Payment Technology

The Shift

The Basics

Liability

The Point of Sale

Counterpart

The Solution

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07Cajun

Kitchen Case Study

08About

SBMerchant

EMV & Point of Sale:Protecting Small Businesses

THE BASICS

When new technology sweeps the country, there are bound to be glitches. Between credit card companies, payment companies, and word-of-mouth amongst business owners, misinformation still floats around the topic of “EMV.”

Europay, Mastercard and Visa (EMV) are the three card companies who originally invented the new chip technology. Europe’s been using this method for years, but the US is lagging behind. However, since the United States accounts for half of the world’s fraudulent card transactions and has seen doubled fraud rates in recent years, the U.S. has decided to adopt EMV as the new payment standard¹.

What does this mean for your business? Below we cover the differences between: stripe, chip, and contactless payment technology, why the United States has shifted, how the “liability shift” affects you, and how to best adopt EMV.

¹Gemalto’s 2014 Breach Level Index

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PAYMENT TECHNOLOGY

The payment industry must evolve with technology. Since the 1950’s, companies have continued to improve the way consumers pay for goods and services in a variety of methods. Here’s a breakdown of these different payment experiences.

STRIPEMagnetic stripe cards have been used since the 1950s. The stripe on the back of the card holds all account information in a static and unchanging structure. When the card is swiped, the payment processor simply reads the information to process the transaction. Here lies the problem: the static nature of magnetic stripe cards is extremely susceptible to counterfeiting.

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CHIPMajor card companies recently chose to incorporate more advanced technology in order to protect consumers. EMV-ready credit cards have a small, embedded computer chip that is inserted and read by EMV-enabled devices. This chip speaks in an encrypted language with the payment processor so that no one else can can enter the conversation. By using unique codes during every transaction, it becomes a locked down process that protects consumers and businesses from invasive cyber criminals.

NFC As consumer behavior shifts more and more digital, so do pay-ments. Mobile payment solutions use Near Field Communication (NFC) to process transactions. Smartphones with NFC chips use a payment application to connect with NFC-enabled credit card terminals. The phone only has to be a few centimeters from the terminal and the transaction is complete.

This method enhances security by using an additional passcode or fingerprint to approve the transaction. The transaction is then validated with a separate chip called the Secure Element (SE), which authorizes the payment back to the NFC modem. Similar to EMV, NFC generates a one-time use code to transmit the user’s card number and secure the transaction.

THE SHIFT

Most card fraud occurs in the United States, with 22 data records either lost or stolen every second¹. As consumers’ online digital activity becomes more popular, more data about what they do and who they are is at risk. Cyber criminals steal credit card data and financial information from anywhere they can access personal data. Payment security is now a significant security concern for all types of businesses.

Other countries have already upgraded to EMV technology; Europe currently has over 90% EMV-enabled terminals, and Asia is moving swiftly with new payment mandates¹. The United States was reluctant to adopt the change because it meant upgrading 15 million payment terminals, issuing chip-enabled cards, and getting banks, processors, and retailers on the same page². But as more of the world shifts to EMV, the United States becomes a beacon for fraudulent stripe card activity. Several large companies such as Target and Home Depot have suffered enormous data breaches in the last few years. After the UK saw a 70% decline in counterfeit card transactions after going EMV, and Canada saw a $234 million drop in fraud card losses, it became time to shift³.

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²The Nilson Report³Aite Group

THE SOLUTION

Whether you’re a global enterprise or a small-scale coffee shop, you and your customers are at risk. Although it’s a huge change for millions of ATMs, POS terminals, kiosks, vending machines and more, it is a worthy investment. EMV protects you and your customers in a variety of ways:

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Waive an annual audit EMV card issuers can waive a merchant annual PCI-DSS audit if 75% of their transactions are processed with EMV certified devices.

Be ahead of the competition Don’t be at the tail end of the EMV movement. Start accepting EMV chip cards and NFC-contactless payments with just one upgraded processor.

Avoid unnecessary chargebacksNeglecting to accept EMV chip cards for payment or swiping a credit card with a chip on it can result in being liable for credit card fraud.

Protect credit card dataMeet EMV standards to reduce fraud and ensure the highest level of security for your business and customer data.

Don’t become a targetHackers seek out businesses that have not yet adopted EMV.

LIABILITY

Who is liable for what? Here lies the most confusion. As of October 1, 2015, merchants are responsible for customer fraud losses only if their payment processors do not accept EMV chip cards and the consumer is using a chip-enabled card, as illustrated below.

Estimates show that as of March 17, 2016, 35-40% of merchants have the new EMV-equipped terminals but are not using them4. The problem? Lack of software and testing. To use EMV, the payment processors’ software must be up-to-date and pass a number of certification tests to ensure it works correctly.

Talk to your processor provider and make sure you have the most updated software and hardware.

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4Payment Source

Mag Strip Card+ Mag Strip Terminal = Issuer Liable

Mag Strip Card+ Chip Terminal

= Issuer Liable

Chip Card+ Mag Strip Terminal = Merchant Liable

Chip Card+ Chip Terminal = Issuer Liable

THE POS COUNTERPART

The Point of Sale (POS) is the main hub of your business. It allows transactions to flow steadily while engaging customers. Having an up-to-date POS that works seamlessly with EMV-enabled processors is key to not only running business smoothly, but also maintaining security.

Steps to become EMV Compliant:

1. Assess your current Point of Sale

Every POS system is different, and you may need to update your hardware, software, or both, or just replace the card terminal. Use this opportunity to rethink your POS, and consider upgrading to a tablet-based system a more robust cloud-based vendor like Revel iPad POS.

2. Ensure hardware is up-to-date

Talk to your POS vendor and make sure your payment device accepts chip cards. If your current hardware does not support chip, work with your POS vendor to choose a processor is EMV-compliant. A POS system that is processor-agnostic can help you save money, allowing you to compare fees and get the lowest rate.

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Steps to become EMV Compliant (cont.):

3. Ensure hardware is tested and approved

If your current terminal can accept chip cards, ensure that it has the necessary approvals and has gone through required testing. EMV terminals require more frequent updates to software and EMV-specific parameters. Work with your payment processor to ensure that your payment device is always up-to-date.

4. Train your staff

Many consumers are still learning how to use chip cards. Train your staff and management to help consumers during check-out.

What sets Revel’s iPad POS apart:

Get your business on track today with an EMV-ready processor and a trusted iPad Point of Sale.

Processor AgnosticRevel integrates with several gateways to give you the freedom and flexibility to work with a preferred processor. Compare and contrast rates to reduce costs.

P2PE Compliance The Revel payment ecosystem allows corporations to securely process payments using validated point-to-point encryption (P2PE). Built by a PCI-Compliant expert, Revel will always be at the forefront of payment security standards.

Hybrid Cloud Architecture Revel is the only Point of Sale system with a hybrid cloud/local architecture.

This unique configuration allows for uninterrupted performance during internet slowdown or complete service

disruption.

Always On Mode Revel’s Always On Mode allows merchants to continue to accept credit cards even offline, giving managers the option to continue to process credit card payments with controlled parameters to mitigate exposure. All data automatically re-syncs with the cloud once connectivity returns.

In 1984, Richard Jimenez Sr., a Santa Barbara native, took over the the struggling Cajun Kitchen on De La Vina Street in Santa Barbara. A prep cook with no restaurant management experience, Richard along with his wife learned as they went along, raised a family and opened additional location that have become loved throughout the community as local favorites. Now their two oldest sons, Richard Jr. and Juan, have joined them at Cajun Kitchen to continue to bring their traditions into the future. Cajun Kitchen selected Revel Systems as their iPad Point of Sale because they needed a solution that could modernize its restaurants, ensure EMV compliance, improve customer experience and be easily applied and operated across multiple business units.

Juan Jimenez, of Cajun Kitchen, shared, “My experience working with Santa Barbara Merchant Services has been rad. Good ROI converting from Aloha. Flawless execution by SBMS, and I really like having someone that feels like part of the team.” Cajun Kitchen has rolled out Revel to 2 locations so far, and has designated the system as its new standard iPad Point of Sale. Juan and his team feel “future-proofed” and know that they have technology that they can evolve with over time.

07 Case Study

About SBMerchant.comSanta Barbara Merchant Services Inc was founded

in 2009 in Santa Barbara, CA, with the goal of

changing the status quo and empowering

entrepreneurs with the tools they need to succeed.

Founder Craig Saling quickly developed a local

following of friends/customers that have referred

the local brand to almost every State.

SB Merchant offers a feature-rich POS solution

and installation team for restaurant, retail and

grocery establishments with integrated payroll,

inventory tracking, customer relationship

management and more. Revel’s open API allows

users to integrate directly with third-party

applications, including mobile payments, online-

ordering, gift or reward cards and advanced

financial software suites.

Connect With Us

1912 De La Vina Street

Santa Barbara, CA 93101

Web: sbmerchant.com

Blog: sbmerchant.com/blog

Twitter: @sbmerchant

Phone: +1 (805) 259-3211