With the payment network’s liability shift taking effect in the United States

in October of 2015, there’s a lot that retailers need to know about the EuroPay, MasterCard and Visa (EMV) chip migration.

There are approximately 1.24 billion payment cards—the United States being the largest user of them—and 15.4 point-of-sale (POS) systems global-ly. European, Canadian, Latin American, and Asian Pacific countries have all began the tran-

sition from magnetic strip cards to EMV-embedded ones, and now Americans are expected to follow suit.

For months, banks have been distributing new chip-em-bedded credit and debit cards, called EMV cards. These help

guard against security breach-es—each time they’re inserted into a POS machine, they’re assigned a unique code for the transaction. Previously, thieves could steal codes associated with the magnetic strip cards, make a copy, and use them or

TECHNOLOGY UPDATE

WHAT YOU NEED TO KNOW ABOUT THE EMV MIGRATION AND SHIFTING LIABILITY LAWS.

By Claire Johnson

ShopKeep

52 GIFTWARE NEWS giftwarenews.com

sell them on the black market. The EMV migration eliminates this fraud, but it can come with a price for retailers.

LiabiLity ShiftMany POS systems will need to be upgraded to accept these cards, and although stores are not required to upgrade their systems before the October 2015 date, they are encour-aged to. After the date is passed, retailers become liable for any fraud that takes place. In the past, banks ate the cost of fraud, but without an updated system, your store will be liable—this is a key component in the new EMV Standard. MasterCard defines the new liability shift in a state-ment as “The party, either the issuer or the merchant, who does not support EMV, assumes liability for counterfeit card transactions.”

Visa, a proponent of the U.S. migration to EMV-enabled machines, estimates that 62 per-cent of transactions conduct-ed in other countries involve a chip-enabled card. For now, the U.S. government is letting the financial industry determine its course, but it’s likely that compli-ance will be enforced at a later date. Beyond replacing the swip-ing devices in your store, you may need to update your POS system and train employees on how to use the new cards. United Payment Services (800/801-1955 or unitedpaymentservices.com) can help you with each step when your store determines the right time to implement EMV-enabled devices. The California-based direct processing compa-ny specializes in helping small and medium-sized merchants with the technology needed to process cards. It provides its

merchants with the hardware equipment needed to han-dle these transactions free of charge. United Payment Services also provides the equipment to work with Apple Pay, which many merchants are interested in integrating into their stores.

Handling the processing for more than 50,000 merchants nationwide, United Payment Services has been in the trans-action processing industry for more than 17 years. Not every merchant has the same needs, so the company customizes plans and prices for their merchants. If a merchant is accepting credit cards currently, they guarantee a minimum savings of 20 percent on all processing fees, and the rates are guaranteed for the life of the account.

“Our goal is to look for long-term partnerships with our mer-chants,” says Kari Gibson, direc-tor of sales services at United Payment Services. The company also offers customer service and tech support all day, everyday. Another added benefit of working with United Payment Services is that all funds are available for the merchants the following day.

“We provide all merchant ser-vices, whether it’s a POS system or a cloud-based POS system for mer-chants that have large amounts of inventory to process, analytics for that, stand-alone machines,” says Gibson. “I would say that about 50 percent of our business is from online retailers, so if a retailer has an existing website, we can make the connection from the website to the payment page in securing the credit card data that’s being passed over the Internet,” she says. United Payment Services pro-vides full ecommerce merchant set-up.

EMV processing only pro-tects face-to-face transactions

at brick and mortar business-es. United Payment Services maintains level one Payment Card Industry (PCI) compliance, which is the highest level of cardholder security. When a merchant signs up with the company, his or her business is going to need to become PCI compliant through a vendor that United Payment Services uses. “Once they get their PCI validation they don’t have to worry if there’s ever a breach at their facility,” says Gibson. “Potential fines start at $25,000, so maintaining PCI compliance is extremely important on the processor’s side as well as the merchant’s side. All merchants, whether ecommerce or brick and mortar, need to validate PCI compliance.”

Since EMV processing doesn’t protect against ecommerce fraud, Gibson suggests that her merchants be on the lookout for items that have different billing and shipping addresses or don’t require a signature for package acceptance. “A lot of times it’s best to ship products only to the billing address,” she says. “Our systems are set to check the cardholder’s billing address to assure it matches with what’s on file at the bank. If there’s a discrepancy, the merchant will be notified, and it’s up to them to determine how they want to

proceed with the transaction.” It’s always important for

any merchant to verify anyone who calls claiming to be their processor. Gibson has heard of some callers who have posed as a merchant’s processing company. “The merchant feels pressured and starts push-ing buttons on their machine and then the next thing they know, their system has been hacked,” she says. Reach out to your processing company if this happens and verify the caller. United Payment Services doesn’t make those types of phone calls, and anyone that is set up at the company has an ongoing account manager from the point they sign up.

An alternative for your tech-nology needs, ShopKeep provides a unique solution for small-to-me-dium sized merchants. ShopKeep was actually founded by a busi-ness owner who was unhappy with the POS system he was using. Today, the company inte-grates a POS system with sleek hardware to take care of all of your store’s transactional and analytical needs.

“There are two keys to get EMV working and you need to have the card reader in the shop,” says Norm Merritt, presi-dent of ShopKeep. “The second piece is that the pipeline from the bank certifying the card

AUGUST 2015 53

United Payment Services

needs to be in operating order. There’s a real scramble right now for processing companies and gateway companies to get the pipes [on the back end] in work-ing order. Just having the pro-cessor in your store won’t make a difference if the pipes haven’t been upgraded.”

What merchants should be doing now is upgrading their credit card machines to be able to accept the EMV cards, and Merritt suggests that they upgrade their POS systems to take advan-tage of all the latest technol-ogy while doing that—which is where ShopKeep can help.

ShopKeep sees themselves as an IT department for small merchants, so it tries to curate the best hardware that’s avail-able for their stores. When Apple announced Apple Pay in October 2014, ShopKeep had an Apple Pay reader available to its merchants by December 1 and those Apple Pay readers are also EMV compliant.

“We can sell [merchants] the EMV capable credit card reader integrated with the state of the

art POS system that gives them incredible power and advantage over their current situation.” Merritt says that many retailers have an electronic cash register, which he says is antiquated, inse-cure, expensive and doesn’t offer the merchant very much insight. “The new cloud-based technol-ogy leverages sleek technology that Apple provides and can really upgrade the look and feel of the shop,” he says. Merritt rec-ommends merchants upgrade that, the EMV reader and Apple Pay reader. The EMV/Apple Pay reader from ShopKeep features a Near Field Communication (NFC) antenna. Merritt says it appears that Google Wallet and other mobile payment providers will likely be leveraging the NFC rails. “Merchants that are wise are going to be upgrading their machinery to be NFC capable, EMV capable and will be upgrad-ing their POS systems,” he says.

ShopKeep offers an elegant iPad-based system that cap-tures transactions and records them in the cloud allowing merchants to check analytics,

u n d e r s t a n d i n v e n t o r y levels and manage their staffs. The sys-tem captures what was sold, when it was sold, who sold it, what it was sold with, the price of the good, the cost of the good, and increas-ingly, who bought the item. “That information

around the transaction pro-vides an incredibly powerful analytical base to use tools and insights to run their business,” says Merritt. “We’re helping our merchants run smarter busi-nesses.”

Part of ShopKeep’s market-ing tagline is to help its mer-chants take back Main Street. Merritt explains that the compa-ny wants to help its merchants compete with big box stores. “If you think about it, a manager of Walmart has data and a whole IT department and a business intelligence department that feeds reports and gives insights,” he says. “A small merchant really doesn’t have that. They sell real-ly cool trinkets, but they haven’t historically had [access] to those same tools to help them run their business and we provide those tools for them.”

Merchants use the tools to see which goods are selling, which employees are being productive and how to staff during cer-tain hours. A lot of retailers go with their gut feelings but data doesn’t necessarily back that up. ShopKeep helps keep retailers objective. Merritt cites an exam-ple of a merchant who consid-ered cutting out her men’s cloth-ing department entirely based on the few men she saw in the store and the amount of real estate the clothing took up. Before she eliminated it though, she

used the data from ShopKeep to determine that 80 percent of her gross margin actually came from the line she was considering eliminating. “That could be the difference of being able to pay your rent or not,” says Merritt. “ShopKeep eliminates the need to make decisions based on intu-ition and helps merchants make decisions based on hard data.”

Merritt stresses that this may seem like a huge overhaul for retailers, but they can upgrade their machines entirely in just one afternoon. Merchants can download the inventory from their existing systems and use that file in the new equipment.

Another benefit of utilizing ShopKeep’s services is that they work on an open loops system, meaning that they are constant-ly updating the technology and implementing new features for you to use in your store with no additional cost. Merritt cites one example, the server la sync, which allows all iPads to be synced with one another. When a store is busy, employees can walk around a line and take orders on iPad minis, and by the time the customer is at the the front of the line, the order will be ready.

ShopKeep’s merchants can buy the hardware for about $800 upfront and $49 per month for each register. They also offer a 24/7 customer care line.

54 GIFTWARE NEWS giftwarenews.com

ShopKeep

TECHNOLOGY UPDATE