option would be getting a new “chip and PIN” card. Most machines, however, will simply accept your signature.
Also, since most chip cards won’t require a unique PIN, if a thief steals your physical chip card, they could probably still easily use it anywhere. Thieves could still use your EMV card for online purchases, too. Since you don’t pay using a terminal for online transactions, all a hacker needs is your credit card number, expiration date, and three-digit security code. Someone could get this info if they get hold of your physical card, but it’s impossible for them to get this info from hacking a chip transaction, since the code is unique.
DaSilva points out why the EMV technology is still useful, though:
Physical card theft represents fraction of card fraud. The real problem is that magnetic stripes can be copied and cloned at will.
Basically, this technology will protect against cloning and copying your card. Since each transaction is unique, thieves won’t be able to skim your data and replicate it.
Instead of Swiping, You’ll “Dip”
Instead of swiping your card, you’ll now insert it into a machine. Some retailers call it “dipping.” You might have already seen this technology at some stores already. Once you dip, you leave the credit card in the terminal until your transaction is complete. Some EMV cards might also support NFC technology, which means you can just tap your card to pay.
The rollout of EMV will happen gradually, so you can still use your EMV card at retailers that haven’t updated their terminals and are still using the old swipe method.
Unfortunately, the Full Transition Will Take a While
The major card networks (Visa, Discover, MasterCard, and American Express) are responsible for this shift, and they’ve given banks and retailers a deadline of October 1st to start issuing and accepting the new technology. If they don’t, the retailers or issuing banks will be on the hook for any fraud transactions.
It’s a soft deadline, though, so don’t worry if you haven’t gotten a new card in the mail. Retailers and banks are introducing this somewhat gradually, and experts say it might take a few years before we all start exclusively inserting our cards instead of swiping them. MasterCard product expert Carolyn Balfany told the Tech Times she expects about 65 percent of cards to be equipped with chips by the end of 2015, with half of merchants upgraded. According to Creditcards.com, debit cards will roll out at a slower pace. Experts expect that 96 percent of debit cards will switch to this technology by 2017.
If you already have a chip card and you’ve been to a Target or Costco recently, you’ve probably tried this new technology. It’s simple enough to use, so it shouldn’t take too long to get used to “dipping” over swiping. It’s a small price to pay for tighter security.
Deadline For More Secure Credit Card Terminal Is October 1
Deadline For More Secure Credit Card Terminal Is October 1
With the EMV adoption deadline just over two weeks away, it looks as if a lot of smaller merchants won’t be ready. EMV credit cards carry a small chip which communicates through a card reader after to the issuing bank, a far more secure process that just using magnetic swipes.
Thierry Denis, president, North America, Ingenico Group, thinks that in the top tiers of retailers, about 90 percent will be ready.
“As you go down the tiers you see less and less people ready. Smaller merchants, smaller chains have looked at consumers and the lack of them using EMV cards, so how likely is a lost or stolen card that will raise a liability issue? They may decide they don’t have to hurry to be ready by October when they can go at their own pace and be ready by January of next year.”
“The scope of the liability shift is rather narrow,” said Stephanie Snyder Tomlinson, senior vice president with Aon Risk Solutions. “Much of the liability will remain with the issuing bank. Fraud liability will shift to the merchant only in cases where a counterfeit chip card is used at a non-chip compliant terminal.”
Many small to medium size merchants have made the determination that they will not be EMV-compliant as of October 1, she added.
“Given relatively low levels of fraud, they have determined that their limited financial resources should be invested in other risk mitigation techniques, such as enhanced data security and encryption.”
Companies that offer EMV card readers take a more alarmed view, warning that small companies could be wiped out by credit card fraud if they don’t install new readers.
Large banks have embraced the change ahead of the October deadline, as the benefit is predominantly theirs, by shifting liability to the merchants who are not EMV-compliant, Tomlinson said.
Technology can be a problem, Tomlinson added.
“One national retailer recently advised that though they have the EMV-compliant terminals in place, software delays are impacting their ability to be EMV-compliant by October 1. An additional hurdle for merchants is the lag time between installing the software and getting it certified. The certification process can take up to six months, given the three different types of certification.”
Adoption appears to be uneven. Denis said that while the chip cards are coming out, one big retailer is not pushing people to use them yet.
“They have rolled out the solution but without forcing the customer to do EMV.”
Customers will have to adjust, because unlike mag stripe cards that you can swipe anytime, with EMV customers have to wait for the amount to be entered, and that adds a few seconds to the transaction. He expects that retailers and shoppers will move to contactless payment soon.
“If you look at the other countries and at Canada where EMV was deployed, all of them saw deployment of contactless shortly after, and it is because of the speed of EMV makes it a bit longer, while contactless you get more transactions fast.”
He doesn’t expect much use of chip and PIN for at least a few years. Chip and PIN is more secure because a stolen EMV-only card can be used by a thief until it is reported missing, while a PIN card is useless unless the cardholder wrote the PIN on the card.
Will Mobile Payments Soon Reign Supreme?
Will Mobile Payments Soon Reign Supreme?
Consumers have been hesitant to adopt usage of mobile payment technology, such as Apple Pay. According to a Trustev survey, only one in 50 people who own an iPhone 6 are using Apple Pay in a regular basis, despite the technology being on the market for a year.
One in five of phone owners tried using Apple Pay at least once, yet most users dropped off or only use it occasionally. In 2014, less than 0.5% of all phones (not limited to Apple products) capable of making contactless mobile payments were used to do so at least once a month.
Monica Eaton-Cardone, COO of dispute mitigation and loss prevention firm Chargebacks911, notes that in order for mobile payment technology adoption to take off, both the consumer and the developer need to each be as equally confidant in the service.
Even Apple has been having difficulty breaking through to consumers, leaving Eaton-Cardone to ask, “If Apple can’t do it, who can? What does the broad future for mobile payments look like?”
“Without merchants on board with developing new technology to advance the convenience of mobile payment technology, consumers won’t follow. However, without merchants believing consumers will utilize the technology, merchants won’t be on board with developing new technology,” says Eaton-Cardone. “Developing new technology can be an expensive investment. Merchants need to feel confident in consumer usage in the first place. We are not seeing that right now.”
Eaton-Cardone is unsurprised that mobile payment technology adoption is slow. While developments in mobile payment technology have the potential to make everyday life and payments easier, many consumers perceive the technology as insecure. In 2014, payment card fraud accounted for $32 billion in losses in the United States alone, presenting a 38% increase from the $23 billion in losses retailers suffered in 2013. The loss due to fraud is equivalent to 0.68% of revenue. (2)
Ironically, per Eaton-Cardone, Apple is most vulnerable to themselves. She points out that with Apple Pay, a fraudster could steal a credit card, enter it into a phone, then use the phone to purchase Apple products – without any identification necessary. Then, when the cardholder goes to dispute the fraudulent activity, Apple loses the most.
“When a consumer uses Apple Pay, they are still protected through chargebacks,” says Eaton-Cardone. “However, chargebacks can be a double edged sword, and there is a high likelihood that those filing fraudulent chargebacks will get caught.”
Eaton-Cardone says that EMV is the best option for fraud protection. Until there is a database validating every single card holder’s fingerprint and digital identity, EMV is the way to go, she attests. EMV relies on a customer’s past history to determine if the purchase is valid or not and also utilizes a micro-chip to store sensitive information, rather than a magnetic stripe.
Through the micro-chip, the customer’s buying patterns and spending habits are analyzed in about a millisecond in order to detect suspicious activity. The cardholder must still verify the transaction with a PIN number or signature.
EMV has been broadly used across Europe since 2005. The United States is the last developed country to adopt the system; however, the U.S. payments industry is transitioning over into this system with plans to do so fully by October 1. Major companies such as Target, Wal-Mart and Sam’s Club have already implemented the new technology.
Half of U.S. consumers don’t have, and don’t understand, chip cards
Half of U.S. consumers don’t have, and don’t understand, chip cards
More than half of U.S. consumers haven't received new chip-based credit or debit cards to improve security of in-store purchases, according to a new survey.
The August survey of 5,027 Americans also found that 56% aren't even aware what a chip card is, even though the technology has been widely used in other countries for years.
The percentage who said they hadn't received a chip card as of August totalled 54%. Banks have been mailing out the new cards with increasing frequency in the past year. Chip cards include an embedded computer chip for greater security beyond the magnetic stripe seen in conventional cards.
[ Find out more: FAQ: What you need to know about chip-embedded credit cards ]
Banks have been speeding up the issuance of chip cards to bolster security ahead of an Oct. 1 deadline. That's when merchants must update in-store payment terminals to accept chip card transactions. After that date, merchants without updated technology must assume the financial liability in the event of credit card fraud; there are some exceptions, such as gas stations that face a later deadline.
Consumers will see no change in the liability they incur and U.S. banks and card providers will continue to protect them against fraud, though consumers are still expected to report a lost or stolen card.
Harbortouch, a maker of point-of-sale technology, commissioned the survey, which was conducted by Shift Communications last month.
Chip cards are sometimes referred to as EMV cards, named after the creators of the cards -- Europay, MasterCard and Visa. They are widely in use in Europe and Canada.
Analysts have worried about the slow rollout of new chip cards while the nation's largest banks have said they are generally pleased with the pace. Even consumers who don't have the new chip cards will almost always be able to rely on older magnetic stripe cards -- possibly for years to come, analysts said. It could take up to a decade for a full rollout of replacement chip cards and the conversion of millions of point-of-sale terminals.
As more retailers add terminals to accept the new cards, analysts have predicted that purchases with them could be confusing for some store clerks and consumers, adding to delays, even chaos, at stores during the holiday shopping season. Chip cards usually have to be inserted into a slot in a payment terminal and must remain for a few seconds, taking slightly longer than swiping a magnetic stripe card.
Some new terminals will support a contactless payment with the new chip cards, where the card can be touched or nearly touched to the terminal to authorize payment. That's similar to the way many newer Android smartphones and iPhones used Near-Field Communication technology to authorize payments with a mobile payment app.
The survey found that only 20.5% of young adults, ages 18-24, are using chip cards for purchases. But that group also had the highest usage of mobile payments with smartphones and other devices.
The survey also found 76% of consumers living in rural areas said they had used chip cards, compared to 64% in urban areas.
Also, 26% of Americans making $150,000 or more a year in income lacked an understanding of chip cards, while that percentage soared to 60% for people making $25,000 to $50,000, the survey found.
Finally, only 51% in the survey said the chip technology would make them more secure, although that number was higher for men (59%) than for women (41%).
Visa Innovates Chip-Based Biometrics
Visa Innovates Chip-Based Biometrics
Visa just took its EMV and biometrics game to the next level — by combining the two.
Visa announced yesterday (Sept. 15) that it has launched a new specification that allows biometrics with chip card transactions. This technology will allow palm, voice, iris, or facial biometrics to be used in what Visa calls the “first-of-its kind technology framework” that’s compatible with the EMV chip industry standard.
Both EMV, a security standard aimed at preventing payment fraud, and biometric verification are two methods companies are hoping can help make payments more secure. Visa’s architecture of its new specification allows fingerprints to be securely accepted by a biometric reader, encrypted, and then validated.
This supports what is called “match-on-card” authentication, which is where that biometric is validated by the EMV card — making it so its data is never exposed or stored on a central database. The specification allows for issuers to validate the biometric data within their own transaction systems, such as ATMs.
“There is increasing demand for biometrics as a more convenient and secure alternative to signatures or PINs, especially as biometrics technologies have become more reliable and available,” said Mark Nelsen, senior vice president of Risk Products and Business Intelligence at Visa. “However, to support wide adoption, it is equally important that solutions are scalable and based on open standards. Building on the EMV chip standard provides a common, interoperable foundation, as well as encourages innovation in cutting-edge biometric solutions.”
By building this specification based on the EMV standard, this allows biometric cardholder verification to be integrated with the technology that’s used by the roughly 3.3 billion chip cards around the world that financial institutions, solution providers, and others in the payments ecosystem rely upon.
Visa’s specification that is being used to develop a proof of concept trial beginning this fall will start with Absa Bank, a wholly-owned subsidiary of Barclays Africa Group. Cardholders will use fingerprint readers at select Absa-owned ATMs instead of a PIN to complete transactions. Visa will offer to provide the specification to EMVCo, the global technical body that manages the EMV specifications.
The Brave New World of Retail
The brave new world of retail
With a little help from the channel, retailers can give consumers the convenience, customization and excitement they crave
The latest research from MasterCard confirms at least one thing we already know about retail customers: They are demanding more and more flexibility when it comes to making payments for their purchases.
According to the company's first Retail Social Listening Study, consumers are asking for more convenient payment options - and getting them. Of the shopping- and retail-related online conversations that were analyzed, more than three-quarters (77 percent) focused on the convenience of new digital payment methods. More specifically, consumers are saying they want to become untethered from their wallets and purses - that is, able to use mobile payments whenever and wherever they choose.
For the study, MasterCard teamed up with PRIME Research, a communications research company, to analyze 1.6 million social media posts from July 2014 to June 2015, all on the subject of shopping and retail.
Facebook, Twitter, Instagram and YouTube were among the social media channels included, and conversations were drawn from more than 60 markets across North and South America, Africa, Asia, Europe and the Pacific Rim.
In keeping with the demand for convenient (and secure) payment methods, MasterCard is working on a number of initiatives. One is biometrics-based payments that allow consumers to use smartphones to verify their identities via fingerprint scans or facial photographs. Another is MasterPass, a digital wallet that lets users make 'contactless' payments directly from their Android or iOS device.
But more flexible payment systems aren't the only thing driving the retail technology space. Customers also want an enhanced shopping experience, and retailers want to leverage the copious volumes of data at their fingertips to expand their customer bases and grow profits.
To make the shopping experience more enjoyable, personal and exciting, retailers have a number of options at their disposal. The 'showrooming' phenomenon, for example, is one that industry pundits say will gain some serious traction by 2020. Thomas Keenan, an adjunct professor at the University of Calgary and author of a book called Technocreep, predicts that stores "will become like museums. We'll go to see something, to learn and be entertained".
To that end, retailers will start using devices and technologies that create impressions and promote interaction, such as beacons (sensors that communicate data to smartphones and engage users), sensory stimulants - smells, for example, and augmented reality displays. Wearables, too, will gain more widespread use, providing yet another vehicle for interaction and engagement. In addition, the retail experience will become more automated via self-service kiosks, in-store mapping tools and near field communication technology.
Meanwhile, retailers that fail to leverage big data and analytics will be missing out on a huge opportunity to accomplish two things - first, to enhance the shopping and buying experience of existing customers, and second, to target and attract new ones.
While e-commerce retailers currently have an advantage when it comes to analytics, bricks-and-mortar players have access to a growing repertoire of tools. Products that analyze foot traffic allow retailers to study conversion rates, peak traffic behaviors and dwell times for improved decision-making and tailored customer interactions. Smart shelves keep track of inventory, advertise directly to consumers and offer shoppers real-time price updates. And analysis of SKU performance can help stores adjust merchandise inventory and create promotions on the fly.
Of course, integrating all of these technologies in order to embrace the 'omnichannel' experience will be outside the scope of expertise (and energy) for many retailers. That's where solution providers come in.
In-the-know channel companies can tap their intelligence of the retail space to help retailers pick and choose technology vendors, map out deployment plans, measure return on investment and tweak their infrastructures to maximize resources.
No two retailers are exactly alike. With help from VARs, integrators and MSPs, each can enter the digital age in its own unique way.
How Wearables Are Taking The World By Storm
How Wearables Are Taking the World by Storm
Wearables are starting to take the world by storm. From wearable cameras, to glasses to fitness trackers, heart rate monitors and of course, watches; wearable devices are really catching on, and fast. Wearable devices are also starting to have an impact on a wide range of different industries including fitness, banking, healthcare, retail, travel, manufacturing and even insurance. According to Mindtree the worldwide market for wearable devices is projected to reach $20.6 billion by 2018, reaching an annual growth rate of 36%.
As well as this, Mindtree suggests that by 2018 there will be 485 million global shipments of wearable devices. That is a lot of wearable goods. However, there is a lot of hype in this exciting market, and it is important to understand what is really starting to make a breakthrough and what is not. The health and fitness market is one area where wearables have really started to have a considerable grasp. Yet what has been successful has varied. For example until now it has been reported that people are more reluctant to wear ear based devices, but are fine with wrist and eye ones. That has been starting to change, and ear-based devices are starting to become of greater interest due to their proximity to blood vessels in the ears. However, wrist-based products get far more attention than anything else. People particularly like devices that track their fitness in this way.
The retail industry has recently started cashing in on the opportunity for wearables. Eyewear and wrist gear are particularly popular in this industry. The vision is that wearable technologies can be linked with payment processing to develop an end-to-end retail experience all based on the use of wearable products. It is envisaged that customers will be able to identify items and look at extra information online while they are at the store. This closely links online information with the in-store experience. Some of the big retailers like Tesco have been researching the possibilities in this area.
The banking industry has been developing wearables as well, to develop a better experience for consumers. However, this is considerably more complicated than in the retail sector. Wearables can be used for all kinds of transactions such as making balance inquiries and making payments, as well as following stocks while on the move. However, there is a good deal of regulation in this industry which makes implementation trickier, with regard to customer data. The insurance industry has also been catching on, and has started developing wearables to assess life threat.
Aside from this, manufacturing wearables are being designed to help workers to make decisions. This is a high priority for a number of organisations. One area where such devices can be helpful is in enhancing the safety of workers. This is thought to be a very important application of this technology in this field. Such devices can help workers to better understand when they are faced with hazards, for example. However, challenges do exist in this sector. One example is that using voice recognition in this type of industry is difficult as manufacturing environments tend to be noisy.
The travel and transportation industry has been working on developing wearable technology of its own. Wearables that are thought to be beneficial include helping staff to give passengers information while on the move, looking for and identifying tickets and processing bookings, and getting access to flight information such as boarding statuses. There have been attempts to use Google Glass to inspect airlines on the ground. In this example photos and videos are sent to a headquarters where they can be reviewed by safety professionals. In addition, Garmin has been working on a watch designed for aviators, attempting to provide a solution for the loading of flight plan information.
It is highly likely that wearables can add value to our lives. Yet currently the technology is too expensive to be a realistic prospect for the majority of consumers. Early adopters that love new technology are paying a lot right now, though eventually it is anticipated that prices will come down. Once the wearables become more affordable then they will open up to a broader market of consumers. Major brands are investing in these technologies and it is likely that we will all be wearing devices before too long.
Make Your eCommerce Site More Interactive with 10 Simple Tips
Make Your eCommerce Site More Interactive with 10 Simple Tips
The more interactive your website, the more users will keep returning to your site because it makes their experience with your company much more enjoyable. Most ideas and tips are good for any website, others may be better fit for eCommerce sites, and sometimes you have to slightly revise tactics to make them work for you. In other words, if you are an eCommerce website then that doesn’t mean that interactive websites won’t work for you.
It’s all about being creative and knowing where to start.
Interactive Website Tips
Below are 10 different ways to make your site more interactive and then what you can do to make it work for an eCommerce website:
One way to reach out to your audience and make their experience more interactive is by including a poll on your website. There are several free poll applications available, so this is an improvement that won’t cost you anything but will allow you to gain instant feedback from your user base.
A How To for eCommerce: There are so many ways you can use polls for an eCommerce site. One popular way is to use them as a short customer satisfaction survey. People like being asked for their feedback, and this is a good way to check-in to see how you are doing as an online merchant.
Polls can be used for gaining quick insight and information, as we just discussed, however if you want to get more information from your website users and clients, surveys can be one way to take that on. The nature of getting this much feedback in one session is interactive in-it-of itself. You don’t have to make a survey extremely long, and they can vary quite a bit in size and form.
A How To for eCommerce: eCommerce sites frequently use surveys to collect information. Think about using a survey via email to have users report back on their purchasing experience, or their overall experience on your website.
Personalization is a fairly new concept in website development. There is an article by OHO Explained in 60 Seconds: Real-Time Website Personalization where they do a great job of capturing the most important features of why personalizing your website experience to each individual user can be so beneficial, and some tools with helping you add this feature to your site.
A How To for eCommerce: Not all shoppers are alike in what they are after. By personalizing features (again, read the article I mentioned above for the full scoop) there are so many possibilities for how you can target specific clients. For example, you can personalize shopping experience by explicit data, such as age, gender, interests, or other information about a specific user that they have entered into their online profile.
Animated Gifs are often enjoyable for users, light-hearted, and interactive. Here’s a list of the top 10 sites where you can get animated Gifs for your website.
A How To for eCommerce: So how can you use a Gif? To be totally honest, using Gifs on your eCommerce site is really going to depend on what type of site you have. You can use them in a lighthearted humorous way, or simply as an animated image to help you tell more about your products or services. My tip here is to make sure that it is relevant and doesn’t look totally out of the blue. They can be used in really creative awesome ways, so long as you do not take them overboard.
One thing is for sure, you should have a blog, and you should be using it to your advantage. There is a lot of information available for how to make your blog the best it can be, so post frequently, and post content that your users will enjoy and relate to. This will help urge people to comment; thus adding an interactive element.
A How To for eCommerce: For eCommerce sites, a blog can definitely be a key component to making your site’s experience more interactive. Here are three ideas you can use to make your blog posts more interactive for users:
•Add social media buttons for Twitter or Facebook so that users can share your post immediately.
•Make sure you add a “see also” section for other content you have produced that may be valuable to them based on their interests.
•Add video and photo media to make your content more interesting. This also makes users want to interact with the content and share more frequently.
Live Chat & Customer Service
Users like when they can get help and answers instantly. Depending on the size of your company, and what you are capable of handling in terms of website customer service, this may actually end up varying greatly. If it is at all possible, add a live chat/customer service feature to your website (at least during normal business hours).
A How To for eCommerce: On an eCommerce site, having this feature is definitely a bonus. If people are struggling with the check out process or have a question about a product, this may be the defining aspect that makes the sale! If possible, make this component for interaction available, and add a call-to-action button for easy utilization.
Newsletters are a great way to increase interaction with your site. By sending out a monthly message with new features, you are going to increase visits and overall interest with your company.
A How To for eCommerce: Write a monthly newsletter that is subscribed to via-email, for you to update clients about new products or services, sales, and any new information that you think can be valuable to them.
Podcasts are definitely an interactive idea that not enough people are taking advantage of. They are fairly easy to set-up on your website, and people do generally enjoy getting information that way. This site has a ton of great information about podcasts including how to set up and create your own.
A How To for eCommerce: This is of course going to depend on the type of eCommerce site you are, but consider offering additional information on your products or services or discussing certain aspects related to what you offer as a business. For example, let’s say that you are a high-fashion clothing retailer. You could offer a podcast on how to recreate certain looks from a recent fashion exhibit using the products available on your site, or a discussion of the event itself.
Offering an e-book for download on your site is definitely one way to win people over. It instantly makes people feel like they are getting something out of visiting your site and like they are benefiting from interacting with your site.
A How To for eCommerce: One way to compile an e-book is to look over the content you have already created for your eCommerce site and blog. What have people benefited from the most? How can you build on some of the gaps in your material? If people take interest in your products or services, it is almost guaranteed that they would benefit from additional, downloadable content.
User Generated Content
This is definitely not the last way that you can make your site more interactive, but it is the way we will wrap up this particular post. Allowing users to generate content on your site, such as discussion forums, can be a great way to increase interaction.
A How To for eCommerce: There are several examples of ways to allow user generated content on an eCommerce site. Disscussion forums were already mentioned, so let’s take another example: Hosting webinar forums is a great way to provide information to your users, and also allow them to produce content and share ideas with your staff and other members of the community.
There are so many ways to make your site more interactive. Take it as an opportunity to benefit the experience of your community and increase visits to your site. This post covered 10 ways that you can make your site more interactive, and included specific examples for eCommerce. It is in no way an exhaustive list, but should be enough to get you started.
3 Trends In Mobile Payments You Need to Know About
3 Trends In Mobile Payments You Need to Know About
The mobile payments space has been touted as the next big thing for some time now. For almost as long as the mobile device revolution, industry watchers have predicted that the ubiquitous nature of mobile devices signaled the end of the traditional wallet — that, soon, cash and credit cards would give way to a new technology embedded into our mobile phones.
So far, it hasn’t happened.
Most people continue to pay for things using traditional credit cards and cash. But don’t get me wrong, the mobile payment revolution is coming — it’s only a question of when. Here are three recent trends that are set to help accelerate the pace of innovation in this space:
1. Make mobile payments a feature of a larger platform.
How it works: Currently, some of the biggest players in the tech industry are working on their own homegrown payment solutions. All of these solutions could be lumped together under the label [Tech Giant] Pay.
While these solutions have a lot in common, they aren’t one-to-one copies of each other. Broadly, they rely on near field communication (NFC), tokenization, fingerprint readers and a mix of other technologies to provide a seamless option for users.
Who’s doing it: Apple Pay, Android Pay and Samsung Pay (notice a theme?).
Why they’re doing it:What ties all of these competing services together is the strategy behind them. They’re all designed to integrate with the platforms of their respective companies — Apple AAPL -1.05% Pay with iOS (and the Apple Watch), Android Pay for Android, and Samsung Pay for its Galaxy line of mobile devices.
Beyond that, it appears that the purpose of these services isn’t necessarily to become a leader in the payment space, but rather to support the continued growth of the larger platform and vision.
2. Use mobile to offer a better deal and experience.
How it works:Instead of focusing on the last mile of the problem — making the payment itself — companies are focusing on loyalty and trying to change the way retailers offer their products to customers. These companies leverage the wealth of data that retailers have about purchase history to craft a unique offer for each customer.
In addition, this strategy allows for a seamless experience between online and offline, easily allowing customers to make purchases with their phones and redeem those purchases offline.
Who’s doing it: One company that is taking this approach is Yoyo Wallet.
“We look at mobile payments and we take it as a given that this is the way the industry is moving. We are going to pay for things with our phones,” said Alain Falys, co-founder & CEO of Yoyo Wallet. “What is more interesting for us, is the question of the relationship between the consumer and the retailer. A lot of the big players today have a narrow focus on payment, but they aren’t bringing added value beyond that. We are leveraging the untapped data from transactions to gain insights and create personalised marketing.”
Why they’re doing it:The idea is to change the relationship between retailer and consumer by offering a more personalized experience. For instance, instead of walking into a coffee shop to buy a cup of coffee, users will receive an offer for a better deal, such as 12 cups of coffee for the price of 10, which they can purchase in advance and redeem whenever they like.
This is essentially the same idea as an old fashioned loyalty card, but in reverse. This is a completely new way to buy things that is being enabled by the same mobile payment innovations that we see from other players.
3. Use mobile to make transactions easier.
How it works: There are a host of payment apps that allow users to easily move money to other individuals without the hassle of cash. This is perfect for when you’re out with a group of friends and struggling to split the bill. These apps streamline that by enabling one person to pay with a credit card and everyone else to pitch in via an app.
Who’s doing it:Popular services in this space include apps like Venmo, Square Cash and Popmoney.
Why they’re doing it:What’s clever about this approach is that it’s allowing these services to build a large user base by solving a common (and painful) problem. Think of this as a ground-up approach — starting with a problem between end users and then working up from there. If these apps are able to build a large enough community of users, it could be easy for them to transition into the same retail spaces that the tech giants are tackling head-on.
Injected electronics: The next wave of wearable tech?
Injected electronics: The next wave of wearable tech?
Will we disappear inside ourselves?
Forget Google Glass and that Fitbit you used to wear; the ultimate in wearable computing isn't worn on your body, but embedded within it. With chips physically inserted into your body either attached to nerves or placed into muscles or skin, a new form of synergy between human and computer can occur.
How do injected electronics work?
For now, implants are explicitly for the delivery of medical services. "Once the ability to control and communicate with an implanted or injected device is achieved, a number of services can be delivered such as real-time tracking of tumour growth or localised and controlled delivery of drugs," says Vaishali Kamat, head of digital health at Cambridge Consultants, who thinks the future is one of miniaturised, injected implants providing targeted nerve stimulation. This is called neuro-modulation.
Equip the body with any smart physiological monitoring device and the emergency services could be called automatically if someone is about to have a heart attack, for example. "Neuro-stimulation therapy could be delivered in response to an imminent epileptic seizure, or increased Parkinson's tremors," adds Kamat. By going straight to the nerve, it's possible that identifying neural pathways could mean treatment for conditions like depression and obesity.
What medical uses could injectable electronics enable?
The medical uses are potentially huge. "The technology could be used to help recover tissues following a brain injury or help manage diabetes by providing an intelligent solution for controlling insulin levels," says Collette Johnson, Medical Business Development Manager at Plextek Consulting. "Injectable electronics could also provide similar applications in chemical regulation of the brain for people with imbalances, as well as for individuals with growth hormone-related diseases. They could also be used to help control prosthetics by reacting to muscle motion."
In June the Lieber Research Group at Harvard University unveiled an injectable mesh that was able to detect electrical signals within mice brains, which could help scientists unravel how the brain's cells communicate. The mesh was injected through a needle just 0.1mm in diameter.
Could injected electronics be the next wave of wearable tech?
"Yes, technology is fast advancing to a stage where this is possible," says Kamat. "These types of treatments could be made feasible by microelectronics, which can be injected or delivered at desired locations in the body via minimally invasive procedures." For anyone squeamish about having things physically inserted under the skin, Kamat points out that ID tags have been implanted in pets for tracking purposes for years.
What about Bluetooth for the body and control by apps?
"Yes, it is possible to implant wireless transmitters in the body and get a signal to and from them via an external device," says Kamat. "Traditionally this has been achieved via a dedicated external medical device – as has been the case in traditional implants, like pacemakers – but more recently, there has been interest in using a smartphone for this purpose."
Trouble is, that requires implanting a device in the body equipped with some kind of wireless protocol, the most obvious being Bluetooth. "Getting a Bluetooth signal out of the body is not a simple task, given that the body absorbs most of the 2.4GHz signal," says Kamat. "However, we are doing work in this space and have developed some proprietary technology that makes this feasible."
Is this biohacking?
Mention injected electronics and embedded wearables and talk of biohacking and cyborgs naturally follows, but this isn't about creating superior beings. "Biohacking varies greatly from the practice of inserting implants to gene sequencing, and working with plants and bacteria to blood and electronic sensors," says Dr Kevin Curran, IEEE Technical Expert, who thinks that practitioners of biohacking mostly aspire to help disabled people. "However, biohackers do share a belief in the power of technology to enhance our beings," he says.
Researchers at the University of California in San Diego recently developed a bio-tattoo that monitors sweat. "This can be classified as bio-hacking as these sensors, which are applied to the skin, can track an athlete's chemical balance to gauge his physical activity," says Curran.
Is this a natural progression from self-quantification?
"Implants could be used to monitor activities and extend the current approach of wearables in health and wellbeing," says Johnson. "Implants can offer feedback for consumers, providing insight into hormone levels, adrenaline release, lactose build-up, hydration and nutrition."
In recent years wearable technology and apps have become a key way of getting people to take more interest in being active. "Health apps are one of the best sellers in the app store and the self-quantification movement is growing," says Curran, who thinks that demand for measuring our bodies will only grow. "We are seeing more wrist-wrapped devices with increased processing and power in addition to many more sensors for reading heart rate, bio data, steps taken, estimated calories burned, quality of sleep, and more."
He gives the example of the Samsung Galaxy S5, which can read blood flow through its camera. The Apple Watch can read heart-rate, too. "However, these are limited and subject to lossy readings," he says. An injected device needs to be highly accurate and reliable if it's to serve any medical purpose.
Could we use implants as ID or to make payments?
Carrying smart cards to use public transport and using phones for Apple Pay might seem like thoroughly modern tech, but a lot of ID-based transactions could very easily be done via implants. "Several services could be enabled if you think of the implanted electronics as a replacement for some of the gadgets or things we carry with us today, for example for identification and payment," says Kamat. "A tiny chip placed subcutaneously in your wrist could serve as your credit card or driver's licence, for example."
However, it could get a lot more subtle. "Implanted electronics can allow better, more accurate sensing of various physiological parameters, but it can also enable us to effect reactions or movement in response to things that the body is not capable of sensing, such as certain frequencies of sound or light," says Kamat.
It's not all about us. The ability to inject electronics applies to all living organisms, not just people. "There is potential for non-medical applications, particularly involving environmental monitoring of plant matter in rainforests," says Johnson. "The information gained from the technology would help the industry better understand particular environmental impacts and adapt approaches in other ecosystems."
But, mostly, it is about us. "Ultimately we want our devices to disappear into our surroundings and just 'know' what to do in order to make our lives more bearable," says Curran. "Where better to disappear than inside ourselves?"
10 Trends Shaping the Future of Retail
10 trends shaping the future of retail
The biggest challenges for retailers in 2015: New technologies, changing shopping habits, and the threat of disruptive competitors.
Over the last few years alone, the retail industry has amassed a graveyard of sorts of companies that failed to stay ahead of rapid changes in technology and consumer needs. Wet Seal, RadioShack, Zulily, and C. Wonder are just some of the struggling retailers that either filed for bankruptcy or were acquired this year, many of them citing the shifting retail landscape as a cause of their troubles.
New technologies, changing shopping habits, and the threat of disruptive competitors such as Amazon are the focus for many legacy retailers as they struggle to keep growing their businesses. Here are 10 trends retailers should keep a close eye on as they navigate this time of change.
1. The growing use of mobile among consumers
Mobile phones are quickly becoming engrained in consumers' everyday life: 64% of American adults today own a smartphone, according to Pew Research, up from 35% in 2011. And 52% of smartphone owners in the U.S. report checking their phones a few times an hour or more, according to a Gallup poll.
Retailers are beginning to see consumers using these devices in every step of their shopping journey, from finding inspiration from their favorite fashion blogger to a mobile checkout in-store. In 2013, retailer ModCloth found that 60% of its Thanksgiving sales came from mobile, while e-commerce giant Amazon has more mobile-only users than Facebook.
More to the point for brick-and-mortar, 75% of store shoppers are using their mobile device in stores, according to InReality. These shoppers are checking for deals from the retailer (or its competitor), consulting with friends via text when trying on wares, and updating their social media accounts while waiting in line. Retailers have and will continue to make mobile shopping—both in-store and out—a priority by investing in mobile apps and beacons for in-store use, in-app shopping capabilities, mobile payments in stores, and mobile advertisements.
2. New payment methods are becoming more mainstream
With the EMV adoption deadline quickly approaching and the many security breaches of past years—including Target, Home Depot, and Neiman Marcus—exposing the weaknesses of traditional magnetic cards, retailers have been slowly renovating their POS systems to accept a varied number of payment options: chip-and-pin cards, NRF contactless payments, and the veteran magnetic stripe card.
Technology companies continue to develop and roll out new mobile payment apps, many of which are considered safer than magnetic stripe cards due to their tendency to generate and use unique pins for each transaction instead of card numbers. But questions remain as to how engrained they will become into the everyday shopping journey—and which new payment method, if any, will win the acceptance of the public.
3. Retailers are investing in their workforces to attract and retain top talent
As the economy improves and workers have more choices for employment, the pressure is on retailers to facilitate a working environment that is both competitive in wages and scheduling. The New York Times' recent expose into Amazon’s harsh work environment drew significant consumer backlash, bringing retail workplace issues further into the national conscience.
Facing the prospect of consumer ill-will and struggling to compete for workers, many major retailers have been making moves to improve working conditions and raise wages for their employees. Just this year, we have seen multiple retailers, including Wal-Mart, Abercrombie, and Gap, increase their minimum wages or do away with controversial on-call scheduling for store employees, while taking a hit in profits in order to do so. The prevailing wisdom among many retailers is that investments in their employees will come full circle: As workers become happier and more invested in their work, customer service will improve, thus driving greater sales in stores and padding the bottom line.
4. Retailers fight discounting with a focus on merchandise
Retailers have always been keenly attuned to their customers' needs. As the economy improves, consumers are holding onto their desires for discounts and sales, forcing many retailers to compete on factors other than price, including merchandising and product quality.
American Eagle has been seeing some success with this approach, with sales up in the most recent quarter thanks in part to a greater focus on the quality of its jeans, despite a move away from heavy discounting. Abercrombie, another teen retailer fighting its way back from several dismal quarters, is focusing on the value of its signature brand, doing away with logos, and shifting to a more "timeless" look to appeal to older audiences who might be willing to spend more. Moving forward, expect retailers to place a greater focus on the quality of their products and perhaps, like American Eagle did recently, even reduce inventory to do away with clearance markdowns.
5. Omnichannel is not an option for retailers anymore — 'it is just business'
Omnichannel is the retail buzzword du jour — and for good reason. As retailers continue to invest in mobile and e-commerce ventures, the ability for consumers to seamlessly shop from one channel to the next while retailers account for inventory is a challenge that all retailers are grappling with — and one that few have fully mastered yet.
An online presence is the now bare minimum for many retailers, and omnichannel capabilities are becoming increasingly necessary. Deloitte's "Navigating the Digital Divide" report states that 64% of transactions in stores are influence by digital, with many parts of the shopping journey taking place even before the customer steps into the brick-and-mortar location.
"In a world where nearly everyone is always online, there is no offline," Deloitte’s report reads. "So it is not about the digital business, it is just business. It’s not about eCommerce, it is simply commerce."
6. Retailers and tech companies are disrupting the traditional delivery model
Driven by the expectations set by Amazon’s delivery prowess, customers increasingly expect multiple fulfillment options and cheaper and faster shipping from their retail providers. 81% of shoppers in a Harris Poll said that free shipping would make them more likely to buy online, while the percentage of U.S. shoppers buying online and picking up in store has dramatically risen from 4% in 2013 to 64% in 2014. Retailers and delivery companies are responding with new solutions to meet customer demand, including ship-from-store, curbside pickup, expanded pickup in-store, Sunday delivery, delivery lockers, and ride-sharing-like delivery apps.
Retailers failing to adapt to these new expectations are feeling the burn from consumers. This month, flash-sale site Zulily — known for slow fulfillment times due to its tendency not to stock inventory in warehouses before it is ordered — was acquired by QVC after experiencing slowing sales and plummeting shares. Though not completely to blame, slow delivery appears to have contributed to the retailer's woes, as customers found themselves waiting, sometimes for weeks, for their orders.
There is no clear winner among the many new delivery methods yet, but the growth of new delivery services and retailers' focus on e-commerce are likely to bring new options to consumers soon.
7. Retailers adjusting store formats and merchandise to target urban customers
For the first time since 1920, the population growth of American cities has outpaced the growth of areas outside of them, according to Nielson. About 80% of Americans lived in urban areas in 2010, according to that year’s census, and 40% of millennials say they would like to live in an urban area in the future. While retailers in the past focused on rolling out large stores in suburban markets, today retailers are needing to rethink their store strategies to reach urban customers.
As these urban centers grow, retailers will need to adjust their store formats to fit into the tight real estate and property boundaries of most cities. Target and Wal-Mart have both rolled out smaller format stores, personalizing merchandise to appeal to the local neighborhood shopper. And as younger customers in cities use a grab-and-go approach to shopping — buying just the essentials they may need for that day rather than stocking up at big box stores like their suburban counterparts — retailers are selecting their grocery categories to fit this on-the-go lifestyle and make their smaller format stores a food destination for urban dwellers.
8. Brick-and-mortar is becoming more of an experience
Looking to attract the millennial generation — whose predicted annual spending will reach $1.4 trillion in 2020, according to Accenture — retailers are taking advantage of their flexible brand loyalty and penchant to spend more on experiences rather than things, enticing them with increasingly unique formats and interactive opportunities when shopping in their stores.
Driven by these millennial preferences and the need for a distinct advantage over online retailers such as Amazon, retailers are turning their stores into destinations for discovery. Apple’s open-concept showrooms are the one of the best examples of this type of retailing, but experiential formats are now becoming more mainstream as traditional retailers rethink the role of physical stores. Retailers like Macy’s and Target are testing alternative merchandise displays and building navigation mobile apps for shoppers to use in-store to find inventory and alert them of sales.
The trend is even coming full circle as pure online retailers eye the benefits of physical stores. Bonobos, Warby Parker, and Birchbox have all opened and continue to expand their brick-and-mortar showrooms and stores in the United States.
9. Commerce is coming to social media
Twitter, Facebook, Instagram, and Pinterest either have launched or are in the process of launching “buy” buttons as an option for marketers, with the buttons seen as a way to monetize social networks and discovery platforms. As more consumers gravitate to using these social networks, placing a high value on the opinions of their friends and online influencers opinions and interacting with brands before going to stores, retailers are launching their own blogs to cultivate more of a brand following and customer loyalty.
10. Retailers investing more and more in e-commerce
The biggest focus for many legacy and big-box retailers this year is to continue to invest heavily in their online operations, even if it has come at a cost for many in recent quarters.
But boosting their own e-commerce capabilities isn’t enough for some retailers. Online marketplaces — where retailers can sell their wares through third party sites like Amazon and Alibaba — continue to grow, as many retailers use them to reach a wider audience. According to NRF's "State of Retailing Online 2015" survey, 32% of retailers plan to spend more on online marketplaces than last year.
Although the idea of selling through a competitor sounds self-annihilating, the reach it offers is hard for many retailers to overlook. According to Forrester, more shoppers started their shopping journeys by researching purchases on Amazon in the third quarter of 2014 than researching on search engines.
How Mobile POS Can Build Customer Engagement in Sporting Goods
How Mobile POS Can Build Customer Engagement in Sporting Goods
Today, retailers are focused on utilizing innovative and compelling new ways to engage with consumers across all channels —in-store, online, social and particularly mobile. Mobile POS systems are changing the retail industry, especially for sports and outdoor retailers. The sporting goods industry is highly competitive, so it is important to establish an efficient digital engagement strategy in order to stay ahead of the market and meet the ever-changing demands of consumers.
Investing in secure, reliable sporting goods point-of-sale software that provides exceptional mobile POS functionalities is a growing part of the in-store journey because of how it can help retailers enhance shopping. Mobile POS systems offer a number of features that allow sporting goods retailers to comprehensively transform and streamline the consumer experience. With mobile POS, you can improve customer service, manage special orders and layaways, rent equipment, track serial numbers, capture detailed customer information, sell from anywhere, track employees and promote sound customer engagment.
Mobile POS can also enable store associates to get out from behind the cash register and engage with shoppers while they are in the aisle to help them with find what they need and to check-out without having to wait in line at the cash register. Shoppers are often more likely to purchase when an item is put right in front of them and easily accessible to buy. Additionally, mobile POS can be utilized during special promotional events such as anniversary sales or warehouse clearances without the need for retailers to set up full-sized cash registers. The beauty of mobile POS is that it helps to further increase the speed, convenience and ease of your customers shopping trip.
Mobile applications have reshaped the retail landscape have quickly become the popular means to provide true value and produce intimate, two-way customer engagement. By utilizing exceptional mobile technology, you can sufficiently run your sporting goods store and serve your customers quickly.
Diagramming a Data Breach
Think You’re Not a Target?
Crooks want transaction card data that can be converted to cash. They’ll go after anyone who has it. Here’s what you need to know.
80% of data breaches occur in small and medium sized businesses
71% of breach victims do not detect the breach themselves
Who gets hit
43% of companies reported a data breach in 2014
60% of victims experienced more than one breach
WHAT is the Result?
$23,675 average breach damage to small/Level 4 merchants
$3.8 billion in 2014 credit card losses (U.S.) due to counterfeit and lost/stolen cards
When? The Timeline:
87 days (median) from initial intrusion to detection
1 day to containment if breach is self-detected
14 days to containment if breach is not self-detected
Where and Why
33% of breaches at point-of-sale
31% of breaches due to weak passwords
Don’t be one of the nearly 30% of companies that have no data breach response plan. Prepare today!
Five Steps to Prevent & Prepare
1. Use complex passwords and two-factor authentications for all access in the payment
environment, including POS accounts and remote access.
2. Properly store authentication/security tokens and change passwords every 90 days.
3. Install and keep current anti-virus, anti-spyware and firewalls to regularly run scans for
4. Implement secure technologies such as point to point encryption, tokenization, and EMV to
help remove valuable cardholder data from your environment.
5. Keep your POS and payment environment behind its own firewall, completely segregated
11% PCI Validation Matters!
Only 11% of all merchants are fully PCI validated, but it’s one of the most important steps you can take.
Five Things Retailers Should Know About Proximity Solutions
Five Things Retailers Should Know About Proximity Solutions
About 15% of today’s retailers use what are called “proximity solutions”—technologies such as geo-fencing and iBeacons, which sense when customers are within a certain location or area and enable interactions between the retailer and the customer via the customer’s smartphone. Judging from related examples of location technology such as global positioning system (GPS)-enabled smartphones, this percentage is likely to reach 60% within five years.
Innovative retailers will work to connect with modern customers—customers who expect a high level of engagement and tailored information from their shopping experience. With advances in technology including near field communication (NFC), which permits devices to trade information wirelessly (think of tapping your credit card to a reader), and Bluetooth low energy (BLE), which enables the same wireless communication range as a standard Bluetooth network but requires much less power. Retailers finally have the capability to meet customer demand—and impress them with more accurate targeting.
Here are five things retailers need to know about proximity-based solutions:
1. Geo-fencing is a virtual fence of information created around a real-world geographical area. This is the foundation of proximity-based services. Once users enter the designated area, promotions and messages can be sent to their compatible mobile devices to evoke interest and create a possible buying opportunity. Geo-fencing becomes geo-targeting when hyper-local deals, not just general information, are pushed to mobile devices (offering deals at a nearby flower shop when a customer makes a purchase at a mall jewelry store, for example). The key to success for these initiatives is to make them value-additive rather than intrusive: the same customers who may feel apprehensive about push notifications may welcome geo-fencing when the store they want to visit has moved and they are automatically informed about its new location. According to a Mobile Marketer article, clothing retailer Ashley Stewart is using geo-fencing to direct its customers from their closed stores to the nearest open one. In fact, the company is even trying to poach customers from competitiors’ stores—a practice nicknamed “geo-conquesting.”
2. iBeacons, small wireless sensors that transmit data to compatible Bluetooth devices, operate under the BLE standard (they don’t need a wi-fi network) and require only a tiny battery for use. ABI research indicates that in the next few years, the number of BLE beacons will exceed 60 million. One of the best uses of iBeacons is micro-location—identifying the position of objects within confined spaces where GPS signals are not available like the ground floor of a multi-level store. Using simple triangulation of data from multiple beacons, a customer position can be mapped to an aisle or near a specific product. Data from BLE beacons can be used to approximate when customers enter or exit a store, or when they are lingering near a designated region. These sensors could be used to design contextually aware applications including targeted promotions, effective product information, and even better store layouts. Very simple to install, but UST is useful for creating platforms for each retailers’ use.
3. Micro-location is the term for identifying shopper location and providing navigation services to direct users to a specific location. Micro-location is not just for sending information to the customer, though; finding out where customers linger can help retailers zero in on hotspots and hone in-place promotions to increase sales. Identifying add-ons to existing shopping carts or promotions for low-volume areas are other possible applications of micro-location.
4. Real-World Case Studies
The South Korea branch of the grocery and convenience store retailer Tesco sought to become number one in its national market—without incurring the costs associated with increasing its number of stores. To accomplish their goal, they put proximity based services to work: they created virtual stores in places like railway stations, airports, and other transportation hubs, reaching out to customers who were in a hurry. They then launched a campaign to inform these busy potential customers about their ultra-convenient shopping. With minimal expense for its virtual stores and a well-thought-out backend distribution system, Tesco reached its goal.
At a different large, international retailer, UST Global worked with the head of innovation at their virtual lab to make checkout more seamless. Capitalizing on the contactless interface enabled by NFC, the company was able to replace the onerous scanning of bar codes with simple product sensing—speeding up the checkout process immensely.
While bigger retailers with larger locations have the space and resources to implement proximity-based solutions, will this technology be affordable and useful to smaller retailers, too? The answer appears to be yes: smaller chains such as gas stations have already inquired about micro-location platforms for their stores. Moreover, the infrastructure involved is minimal: installation of iBeacons is extremely simple and its network demands minor; additionally, the cost for these devices is highly likely to decrease, as it has most high technology.
5. Future Applications: Data Analytics
While the present applications of these solutions are geared toward immediate sales, the future is in data analytics. The qualitative data to be collected from millions of customer/store interactions and experiences on the ground could motivate major innovations in retailer design, promotions, marketing, and inventory.
The contact enabled by geo-fencing and BLE devices is relevant and comfortable for the millennial demographic, who are at home with social media, and the latest technology. Baby Boomers and Generation X may be more wary about retailers encroachign on their privacy. Retailers may have to be sensitive to these cultural distinctions, and tailor their practices accordingly.
Generation aside, though, any “smart” customer today wants a personalized retail experience, and the smart retailers are the ones who deliver it.
Three Common Misconceptions about Mobile Security
Three Common Misconceptions about Mobile Security
Most people who have a smartphone view it as a lifeline. Studies show that a person has more anxiety about losing their mobile device than their purse or wallet. This anxiety even has a name – nomophobia, or “no mobile phone phobia.”
Nomophobia is the fear of being out of mobile phone contact, and in a sense it’s entirely reasonable. Your little device is not just a lifeline to the rest of the world – it’s also a repository of sensitive information that’s valuable to us – our photos, our carefully curated app and music collections, our contacts, details on our birthdays and anniversaries, our daily schedule and more.
It contains the record of our lives—who we’ve communicated with, what we searched for, what we’re interested in, even where we were and now are. For me, my phone even knows my health profile and sleep patterns. It retains every little personal action, and it’s there for retrieval at any moment.
And of course, that little gadget gives us access to almost all of our financial information. The Federal Reserve says half of all Americans with a smartphone are accessing bank accounts using the devices, and one in five has carried out a mobile payment in the last year.
So why is nomophobia so real? Access to most of our financial records and history is just a click away. With mobile security at the forefront of the issue, nomophobia now has dollar signs all over it, and that can be a scary thing.
Your mobile device knows so much about you, but is the relationship reciprocal? How much do you really know about your mobile device? Where has its data been? What has it been doing, and with whom?
It’s no question that losing your mobile device can be nerve-racking. But, if you would like to get to know more about your mobile device, here are some questions you might ask:
Do you know where every app on your device came from? Was it a trusted app store?
Do you know who the developer was?
Do others, such as your kids, have access to your device, and can they download apps?
Do you know which networks your devices connect with automatically? Have you made sure they’re secure?
Are you using all the security features of your device effectively?
Is your password strong?
If your device offers biometric authentication, do you take advantage of it?
Do you know what data your apps share, and how they do it?
As you think about your relationship with your mobile device keep this in mind: Your personal data, voice and camera features, and location-based services—among other features–continuously enable innovation. The data your mobile devices collects leads to greater personalization, which benefits each of us personally. These assets are used to develop new and more creative services. For example, beacons can be used to enhance branch or event- based experiences through mobile engagement.
Fintech players, like Digital Insight, are excited about where this technology can take us, and want customers to engage with confidence and know that their information is safeguarded.
But, you may be surprised to learn that some of what we believe to be true related to mobile security may only be part of the story.
So let’s take a look at three misconceptions and some insights that start to paint a more complete reality:
iOS Apps are generally safer than Android Apps.
Both Apple and Android have the same level of vulnerability when it comes to enterprise apps. Hackers may use social engineering techniques to lure employees to a “pop up” app store. This store, at quick glance, would look exactly like a company’s real app store. Employees would be prompted to download an app but are unknowingly downloading a malicious app to their device, regardless of whether the device is jailbroken or not.
And Credit Union Times published an article in April, focused on social engineering based attacks “going corporate”, fraudsters focusing more on businesses and their employees, rather than consumers.
Malware is the biggest threat to mobile security.
The truth is malware isn’t the only threat around. I recently read about apps that hijack the voice and camera features of a device to record voice and video without you knowing. Creepy.
Without thinking, we give our apps access to all kinds of data, and once that’s out there it can land in the wrong hands. When we download apps, they sometimes ask us for various levels of permission? Too many of us just hit, “yes”.
So ask yourself, why would something like a flashlight app need access to any of my data, like my location? It only needs access to the light associated with my camera, right?
Don’t be fooled by the eye candy. For every app you download, check out the developer, check the reviews, pay close attention to the data that’s shared, and how the app safeguards that data.
Big Names Are Safer.
Brand recognition is usually a good indicator, but accessing big brand names may run counter to default protections. Did you know the Amazon App store is not recognized as a trusted source for non-Kindle/Fire Android devices? To download an app from the Amazon App store, a user must uncheck a protection mechanism that Google put in place. This disarms a key security layer. If you then happen to go to another unknown or untrusted source for an app, you would no longer be warned.
In short, this is just another case where the device doesn’t need to be jailbroken or rooted but becomes more susceptible to malicious apps.
So what’s the bottom line? The mobile genie is not going back in the bottle, and it shouldn’t. Google just announced that mobile search has officially surpassed desktop search in 10 countries, including the US. This is a great thing—it represents convenience, personalization, instant gratification and a whole lot more. But let’s not forget that there is no free lunch. The cost of these benefits are that we need to continually educate ourselves on the risks and mitigations.
5 Big Security Trends That Today’s Tech Users Need to Watch
5 Big Security Trends That Today’s Tech Users Need to Watch
Today's advancing technology is improving the ways in which all industries do business. But regardless of what industry you work in, one thing that has always remained a constant is the importance of security. Data breaches can significantly impact a company in a highly negative way, ruining consumer confidence, as well as causing your company to have to pay large fines as a result of the breach. Sometimes a security breach cannot be prevented, as there are very skilled hackers that work hard to get past even the toughest defenses. But sometimes it is simply the fault of a careless employee who doesn’t follow proper security protocols.
Other forms of security, such as video surveillance, have also come leaps and bounds, enabling you to monitor things in the office from a anywhere in the world on your mobile device. And access points ensure that only authorized employees can gain access to particular areas of the business in which sensitive information may be stored. Depending upon your industry and business, you might not need all of the security options described below, but they are definitely security options to consider as your business grows. And as the technology continues to advance seemingly each day, you find even more options for better security at your disposal in all aspects of your business.
Obviously cybersecurity is at the forefront of the new security technology trends, with a cloud based antivirus system being one of the most popular and recommended choices for improved security. With cloud-based applications being utilized for everything from sharing and editing files, team and project management, online presentations and general storage of files and documents, a reliable cloud based antivirus system is needed to ensure that all of the data stored on the Cloud is kept safe and secure from those who are not authorized to access it.
Remember, hackers are always striving to come up with new ways to attack or access business data, sometimes with a clear purpose, and sometimes just for fun. Thankfully, as hard as the hackers might be working, those who develop security technology are working just as hard, and cloud based antivirus systems are more than ready to provide protection for many companies, offering the utmost security for their data and networks.
2. Video Surveillance
Video surveillance in the past meant having a bunch of cameras placed around the office, with a central terminal located somewhere in the office that had to be monitored and maintained. New and advanced video surveillance systems let you easily provide surveillance for your business without a massive amount of equipment, and cloud-based apps let you monitor and control your surveillance from anywhere. Video can be stored on hard drives or cloud space, saving you time and expense on new videotapes or DVDs and recording equipment, and the quality and imaging has grown by leaps and bounds, providing, sharp, crystal clear HD video.
3. Identity Management
If you want to prevent unauthorized access to your office or specific areas within your office, you can either post a security guard, or use identity management tools and resources. Keycards and other forms of identity management allow only authorized employees and personnel to enter the office or areas of the office, and the technology can also be expanded to your database, ensuring that only those who have authorized access can see certain databases or other areas of your network. You can also prevent unauthorized users from using PCs or mobile devices that do not belong to them, ensuring privacy and security.
4. Integrated Systems
Some businesses have to rely upon several different security systems in order to provide full security on all aspects of their business. But integrated systems offer complete control with one intuitive, advanced application system, so that video, access control, and other areas of your security needs are all easy to manage through one complete system. This can save you a great deal of money wasted on separate systems as well as maintenance for each system.
5. Video Verification
When an alarm is tripped, you or the authorities often only receive an alert. With video verification, video of the area in which the alarm is sounding can also be sent so that you or the authorities know exactly who or what to look for. This not only helps to reduce false alarms, but also serves to improve security and give the authorities a more clear picture of who to look for in case of a break in, as well as providing you with an image of any offenses that are made by employees entering areas they shouldn't be in or engaging in acts that may harm the business.
7 'Selfie' Security Tools for Payments
7 'Selfie' Security Tools for Payments
As mobile wallets and other high-tech payment mechanisms proliferate, they bring with them more options for security. Companies are increasingly looking for ways to use devices' built-in cameras to urge consumers to take self-portraits for authentication.
MasterCard, First Tech FCU
MasterCard and First Tech Federal Credit Union are using selfies to improve e-commerce security. The companies anticipate a rise in e-commerce fraud after EMV-chip security comes to the point of sale, and their "Selfie Pay" project may provide similar defenses for the Web.
PayPal, Square Wallet
PayPal's app and the now-defunct Square Wallet asked users to take a self-portrait when signing up. This selfie would be presented to store clerks as a form of photo ID.
Alipay, the payments affiliate of Chinese e-commerce giant Alibaba, is developing a "Smile to Pay" authentication service for mobile payments. Alibaba CEO Jack Ma demonstrated the system at a conference in Germany this year, and the system is planned to roll out worldwide in 2017.
Sionic offers a selfie-based security system, but it acknowledges that one in four consumers are "really uncomfortable" with using self-portraits for authentication. "We're OK with those odds," said Ron Herman, CEO and founder of Sionic
USAA was the first major U.S. financial institution to deploy a full-scale rollout of voice and facial recognition. To avoid letting fraudsters trick the system with a photo of the user, USAA also checks the smartphone's device ID. Users must also blink to prove that they are not a still photograph.
The smartphone isn't the only banking device with a built-in camera. ATMs have cameras for security purposes, and some banks are looking at ways to use facial recognition to improve security at the ATM, according to Hoyos Labs, a vendor of facial recognition technology.
Digital Insight, EyeVerify
NCR's Digital Insight is working with EyeVerify to integrate the security vendor's EyePrint ID system into mobile banking apps. Though the technology examines the blood vessels in users' eyes, the process of scanning these images is — from the consumer's perspective — no different than taking a selfie.
Wearable payments: The next frontier?
Wearable payments: The next frontier?
What problem is wearable payments trying to solve?
That's a question I've asked myself multiple times the past 12 months as that particular industry has continued to evolve. And the answer can't be easily determined.
Devices such as smartwatches, contactless wristbands, and smart clothing are products of a technological revolution straight out of "The Jetsons" and "Minority Report." They're changing the way we communicate with each other, how we monitor our health, and how we buy goods and services.
But is it all too much? The payments industry is having enough trouble convincing consumers to eschew cash and plastic cards in favor of smartphones. Adoption in that area is uneven, particularly for in-store mobile payments.
Today, the industry is pushing payments through wearables and is doing so with the argument that it wants to give consumers choices. Some industry pundits are bullish on this idea. Others, not so much.
"[Of] the motivators of why any of this is happening at all, the primary one in my view, is convenience and offering new vehicles for users," Karl Martin, CEO of biometric wearable device provider Nymi, told Mobile Payments Today in a recent interview.
Toronto-based Nymi is one of a growing herd of companies — along with firms like Gemalto and smartwatch and fitness band providers — that are heavily pushing wearable payments.
In Nymi's case, it recently announced the completion of what it called the world's first biometrically authenticated, wearable credit card payment using one's heartbeat.
Nymi is working with TD Bank and MasterCard on the project. More than 100 TD users in Toronto, Ottawa, and Regina will be testing the Nymi Band's contactless payment functionality until the end of the summer as part of a closed pilot. Other participating Canadian banks are scheduled to launch similar pilots later this year, and Nymi expects several thousand payments to be made using the Nymi Band during this time.
Those involved with the project don't have any illusions that wearable payments will become mainstream any time soon.
"I can tell you from our partners like MasterCard and others, I don't think there's a perception that wearables are going to be the way everyone does their payments," Martin said. "It's more along the lines of giving an opportunity for a broader range of options."
And the options in the market are coming fast and furious as we march into 2016. That's one reason why Aditya Kaul, a research director for technology-centric consulting firm Tractica, is bullish on the future of wearable payments.
"Essentially, we see wearables as an extension of mobile payments, where the wearable will be a convenient option to pay, but might not be used on all transactions or replace the mobile wallet," Kaul told Mobile Payments Today. "In the case of fitness trackers, they can be extremely useful as they can solve the problem of carrying your wallet or mobile while going on a run or even to the gym. All the advantages of mobile, like wallets and loyalty cards, also apply to wearables, especially smartwatches."
Apple's reluctance to give details about how the Apple Watch is selling has led many industry observers to question whether the company should have jumped into the smartwatch market in the first place.
Of course, Apple's entry into the market was inevitable, thanks to success stories like Pebble. But it appears at the moment that Apple Watch is not a must-have tech accessory.
Kaul does not believe slow Apple Watch adoption spells doom for an industry that's still in its early days.
"Apple not revealing numbers doesn't necessarily mean that they are bad," he said. "Wearables have some maturing to do, and payments is one of the killer features that could drive sales forward.
"If you look at payment bands [for] live festivals or Disney's MagicBand, there has been tremendous growth over the last few years and will continue over the near term."
Indeed, Disney created a benchmark in wearables when it introduced a contactless wristband for its theme parks and hotels that guests can use as a room key, theme park ticket and payment account, among other features.
The MagicBand actually solves problems many consumers would rather not deal with at a theme park, particularly the prospect of losing a wallet or purse while riding Space Mountain.
Can other wearables make such claims?
"The wearable devices that do well are the ones that have a good use case," Ben Jackson, director of the prepaid service at Mercator Advisory Group, told Mobile Payments Today. Jackson has covered the wearables market in the past for Mercator.
Jackson pointed to the growing popularity of fitness wearables such as Fitbit and Jawbone, the latter of which now provides a device with contactless payment functionality thanks to a partnership with American Express. He believes these devices provide value to the growing number of health conscious consumers worldwide.
As for the Apple Watch? Jackson believes it is currently on the path of another infamous device.
"I think Apple Watch is going to be like Google Glass in some ways," he said. "It'll have its devotees and people who find good uses for it, but for most people, it's not going to be [worth buying]. The added functionality it brings is not going to be worth the cost."
Even as some wearables experience growing pains, Tractica expects big gains for those devices capable of contactless payments.
Tractica predicts that wearable payment transaction volume will grow from $3.1 billion in 2015 to $501.1 billion by 2020, representing a compound annual growth rate of 177 percent. This will represent some 20 percent of total mobile proximity transaction volume.
In a recent report, Kaul advised readers to keep tabs on certain wearable projects that show the potential for future mass adoption; Disney and Nymi made his list, along with Barclays' contactless bracelet and efforts from Alipay in China, among others.
Global cash demand growth is not just about inflation
Global cash demand growth is not just about inflation
While talk of the death of cash continues in some quarters, data tells quite another story — demand for paper money shows no signs of abating. Standard thinking says this is only a matter of inflation; there is bound to be more cash in circulation because of price rises and population growth.
However, global demand for cash is growing at such a healthy clip that it’s got to be more than just economic growth and inflation at work.
Cash demand is increasing more than three times faster than worldwide economic growth rates, according to latest figures from the ATM Industry Association (ATMIA).
“The results of this far-reaching research paper show powerful rates of growth for cash in circulation right across the world, with an average year-on-year increase over this period of 8.9 percent, compared to anaemic economic growth rates below three percent,” commented Mike Lee, CEO of ATMIA.
Cash demand is growing at a rate of 4.5 percent in Europe and by 11 percent in the BRICS nations – Brazil, Russia, India, China and South Africa.
“Since the World Bank believes international economic growth will reach three percent this year and average at around 3.3 percent up to 2017, we can be very pleased that our industry’s most important asset, the global supply of cash, is underpinned by exceptionally robust demand from the human populations of the world,” added Mr. Lee. “Cash growth is currently outstripping economic growth by a wide margin.”
Moreover, continued low inflation in Europe, the US and other developed markets ought to be subduing cash circulation, yet it seems that this too is not enough to hold back demand for paper money.
Of course, we are seeing cash fall as a proportion of payments. Britain recently saw non-cash methods overtake cash for the first time. But continued demand for cash and more people using cash machines to withdraw money fuelled another rise in the numbers of ATMs. Whatever the cause for this thirst for cash, it makes the ATM an even more important consumer channel than ever.
Cash growth rates were as follows:
•Brazil – 12%
•India – 14.4%
•China – 4.6%
•South Africa 10.2%
•UK – 6%
•US – 7.5%
Industry pundits mustn’t be too swift to predict the total takeover of electronic payments, while cash is still so popular with consumers.
10 Innovative Gadgets That Will Transform Your Life
10 Innovative Gadgets That Will Transform Your Life
A few years from now, people might reminisce about a time when they watched movies on screens and manually closed their bedroom curtains. Fortunately, we’re in the midst of a technological revolution. Nanoparticles might soon internally diagnose diseases, machines might build themselves and virtual reality headsets might replace televisions.
These innovative gadgets, however, aren’t only for wealthy corporations to enjoy. Many companies are creating innovative gadgets for everyday consumers as well. Here are 10 innovative gadgets built to make consumers’ lives easier in the next years.
1. Microsoft HoloLens
Microsoft HoloLens brings high-definition holograms to life in your world, where they integrate with your physical places, spaces, and things.
Until recently, holograms have largely belonged to the world of science fiction and Iron Man movies. Microsoft is hoping to change that with the Microsoft HoloLens, unveiled in January.
Users will be able to create and interact with personally built or digitally projected holograms while wearing the HoloLens goggles. If users are especially fond of a holographic object they’ve built, they can bring it from the digital world into the physical world with the HoloStudio’s 3D printing capability. And, among other features, wearers of the HoloLens will be able to visually transport themselves to a different location — be it via a friend’s view of his or her room or the Mars Rover’s view of extraterrestrial life.
2. Myo Gesture Control Armband
With Myo you can move seamlessly through your slides using natural gestures and motion to deliver your most memorable presentation yet.
Dubbed “The Next Generation of Gesture Control,” Myo is an armband full of motion and muscle sensors that is able to pickup on the “electrical activity in your muscles to wirelessly control” your electronics via Bluetooth. According to the company, the device will work with Windows and Mac OS, with iOS and Android support coming soon. We’re not futurists, but if we were to guess at how we will control our home in the future, it looks very similar to this.
3. Meta Augmented Reality
Meta provides holographic glasses that see through display and allow users to see, create and interact with digital objects shown in physical space. The company has shipped its first product, the Meta 1 Developer Kit after a $194k very successful Kickstarter campaign that ran in June 2013 (read here). Coupled with independent funding, they raised a total of $2 million by the end of the campaign.
Last month, January 2015, Meta announced a successful Series A funding round. During this round, the company raised $23 million from venture capitalists. Now, over 1500 developers and companies such as the world’s largest architecture firm Arup, Salesforce and Stanford University based company, SimX are building augmented reality applications with its SDK.
4. 3D Bioprinting Machines
We know that 3D printing technology can be used to do more than make odd plastic trinkets. Thanks to a group of bioengineers around the country, we now know that the technology can also be used to develop human tissue. Dubbed Bioprinting Machines, these devices can build patches of skin, blood vessels, and cartilage using living cells.
Though years away from clinical use, one company, Organovo Inc., has already released a commercial 3D bioprinter that cost “several hundred thousand dollars each,” according to the Wall Street Journal. It’s not the hardware that’s holding the technology back, however, Hod Lipson of Cornell’s Creative Machine Lab, says, “We have machines that can make almost anything, but we don’t have the design tools/ In bioprinting, there is no computer-aided design software for body parts.”
5. Drinkable Water Billboard
In 2013, it seems advertising is needed about as much as clean water. So it’s refreshing to see one company work to combine the two. Located in Luma, Peru, and developed by The University of Engineering and Technology of Peru (UTEC) and ad agency Mayo DraftFCB, the billboard is able to produce around 26 gallons of water a day using five filtration devices and Lima’s extremely humid air. The billboard is designed to not only provide water to Peru’s largest city-one in which 1.2 million residents don’t have running water, but to also encourage kids to apply to the UTEC and study engineering.
We know: Having an airline lose your luggage is not the worst thing in the world, but it still sucks. GlobalTrac aggress. The company this year released its TrakDot luggage tracker, which allows you to use your phone or tablet or computer to see exactly where your bags are. All you do is slip the device into your luggage, and then fire up the app. Now if it could only figure out how to get your lost luggage back to you, that’d be great.
Understanding Wearable Technology
Understanding Wearable Technology
Tech News by Tech Guru on August 18, 2015
Wearable technology is known by an array of terms such as wearable tech, wearable gadgets or simply wearables. These are just but a few terms that are most prominent.
What is Wearable Technology?
It can simply be defined as accessories that fall under the category of technology gadgets or devices whose functionality is exploited by the consumer wearing them.
They can don different parts of the body. For example they can be worn on; the wrist, the neck, the arm, the ear or the ankle.
History of Wearable Technology
The history of wearable technology devices can be traced back to 17th century abacus ring
This 300 year-old predecessor to the modern computer allowed wearers to do complex mathematical arithmetic without having to write down even a single digit. All the wearer needed to do is move tiny beads along nine rows.
At around the same time, a wearable watch was being developed in Europe. The watch consisted of an hour glass inside a drum that was hung around the neck. This paved way for the development of a wrist watch which was developed by a German artillery officer. He developed the first watch that could be strapped around the wrist towards the end of 19th century.
By mid 20th century, an array of portable and wearable technological devices had emerged. This ranged from television sets, cameras to telephones.
Modern Wearable Technology
Modern wearable technology seeks to interweave technology into the everyday life and have a positive impact. The goal is to improve the quality of life regardless where on the globe one might be.
The pioneer modern worn electronic device was the calculator watch which was introduced for the first time back in 1975.
The calculator watch is essentially a digital watch which has a built in calculator. They were extremely popular in the 1980s. They were the must-have electronic gadget. They continue to be produced though in a fraction of the quantities produced in the 1980s.
What Do Wearable Technology Devices Do?
Wearable Technology usage primarily falls under two categories;
• personal use
• business use
The usage of wearable technology in both categories is on the rise. Whether for personal or business use, wearable tech gadgets are used to serve any one of the following functions;
• As a fashion statement
• As a fitness tracker
• To synchronize data and communication from other gadgets
• For specific health issue monitoring
• As a gauge for alertness and energy levels
• As navigation tools
• As media devices
• As communication gadgets
The functionality list of wearable technology devices is increasing each day with new inventions. This is primarily driven by necessities to overcome a certain challenge. For this reason, the list of functionalities cannot be exhausted.
Most wearable technology devices serve more than one function named above. For example, the Apple Watch is not only a watch; it is also a communication gadget, a fashion item as well as a tool to synchronize data and communication from other gadgets.
Classes of Wearable Technology Devices
The classification of wearable devices is complex an inconclusive. This is because of the multi-functionality properties of the gadgets. This is compounded by the never unending inventions each day.
As a result, most wearable technology devices are classified depending on the function they serve.
Sports and Fitness
By far, this is one of the most dominant gadgets in the wearable technology field. The dominant gadgets in this category are smartwatches and fitness trackers. There are numerous competing brands whether in the smartwatches section or the fitness trackers.
For smartwatches, the Apple Watch is by far the market leader. Not only is it sophisticated but also iconic and tailored for the 21st century technology enthusiast.
Other smartwatches of note include Peeble Steel, Sony SmartWatch, Samsung Gear, LG Watch, Asus ZenWatch, Qualcomm Toq and Motorolla Moto 360. Other brands continue to emerge in the market every day.
Fitness trackers have become poular especially in the western world. This has been as a result of maintaining physical fitness being a health necessity. Constant travelling and rigid work schedules have made it difficult for many to have time for gym.
Healthcare wearable technology devices use innovative data collecting and interpretation systems to help monitor health status of an individual using it. These devices are specially engineered for the healthcare industry.
Inside the high-tech retail store of the future
Inside the high-tech retail store of the future
Retail stores are having an identity crisis. With foot traffic falling and customers flocking to online outlets like Amazon, many brick-and-mortar stores are looking for new ways to keep the physical shopping experience relevant. "Physical stores find themselves at a crossroads," says Doug Stephens, retail industry futurist and author of The Retail Revival. "The value they used to provide, to assemble in one place a selection of products easily shopped and taken home, that value isn't what it used to be 30 or 40 years ago."
If storefronts want to compete with their more convenient (and usually cheaper) online alternatives, they will have to offer unique and personalized experiences worth getting off the couch for. "My expectation will be to go to the store to learn about things, to be a participant in things, to try different products, to co-create, to customize, to personalize the things I'm buying," Stephens says. Here, a few predictions for how the retailers of tomorrow will keep us shopping.
You'll be transported by virtual reality
The stores of the future will "be far more immersive, tactile, and much more visual," says Stephens. "Technologies like virtual reality, which a lot of companies right now are sort of experimenting with, can be used to create immersive shopping experiences."
For instance, outdoor apparel maker The North Face recently collaborated with VR company Jaunt to let shoppers at its flagship stores don VR headsets and take a virtual tour of Yosemite National Park, or virtually rock climb alongside star athletes. "Every brand wants to forge an emotional connection with its customers," Eric Oliver, director of digital marketing at The North Face, told Digiday. "Our brand mission is to inspire a life of exploration, so we felt like this was a great way to enhance our storytelling, use technology, and transport people to the outdoors." After they've descended the cliffs, perhaps customers will feel more inclined to purchase some climbing gear.
Virtual reality could also replicate the in-store shopping experience entirely, as marketing agency SapientNitro and VR platform Sixense demonstrated with their collaboration vRetail. The platform transports users into a digital showroom with virtual clothes and shoes, which users can try on using a digital avatar.
The mannequins will talk to you
The motionless human-like models that most stores use to show off merchandise are about to get a little bit creepier. A startup called Iconeme added electrical implants to mannequins that can communicate with a nearby shopper's smartphone. A customer with the Iconeme app can learn more about the clothing the mannequin is sporting and even make purchases seamlessly through the app. Iconeme unveiled the technology last year at several stores in London, including a brand called Hawes & Curtis. "We want to develop a greater engagement with our customers," the company's brand manager, Edward Smith, said in a press release. "We can have instant feedback and instant sales as a result of our displays, even if the store is closed. It's a complete game-changer for the retail industry."
5 Tech Trends That Will Hit Every Retail Store By 2020
5 Tech Trends That Will Hit Every Retail Store By 2020
Showrooming—the practice of shoppers using retail stores to discover products they’d like to buy, then completing their purchases online where they can find better deals—is often cited as a concern of physical retailers. With an enticing mix of low prices, breadth of selection, and convenience, online retailers attract shoppers in ways that brick-and-mortar stores struggle to compete with.
eMarketer reported that global e-commerce sales hit $1.3 trillion at the end of 2014, an increase of 22 percent over 2013. Meanwhile, growth at U.S. retail outlets is in the low single digits, according to figures from the U.S. Department of Commerce collected by Business Insider.
But the prospects aren’t all grim for physical stores. In fact, retail experts believe there’s a tremendous opportunity ahead as the worlds of online and offline commerce begin to converge.
“We will see more disruption in the next 10 years of retail than we did in the previous 1,000,” said Doug Stephens, founder of Retail Prophet
Here are five predictions for how brick-and-mortar commerce will look in 2020:
1. Retail stores will embrace showrooming
Rather than competing with showrooming, brick-and-mortar stores in 2020 will begin to embrace it.
“Stores will become like museums—we will go to see something, to learn and be entertained,” predicted Thomas Keenan, adjunct professor at the University of Calgary and author of a book called Technocreep, which explores the future of technology.
Further, beacons—sensors placed around stores that communicate information to smartphones—will track information such as which products customers linger around. The beacons can then push information on those products to customers’ mobile devices, allowing them to order from their devices and have merchandise shipped to their homes.
Beacons are already deployed at large retailers such as Lord & Taylor as a way to provide more interactive shopping experiences.
2. Analytics will be commonplace in physical stores
E-commerce retailers have had a leg up over their brick-and-mortar counterparts in terms of their ability to selectively target customers based on insights into consumers’ preferences and habits, as well as their ability to refine their tactics continually based on insights they glean via analytics.
By 2020, offline retailers will have the same tools available to them and will employ them widely. Whether it’s using analytics to map where people walk and what they pick up to better position products in the store or tracking shoppers at the device level to target promotions to them, data will be used to understand customers and increase sales.
Social Media Payment Systems
Social Media Payment Systems
This New Service Helps Banks Take Payments Via Social Media Platforms
'Fastacash' is a new social media payment system that allows banks to accept financial payments via different online platforms. As consumers increasingly opt for online banking, many financial institutions are looking for innovative ways of socializing their payment services. Fastcash helps banks serve a greater number of customers by allowing them to carry out transactions via social media.
The Singapore-based company helps banks and other financial institutions improve their services by enabling users to send and receive payments via social media. The system operates through the use of auto-generated sender codes that help users confirm the identity of the recipient. The goal is to socialize banking services by allowing customers to carry out financial transactions via their favorite social media platforms.
While Fastacash is currently testing out its services on a limited scale, the goal is to eventually incorporate online banking into popular social media platforms such as Twitter, Facebook Messenger and Whatsapp.
References: fastacash & springwise - Katherine Pendrill
4 Ways Wearable Technology is Slowly but Surely Changing Everyone’s World
4 Ways Wearable Technology is Slowly but Surely Changing Everyone’s World
They say the ‘high tech’ gadgets known as wearables are only popular in the technology geek community…
The April Modis Geek Pride did a survey of people aged 18 or over found that 61% of ‘self-described geeks’ said they would buy and wear a smart watch and 56% would do the same with smart glasses. Interestingly enough, 37% of ‘non-geeks’ were also interested in smart watches, and 35% were interested in smart glasses.
As technology is getting smarter, better and more attainable it isn’t just wearable technology aimed towards the self-described geek community, below are 4 ways wearable technology is finding its way into our everyday lives.
Health and Fitness
Health and Fitness is the biggest market in wearable technology. This is because many people want to track their physical activity information, in order to see if and how they’ve improved, the average measurements taken by the wearable tech are usually measurements such as calories burned, steps taken and distance travelled. There are more in depth measurements taken by more complex wearable tech such as smart socks that let you know when you’re too inactive or when your running form needs improvement.
Payment via smart wristwatchA new type of wearable tech or new feature to wearable tech such as smartwatches is the ability to make payments. By using NFC (Near Field Communication) chips in these new wearables like NFC rings, MagicBands and even the ordinary watch you are able to make everyday payments without having to take out your wallet to find change or use your credit/debit cards. This is a strong up and coming trend and if it becomes foolproof then there will soon be no need for credit or debits cards. Although the “contactless” feature is becoming very popular and is currently being added to our new debit/credit cards. However, it will be no match for payment via wearable tech.
There are many wearables being installed into the healthcare profession as they can help with accuracy of results and help the efficiency of data collection. A noticeable piece of wearable tech soon to be installed is ‘The Helius’ by Proteus Digital Health which is a consumable pill that is able to keep track of very important health information of the person who has taken it. The information that the pill records is then recorded in real time to the Helius companion app. The Helius will be able to tell a doctor if the person is taking their prescribed medicines at the correct time and will show the doctor just how the patient is responding to their therapies.
Everyday Gadget Use
In the technology driven world we live in, most people can’t go days, hours, or even minutes without being on their phone, laptop or tablet. With the biggest technology brands working on new wearable tech to replace them, it’s inevitable that there soon won’t be the need for these everyday use gadgets to be carried around anymore. With Google working hard on their new Google Glass model and Apple’s recent unveiling of the Apple Watch you’ll have the power of a phone or laptop via a pair of high tech glasses or a watch both of which you can use on your travels without having to hold them.
As you can see wearable technology is making the little things in life even easier to enjoy.
Technology is moving forward very quickly and you need to be up to date especially because with new wearables means your website will definitely need to be mobile friendly.
Voice Authentication Beats Fingerprint Biometrics for Data Protection
Voice Authentication Beats Fingerprint Biometrics for Data Protection
While the average consumer’s banking and payment account information may not be considered as highly-sensitive as the "non official cover" list from Mission Impossible, multi-layer authentication is still the best way to fend off fraudsters.
And biometric security technology like voiceprint identification isn’t reserved for the CIA.
Federal Financial Institutions Examination Council (FFIEC) guidance recommends and sometimes mandates using multi-layered, dynamic forms of customer authentication, because archaic, static methods are not sufficient when it comes to combating sophisticated white collar crime. The passwords, PINs and static security questions of yesteryear can now easily be compromised and are not sure forms of account authentication to protect customers.
As part of onboarding and authentication system, biometrics can be combined with advanced Knowledge-Based Authentication (KBA). Voice biometrics is a dependable method of identification that is perfect for multi-layered authentication systems. In fact, voice biometrics technology is even more reliable than fingerprinting with a 99.99 percent success rate.
After Japan started checking the fingerprints of foreign visitors in 2007, a Chinese woman named Lin Rong passed through a security checkpoint and evaded immigration by having a plastic surgeon swap her fingerprints from her left and right hands. And she’s just one of many who tried to alter their fingerprints through various techniques. In another case, the FBI mistakenly matched a partial fingerprint found on a bag of detonators linked to the March 2004 terrorist bombings in Madrid to Brandon Mayfield, a lawyer in Oregon.
Government intelligence agencies worldwide rely on voice biometrics security technology, and issuers can, too. While PINs and other authentication data can be breached, someone’s voice cannot be compromised or stolen. Even voice recordings cannot be used to gain unauthorized account access, as voice biometrics technology can be programmed to ask for words, numbers and phrases in random order, making “replays” and stolen voice prints useless.
Nymi Band uses your heartbeat to secure mobile payments
A Canadian company claims to have enabled the 'world's first biometrically authenticated wearable payment using your heartbeat.' The pilot is a small, consumer-oriented program, but the target audience is much larger.
Nymi Band uses your heartbeat to secure mobile payments
You may pay for groceries with your smartphone and a connected credit card, via Apple Pay or Google Wallet. You may have seen some techy-type at your local drug store pay for his toothpaste and toilet paper with an Apple Watch. What you've probably not yet witnessed is someone making a secure payment with a tap of the wrist and biometric, heartbeat authentication. But if Canadian company Nymi has its way, you will.
Nymi this week announced the successful trial of its Nymi Band wrist-worn heart-rate monitor as an NFC mobile payments device. It uses heart rate, or electrocardiogram (ECG or EKG), measurements to verify your identity. Nymi first discussed its plans to bring payment authentication to its Band last fall, and today, the system is in action, albeit limited action, in Canada.
Nymi partnered with TD Bank Group and MasterCard for the initial trial, which began a month ago when the first Nymi payment was made in Canada. More than 100 TD users in Toronto, Ottawa and Regina, many of whom are TD bank employees, are currently testing the Nymi Band's contactless payment functionality as part of the closed pilot program.
Additional Canadian banks, including RBC Royal Bank, are expected to launch similar Nymi pilots later this year. Nymi says it expects thousands of payments to be made using its Band before the end of the year. Karl Martin, Nymi CEO, wouldn't say when, or if, Nymi Bands or technology will be available in the United States or Europe. However, the company is working with partner companies in these countries.
How Nymi Band works
After Nymi pilot users set up their devices for the first time and create authentication profiles, they need only put on the Band, which has a sensor on its bottom side that sits on the wrist, and then tap a finger to another sensor on its upper panel to authenticate. (Nymi added payment-card information for individual users beforehand as part of the closed pilot.)
Unlike popular fitness trackers that also measure heart rates, Nymi uses an electrical signal instead of an optical one, so it requires two points of contact for that initial authentication, according to Martin. To make payments, Nymi users simply hold their devices close to compatible contactless payment terminals for a second or two.
The Nymi Band is not just for payments. It's designed to be used for a variety of authentication purposes, and it can also unlock PCs, Macs and smartphones along with Nymi desktop and mobile apps. (Check out the video below for more on Nymi and its future potential uses.)
The top passwords of 2014
The top passwords of 2014 will make you feel comparatively ingenious
Given that it's 2015, and we have been logging onto the world wide web for decades, you'd assume people would have a healthy grasp on what makes a good password by now. But no, that doesn’t appear to be the case — if the list of the 25 most popular passwords of 2014 is anything to go by, anyway.
SplashData's annual list compiles the millions of stolen passwords made public throughout the year, and assembles them in order of popularity. This year's list is a particular doozy. It proves, among other things, that there are a lot of Michaels out there, that we're all still hung up on superheroes and that, at the very least, people have the cognitive ability to count to six.
With that, we give you the top 25 passwords (and their position relative to last year’s list) that you should probably avoid, unless you fancy being #hacked:
1. 123456 (unchanged)
2. password (unchanged)
3. 12345 (up 17)
4. 12345678 (down one)
5. qwerty (down one)
6. 123456789 (unchanged)
7. 1234 (up nine)
8. baseball (new)
9. dragon (new)
10. football (new)
11. 1234567 (down four)
12. monkey (up five)
13. letmein (up one)
14. abc123 (down nine)
15. 111111 (down eight)
Wearable payments: from hype to reality
Wearable payments: from hype to reality
If you step into the British Museum, you’re able to stand just inches away from one of the oldest coins in the world – dating back to 650-600BC. Looking at the tiny coin, it’s hard to believe these objects have been at the heart of the way people spend and manage their wealth for 2,000 years.
Recently, this was brought home when 5,000 Anglo Saxon coins were discovered buried in a lead-lined box in a field in Aylesbury, Buckinghamshire, UK. The find emphasised the lengths people will go to store and protect their money.
The importance of protecting money from potential criminals – from the highwaymen of old to hackers today – has been paramount since money’s invention. However, what has completely transformed is the choice of methods available to spend and manage our money.
Up until 30 years ago, cash was largely the accepted way to pay. However, in 1987 – after 2,000 years of the predominance of physical money – the debit card arrived on UK shores. The dawn of the card payment ushered in an age of quick, convenient ways to pay, and the ability to purchase goods and access money became instant, safe and easy.
Since then, money has evolved at an unprecedented rate with innovative ways to pay proliferating at a far greater pace in the past three decades than the centuries preceding it.
We’ve seen the arrival of contactless that enables consumers to make secure, everyday payments with a ‘touch’. The response has been overwhelming: one million Visa journeys are made on the TFL network every two days, the use of contactless terminals has tripled over the past year and 866 million Visa contactless purchases were made in Europe in 2014.
The engine that has driven contactless cards – near-field communication (NFC) – is now driving a new era of commerce using mobile payment technology. Last year, Apple’s entry into the US market was a critical piece of the mobile payments jigsaw and, more recently at Mobile World Congress, Samsung entered the market with Samsung Pay, making mobile payments an unavoidable juggernaut in 2015. Even though mobile payments are relatively young, people have already started asking about the next logical step: wearable payments.
Pieces coming together
From a business perspective, the wearable market is attracting attention across multiple industries. For the consumer, it has gained prominence in the past year with retailers such as Amazon dedicating an entire section solely to the category.
It’s still early days though. At the Consumer Electronics Show 2015, Qualcomm president Derek Aberle admitted that the wearables market is still in a period of “self-discovery” as companies try to work out the best combination of features and design to appeal to buyers.
Being early to market doesn’t necessarily lead to success. A number of gadgets that have launched to much hype have come crashing down when consumers have realised they actually only want to invest in devices that enhance their lives in a practical way.
This is where payments come in. Having a quick, convenient and secure function (such as payments) that makes life easier, helps consumers see value in wearing a gadget, beyond the hype, and there are already options out there to do just this.
Generating Loyalty for Retailers in an Omnichannel Era
Generating Loyalty for Retailers in an Omnichannel Era
One of the breakout speakers that took the stage at this year’s NCR Synergy conference was Retail TouchPoints’, Senior Editor, Alica Fiorletta, who discussed key data points, current trends and various obstacles and challenges that often prevent retailers from achieving omnichannel engagement. For those of you who didn’t have the chance to attend the conference, we’ve shared some of Fiorletta’s best practices for how retailers can sufficiently take a personalized approach to their loyalty management in the Age of Omnichannel.
According to Bond Brand Loyalty, consumers are subscribing to more loyalty programs today with an average number of 13.3 loyalty program memberships. However, retailers are seeing a pattern of consumers not being engaged, as only 6.7 of those loyalty accounts are currently active.
How can retailers boost these numbers and engagement with their brands? The answer is personalization. Today, customers expect a lot from their relationships with retailers and brands. Each piece of their journey should be customized, convenient and consistent throughout their entire shopping experience, including recognition of their purchase history, preferences, personalized offers, and more. This requires a communications strategy that is seamless to the consumer regardless of channel. By creating a communications strategy, the retailer maintains a strong brand and smooth engagement across all channels.
For example, retailers such as Sephora, DSW, 7-Eleven and Julep offer loyalty programs across all channels to address customers’ needs. Whether they are shopping online, in-store or by mobile, shoppers should have their relevant data synchronized and readily available for their viewing pleasure. Offering customers these options enables a better understanding of how they interact with the brand and what motivates their shopping behavior.
3 Game-Changing Retail Tech Trends for 2015
3 Game-Changing Retail Tech Trends for 2015 – Wearable Tech, iBeacon and Mobile Payments
The retail industry is the fastest to catch up to new tech trends. In order to stay relevant in a highly competitive market, every retailer needs to keep abreast with new technical innovations on the block.
Which technologies have the potential to disrupt? What are these technological advancements capable of? And, what does one need to know about these, to utilise them to their full potential? We will talk about 3 such technologies in this blog post.
1. Why Wearable Tech will benefit retailers
According to a new research from Accent Marketing, half of more than 1,000 consumers surveyed said they would buy wearable tech so brands can send alerts and have more insight into their lifestyle. Wearable tech, with its ability to collect data and also its sensor-driven element, has huge potential in the retail domain to gather analytics, enhance customer experiences and more. Here are a few reasons:
a) Huge scope for consumer data collection and analysis– Since wearables are in closer proximity to the fundamental movements, actions, and behavior of the consumer, the accuracy of data points collected could be higher than, say a smartphone. Collection of such data and its analysis offers huge scope of improvement in store layouts and product placement, optimizing the number of store associates at various locations and more.
b) Opportunity to deliver a seamless, omni-channel experience– With wearables, you get one more screen to interact with the customer. It gives retailers the opportunity to deliver a seamless experience across all screens – from laptops and tablets to phones and now say, watches. Brands that are able to do it well and soon, are sure to make a mark.
c) Take customer service to the next level – According to Price Waterhouse Coopers, 72 percent of consumers will look to wearable tech to improve customer service. Big retailers can outfit store personnel with wearable devices, thereby improving their responsiveness to in-store customer queries and requests.
How to make the most of wearable technology:
a) Enable it for very specific use cases: The Apple Watch has screen sizes of 38 and 42 mm. Such small screen sizes are not ideal for browsing e-commerce pages. You thus need to focus on delivering messages apt to the screen size, like bookmarking a dress, saving a coupon for later, or setting up an alert for a sale etc.
b) Ensure that your app is optimized for wearable devices: The experience offered to customers should not be a replica of the experience offered on a smartphone. The UX should be relevant to the new medium and should act like an extension of the phone. The Apple Watch, for instance is perfect for delivering instant notifications and quick glances, sharing information that can be acted on or ignored in a quick span of time. Anything that requires time is better suited for the phone.
2. Why iBeacon technology is the ‘next big thing’ for retail
According to a recent Business Insider report, beacons are expected to directly influence over $4 billion worth of US retail sales this year at top retailers. The same report also says that half of the top 100 retailers in the U.S. are testing beacons this year. With stores like Macy’s, House of Fraser, Lord and Taylor etc., deploying beacons at scale, it’s evident that retailers are convinced about the potential of beacons in retail.
Let’s look at why retailers should be investing in beacons this year:
a) Gather deep insights on consumer behavior: Beacons provide endless opportunities to collect massive amounts of untapped data on what products customers buy more often, which store locations are the most crowded, what are the most common traversal paths taken across the store. This can help improve store layouts, product placement and allocation of staff accordingly.
b) Personalize shoppers’ experience: Taking customers’ preferences, tastes, past purchases into account, you can deliver highly targeted offers and discounts to them. The easiest way to do it is to sync customers’ shopping lists, wishlists and favourites with your app.
How to make the most of beacons:
a) Limit the number of messages sent per store visit: Don’t send a plethora of offer and discount messages to customers. Offers should be based on certain ‘rules’ and criteria. Say, a regular customer who buys oats often can be sent a discount offer on milk; the same offer should not be sent to everyone inside your store.
b) Inform and educate customers about how the data collected will be used: Make sure you ask customers for permission to access bluetooth and location services as customers have a tendency to shy away from location-based services. It is, thus important to provide clear opt-in instructions.
c) Test your campaign on a limited audience before going mainstream: The best way to start a beacon campaign is to conduct a trial on a small scale with a limited set of people. Based on the experience and learnings from the trial, you can go mainstream.
If you are planning a beacon pilot, take a look at the Beaconstac Starter Kit which includes everything you need to get started. Using the Starter kit you can set up your own campaign, without a developer’s help!
9 Problems with Wearable Payments
9 Problems with Wearable Payments
As wearable devices like the Apple Watch gain an audience, banks and retailers are exploring ways to make the most of this new style of consumer technology. But a number of hurdles stand in the way.
1. Designing in the Dark
Apple is notoriously secretive about unreleased hardware, and did not provide early developers such as USAA with pre-release versions of the Apple Watch. "The hardest part of developing the app was testing on the simulation software instead of the actual device," said Neff Hudson, head of emerging channels at USAA.
2. Pricing Pressure
Consumers are willing to pay hundreds of dollars for an Apple or Android smartwatch, but what will they pay for a wristband that only does payments? Barclaycard sells its new bPay band for £24.99. In testing, the bPay band was free, but Barclaycard insists its commercial version is still cheaper than nearly any other wearable device.
3. Covering Up
Another inventive Barclaycard wearable is its payment-enabled wool glove. It seems like a good fit for colder regions, but by design it covers up the user's hands, thus preventing consumers from using other payment systems that employ fingerprint authentication, such as Apple Pay.
4. App Overload
To be the first issuer with an Apple Watch app, Citi had to split its mobile strategy by requiring smartwatch owners to download the wearable app separately from the bank's iPhone app. Citi rectified this on July 1 by offering a combined app, but until that time mobile users had to jump through an extra hoop to bank from their wrists.
5. Size Matters
Citi has three design principles for the ultra-small screen of the Apple Watch: intimacy, importance and immediacy. Anything that doesn't fit those principles is wasting precious screen space on the customer's wrist.
[INFOGRAPHIC] How m-Commerce is Changing Shopping
[INFOGRAPHIC] How m-Commerce is Changing Shopping
There are more mobile devices on the planet than people, and they’re used for shopping with an ever-increasing frequency, creating not only new shopping trends, but a whole new kind of retailing.
Mobile devices are nearly ubiquitous – in 2014, the number of mobile devices outnumbered the world’s population. Even more than sheer number of devices, usage is growing – according to Cisco, the average smartphone usage grew 45 percent in 2014, with over 800 MB of traffic per smartphone, per month.
Of course, one of the most popular – and exponentially growing – use cases of mobile devices is the great American pastime … shopping.
Online e-Commerce shopping was the most disruptive innovation ever to affect the retail industry. Now, mobile commerce, or m-Commerce, is threatening to add a new wrinkle of disruption as the long-promised multi-channel, omnichannel shopping experience finally comes to fruition.
The infographic below, created by Snap Parcel, shows how the ubiquity of mobile devices and their ease of use has led to the development of new consumer shopping trends.
For Impulse Shoppers, a Brave New Retail World on Social Media
For Impulse Shoppers, a Brave New Retail World on
This post originally appeared in Re/code.
Impulse shoppers, welcome to a brand-new way to feed your fix. In the span of a few weeks last month, Facebook, Pinterest and Instagram unveiled nifty new buttons that let users buy the must-have clothes, crafts and gadgets streaming by in their feeds. Google has its own button in the works, while Twitter has been quietly testing a “buy” button since last September. The age of social media shopping — a.k.a. social commerce — is upon us.
Well, almost. While it seems to make sense to combine the experiences of socializing with friends and shopping — as the inventors of the mall discovered ages ago — it’s easier said than done online. A bewitching combination of technical and psychological obstacles means that two decades after Amazon began revolutionizing e-commerce, social commerce is still waiting to get off the ground.
Is this the moment when users finally embrace Facebook, Twitter and rising networks like Instagram, Pinterest and Snapchat for their retail needs? That depends.
The Case for Social Shopping
When it comes to deciding what to buy, ads may sway our judgement, but input from people we trust often seals the deal. This holds just as true when bargain-shopping with BFFs at bricks-and-mortar stores as when hunting for deals on the Internet. Four out of five people say that posts from friends directly influence buying decisions. “Social proof,” as marketers call it, keeps the retail wheels greased and moving.
So what better place to buy online than social media sites where friends and followers are already hanging out and sharing information? “Here, the inspiration for a particular look isn’t sparked by some vacant-eyed model, but by friends and frenemies alike,” notes industry analyst Jake Sorofman in a recent blog post on the subject.
“When it comes to deciding what to buy, ads may sway our judgement, but input from people we trust often seals the deal.”
At the same time, the fleeting nature of the news feed — streaming by with the trends of the moment — lends a sense of urgency to the social retail experience. Exclusive offers and flash promotions add to pressure on social media “to act quickly or miss out on the deal at hand,” writes retail columnist Brad Tuttle in Time, and users tend to forgo the obsessive comparison shopping that characterizes other online purchases.