Contactless taps new markets
It’s faster than cash, so what’s taking contactless so long to become a mainstream payment method in the United States? Most payments industry analysts agree that contactless technology, which is easy to implement and popular worldwide, may take longer to be fully embraced by U.S. merchants and consumers.
Thanks to the efforts of card brands and their technology partners, we’ve graduated from early pilots and processor certifications to an affordable family of contactless-ready terminals and peripheral readers. Consumers can confidently tap or wave credit cards, key fobs and assorted devices in lanes and counters across the country.
Slow start for fast payments
So why aren’t more people doing it? It’s taking time for consumers to notice the contactless cards on their key chains and in their wallets and understand the benefits of using this alternative payment method. Retailers have been cautious about adopting contactless technology, too. Best Buy Co. Inc. mandated only PIN-based contactless transactions, leading to the discontinuance of Visa Inc.’s payWave at its stores. Most contactless cards are dual-purpose, supporting both contactless and mag stripe, so currently Visa cards can be swiped, but not waved at Best Buy.
Also, unlike markets in Asia and Europe, where contactless payments are popular, the infrastructure in the United States has dampened contactless adoption because it is built more on mag stripe reader technology than on smart card and microprocessor technology.
Contactless taking hold
The rollout may be slow, but there are signs the U.S. market is ripe for contactless payments. Beyond the faster transaction times, there’s more security and control with contactless payments, because the card, key fob or smart phone used at the POS never leaves consumers’ hands. Contactless is also a more fraud-proof technology: the microprocessor used in contactless payments is harder to hack into than traditional mag stripe schemes. Contactless payments can also be paired with gift, frequency and loyalty programs to create rewards and incentives.
Additionally, along with the success of pilots of Visa’s payWave, MasterCard Worldwide’s PayPass, American Express Co.’s ExpressPay and Discover Financial Service’s Zip, there are ongoing systems integration efforts at the host, carrier and gateway level that will seamlessly fold these and other emerging technologies into a congruent, commercial processing framework. Here are additional indications that contactless acceptance in the United States is catching on:
* Our increasing mobility: The primary game changer will probably be the push to pay by mobile phone. Europe, Southeast Asia and other regions have seamlessly incorporated mobile phone payment transactions into legacy processing infrastructures.
* Killer form factor: Earlier entries, such as the key fob or the credit card with embedded chip, were cool but got lost in the shuffle. We’re running out of room on the key ring and in the wallet. So many plastic products compete for our attention that it’s easy to forget which ones have embedded chips that can be tapped or waved. In contrast, we have only one or two mobile phones. The tipping point will occur when more people realize they can leave their wallets at home.
* There’s an app for that: As we depend more on mobility and connectedness, our mobile devices have become much more than phones. They are compasses that navigate the changing landscape of interconnected mobile enterprises. Our always-on digital assistants help us stay connected through email, social media, geolocation and mobile networks with ever-increasing voice and data capacities. Adding payments to the mix is a no-brainer.
* Enhanced security and privacy: When a mobile phone is used as a contactless payments device, it automatically becomes more secure. The microprocessor contains an identifier that’s linked to sensitive cardholder data, but the details and bank information registered to the device are stored remotely. Transactions are more secure and compliant with most Payment Card Industry Data Security Standard requirements.
* Easy to sell and install: Selling and supporting smart phone transactions is relatively easy. Many countertop terminals and customer-facing devices are already contactless-enabled. Peripheral contactless readers can be added to late-model hardware and virtual processing systems. The function is included in most processing software, requiring only a partial download or parameter change and no heavy investment in equipment or training.
* Continuing contactless initiatives: A pilot program, code name Mercury, involving AT&T Inc., Verizon Wireless Inc., Barclays Bank PLC, and Discover will test smart phones equipped with contactless microprocessing chips at POS readers in select markets in 2011. Consumers will be able to wave or tap their phones to initiate payments. And, in a pilot in the New York City subway system, MasterCard and Visa are testing contactless MetroCards that can be waved instead of swiped at turnstiles.
A trend to watch
Contactless initiatives, the relentless efforts of manufacturers of contactless chips and readers, and the increasing adoption of mobile technology will continue to drive mass acceptance of contactless technology.
The growing contactless trend promises increased adoption of all forms of contactless payments as consumers and merchants become more comfortable with tapping and waving. We’re even seeing contactless options at self-attended venues such as pay-at-the-pump, quick-service restaurants and vending machines. So stay alert; you don’t want to miss this important new wave.
Originally appeared in The Green Sheet, Issue 10:09:02, November 22, 2010.
©Dale S. Laszig, Castles Technology Co., Ltd.
Please include this copyright notice when reprinting this article, and link back to this site when reprinting or quoting.
Technical details: What to share and what to spare
By Dale S. Laszig
Castles Technology Co., Ltd.
Have you ever felt like a deer in the headlights during a whiteboard exercise? Merchants can feel that way when we get too technical. Most wouldn’t know the difference between an 8-bit and 32-bit ARM processor. They get brain freeze trying to read a self-assessment questionnaire (SAQ). They rely on merchant level salespeople (MLSs) to replace broken equipment. They just want to keep transactions flowing; they aren’t interested in becoming payment processing experts.
But there’s a downside to avoiding technical details. Merchants who don’t understand our services will be more susceptible to competitive offers and fraudulent transactions. Taking time to educate them will build stronger relationships and pave the way for referrals; it will also help them identify the warning signs when unscrupulous customers or solicitors walk through their doors.
So how can we share just the right amount of technical information with our prospects and customers, without overwhelming them or losing their attention? The key is to make our technology relevant by observing it from a merchant’s point of view. Features and benefits are only meaningful when they answer a need or solve a merchant’s problem.
Following are guidelines for informing nontechnical audiences about our industry’s fees, regulations and technology.
Discussing interchange
Despite the more than 100 variations of qualified and nonqualified bankcard transactions in our current processing environment, many merchants will still ask, “What’s your rate?” To foster understanding:
* Share a chart of current interchange rates during sales calls to establish transparency and trust while demonstrating the complexity of interchange. Also, show prospects a sample merchant statement to explain your own pricing.
* Encourage merchants to visit Visa Inc.’s and MasterCard Worldwide’s website sections devoted to merchants at http://usa.visa.com/merchants/index.html#/page1 and www.mastercard.com/us/merchant/index.html, respectively, to get a detailed overview of current interchange rates and card brand rules.
* Spare the details of each individual interchange category to avoid losing your prospects’ interest and your own momentum as you close sales. You can honestly say that interchange is a work in progress subject to ongoing review by the card brands and emerging government oversight.
Talking about security
Considering how much resource processors, ISOs and third-party providers have invested in understanding and implementing the Payment Card Industry (PCI) Data Security Standard (DSS), how can we condense this information into pertinent sound bites to educate our merchants? Here are some tips:
* Share the PCI bottom-line message of protecting cardholder data. Emphasize that the PCI DSS protects merchants as well as their customers. Many merchants who have heard about the high-profile security breaches at major retailers may not realize the highest percentage of fraud is occurring at Level 4 merchants like themselves.
* Explain why it’s no longer acceptable or legal to store receipts that have complete card numbers, expiration dates and addresses on them.
* Spare the implementation details. Build a case for creating a security strategy and explain that PCI is not a one-size-fits-all solution. Convey that the process begins with an SAQ but doesn’t end there; the SAQ will clarify and expose weaknesses in a merchant’s processing environment so the right security tools can be applied.
* Refer merchants to your company’s chosen PCI specialists who can work directly with them to create a security framework that not only meets current standards, but is also flexible enough to meet the changing requirements of the evolving payments sphere.
Homing in on hardware
If you were a merchant, what would you look for in a credit card processing system? Would you care more about looks or performance, high speed or low price? Answers will differ according to the personalities, preferences and priorities of each customer.
Your first priority is to understand each customer’s motivations. Too many MLSs err in recommending a product to fit the needs of a business instead of a person. A small business owner with big aspirations might be offended if you suggest a low-end credit card terminal for processing. Similarly, a high-profile retailer operating on low margins and a reduced budget is not necessarily a candidate for a fully loaded, customized processing system.
Here’s what to do:
* Share an overview of your product line, briefly highlighting the advantages of each device. Reassure customers that the system they invest in today is scalable and designed to grow in direct proportion to their business requirements. Make them aware of buyback or upgrade programs your company offers.
* Avoid technical details that can be easily found on the reverse side of a product brochure by those who care about megahertz, Underwriters Laboratories listings and other data that’s of more use to engineers than business owners. Focus on the business side of things by emphasizing profitability, trustworthiness and ease of use.
Suggesting the right software
Internet connectivity has increased demand for credit card processing applications with multiple access points that can be incorporated into larger enterprise operating systems.
Merchants can choose from an array of processing software, from traditional countertop and mobile terminal applications to virtual terminals and payment applets that blend into accounting software and larger POS management systems.
There is so much choice in today’s processing software that merchants can become overwhelmed and have difficulty making decisions. The best approach in helping merchants choose the right fit in processing software is to get a sense of their requirements. To do this:
* Spare a complete rundown of every different type of software and operating system on the market. Focus instead on the systems that are most appropriate to your clients’ businesses.
* Share how a new system can save time, solve a problem or create new revenue streams, and merchants will be more motivated to make the software investment.
Whether you are managing a territory or a team of agents, your ability to organize the details of your business will be a key factor in your success. Knowing what to share and what to spare will pave the way to peak performance.
Originally appeared in The Green Sheet, Issue 10:08:02, August 23, 2010.
©Dale S. Laszig, Castles Technology Co., Ltd.
Please include this copyright notice when reprinting this article, and link back to this site when reprinting or quoting.
If clicks could talk: Five things they’d say about selling
MLS agents are the Kings and Queens of selling. We build our empires on millions of transactions and every one of them is a sale. Every transaction is a successful close. Every time someone says yes to our merchants, we all do a little bit better. Imagine all the sales that occur every second, over dial lines, Ethernet/IP, WiFi and cellular networks. That’s an oceanic current of positive energy, and it’s keeping our lights on, too!
Imagine if we could sell that much, that fast. Imagine walking into a new merchant, having a handshake and going back to the office with an approved merchant application. The good news is: It really can be that simple! If we build the right kind of referral networks of happy customers, they will begin to look a lot like the electronic networks that manage all the credit card transactions. That’s right, “If you build it, they will come!”
What else can we learn from our clicks?
1) Trust: Today, Payment Card Industry Data Security Standards (PCI DSS) are a critical part of every merchant’s processing. Transactions need to be “cleared for take-off” by using industry compliant hardware and software. It’s also a good rule of thumb when you meet with prospective merchant customers to ask yourself if the business owner and company meet your own standards of respectability. If there is any question in your mind about the person’s trustworthiness or the legitimacy of their business, walk away. When you see them on a Most Wanted poster at the Post Office, you’ll be glad you paid attention to your instincts.
2) Technology: Clicks are only as good as the hardware and networks that manage their itineraries, from point of entry through authorization and settlement. Technology is their ride, and it also speaks volumes about who we are and what we do. Are you a Mercedes or a Yugo? Our merchants deserve the very best equipment and processing software systems, which will deliver fast response times and won’t break down when they need it most. How often do we hear from merchants about machines failing in the middle of their peak season? Let’s create our own Cash-for-Clunkers programs and let them trade in the old lemons for modern processing systems. Remember, whatever they use is a direct reflection of us and our companies.
3) Support: Sometimes a transaction will fail on its way to an authorizing host. What happens when the system says, “No response from host?” As we all know, network and hardware issues are a fact of life. Support is a critical component of building long-term relationships with your merchants. You can have the hottest looking machine out there and split second transaction times, but none of that will matter if your merchants are placed on hold for fifteen minutes when they call your Help Desk. Let’s keep them happy with unprecedented customer service.
4) Back-up: Transactions have two primary objectives: get authorized and get settled. If their primary method of communication goes down, they search for a secondary method. For example, if a transaction can’t be transmitted on Ethernet/IP, many systems will “fail over” to dial. The concept of having a secondary way of processing is a great way to keep merchants productive. Some of these fail-over systems are so smooth that merchants don’t even know when a fail-over has occurred. Fail-over or having some kind of back-up plan is also an essential part of any good processing system. Offer your merchant a virtual terminal that will stand in for a credit card machine in the event of equipment failure. Sell them peace of mind with a monthly merchant club membership that will get them an overnight replacement if their terminal breaks.
5) Value: Clicks are just clicks, right? Not if you consider the many ways that cardholders use their credit cards to get points, miles, or extra float on large purchases. You could say the same thing about our business. Is it just a machine and a rate, or are you offering your merchant customer an extension of their brand identity and business? What additional value can you offer your merchant that sets you apart from your competition and gives them some bragging rights too?
Click on!
To summarize, there aren’t too many people who understand the complexities of the merchant services business, a multi-billion dollar industry built on gazillions of tiny little transactions. Merchants sell, cardholders buy, and we’re the people who make it all possible.
Although we’ve all heard that we’re in a recession-proof industry, we also know how competitive it is out there, and how fast technology is changing. If clicks could talk, they’d probably thank us for everything we’re doing, and tell us we’re doing a great job. Hopefully, we’re hearing that from our merchants as well.
This article originally appeared in the December 2009 issue of Merchant Times, a publication of Performance Training Systems. http://www.surviveandthrive.biz/
Product Review: Vega7000
The Vega7000 combines magnetic stripe and smart card reader technology in a compact EFT countertop terminal with multiple options for transaction processing and connectivity. A clam shell thermal printer makes paper loading easy. A flexible operating system and multiple Secure Access Modules (SAMs) stand ready to support a variety of applications.
Vega7000 is configurable for multiple communication interfaces, such as USB, RS232, RS485, GSM/GPRS, and CDMA. Its PIN pad is PCI PED certified, delivering a secure and reliable transaction.
Its versatility and enhanced performance give the Vega7000 a leading edge in meeting the complex requirements of today’s electronic processing environment.
