I see two major trends impacting the retail industry in 2015, and both of them deal directly with point of sale. With cyber-attacks affecting major retailers and mom-and-pops alike, financial security is a daily concern. EMV, along with encryption and tokenization, will make major steps in securing transactions while assuaging consumer fears. Another trend to consider is Near Field Communication (NFC), which will enable mobile commerce and contactless EMV at the point of sale.
EMV: Encryption and Tokenization
As you likely know, “EMV” refers to credit cards embedded with a microchip programmed with unique digital information.
An upgrade to EMV and contactless EMV is worthwhile because it helps combat counterfeit acceptance through methods that ensure the card’s rightful owner is the purchaser.
Retailers who decide to upgrade their terminals will reduce their exposure to disputes for fraud while boosting consumer confidence.
Although merchant EMV compliance is not mandated, brick-and-mortar retailers who don’t upgrade by October 2015 will be liable for counterfeit, lost, and stolen card fraud.
NFC and Apple Pay
Expect to see heavy competition between Apple Pay, Google Wallet, and other NFC payment methods in the next year.
Many analysts expect NFC to take a few years to catch on, but, in fact, Heartland was processing Apple Pay purchases at San Francisco’s AT&T Park during the 2014 World Series. This is a trend I see continuing.
A difference between EMV contact and paying with EMV contactless via NFC is that the latter is quicker and less cumbersome. EMV card readers require the user to insert the chip card into the reader, wait for approval, and sometimes enter a PIN before removing the card. NFC requires a customer to tap their smartphone, and that’s it. Apple Pay—and other NFC solutions—protect card data by using a token each time a transaction is authorized. Tokenization substitutes a unique code for the payment card’s number, keeping transactional card data off of the retailer’s systems.
The benefit of tokenization is that if a merchant’s system is breached by hackers, tokens have no real value to criminals because they do not contain any card information that can be used for fraudulent transactions.
A More Secure Future for Consumers
By pushing Apple Pay, Apple is advancing the future of payments. Merchants who want to accept Apple Pay will be required to use NFC readers. Payment peripherals providers who are selling EMV-certified contact and contactless acceptance are including NFC as part of EMV contactless. If retailers decide to upgrade to NFC, it’s a good idea that they also make the leap to EMV to meet the October 2015 liability shift deadline.
Heartland supports Apple Pay because it aligns with our mission to provide a secure method for transaction acceptance.
Retailers can use the debut of Apple Pay and the impending EMV compliance shift as an opportunity to evaluate the overall security of their payment system to make sure that they are not exposing their customers’ private data.
With the number of breaches on the rise and cybercriminals getting more sophisticated, retailers need to be proactive when it comes to debit and credit card protection. EMV, NFC and Apple Pay are some of the best defenses for protecting companies from breaches, and this is a great example of what 2015 can offer for security.