Archive for October, 2014

BuySecure Initiative | EMV Embedded Chip & Pin Credit Cards

Wednesday, October 22nd, 2014

Although likely just a funny coincidence after having his personal credit card recently declined at a restaurant in New York City, on Friday October 17, 2014 President Obama signed an order called the “BuySecure” initiative. This initiative calls for the expedited adoption by government entities to accept EMV Chip and PIN credit cards.

obama-emvEMV, which stands for EuroPay, MasterCard, Visa, is a technology that uses an embedded smart chip rather than the 40 year-old magnetic strip technology to store the credit card’s information. Magnetic strips store and send credit card data statically, which makes them vulnerable in security breaches. When credit card data is stolen, thieves can then replicate a credit card and make purchases until the discovery is made.

EMV cards, also known as “Chip & PIN” are designed to add security to customer-facing retail transactions. The smart chip uniquely encrypts the credit card data for each transaction. In addition to the smart chip, customers are also required to enter a personal identification number (PIN), further adding to the level of security.

There has been push by the credit card associations for migration to EMV for all entities involved in the credit card transaction process to be compliant by October 2015. The card associations call this the “EMV liability shift”, in which merchants that are not compliant by that time may be held liable in the event of a security breach.

However, Obama’s BuySecure initiative hopes to speed up the adoption following major breaches that have happened in recent months.

Mega chains like Home Depot, Target & Neiman Marcus been hacked, resulting in the theft of credit card data and personal information of millions of their customers. When these security breaches happen, not only does it cost banks and card associations millions in fraudulent charges, customers are more at risk of identity theft. With EMV technology, it’s next to impossible to steal credit card data.

According to President Obama, Home Depot, Target and Walgreens and Walmart plan on installing EMV-compatible credit & debit card terminals as early as January 2015, well before the EMV liability shift.

In his speech at the Consumer Financial Protection Bureau on October 17th 2014, President Obama stated that government credit cards would soon incorporate the EMV chip-and-pin technology. Also part of the BuySecure initiative is the implementation of EMV credit card terminals by federal government agencies, enabling them to accept and read embedded chip cards.

By taking the 1st step in becoming EMV compliant with its BuySecure initiative, the government hopes to encourage many other retail establishments to follow their lead.

According to a White House press release, “The goal is not just to ensure the security of doing retail business with the government, but also, through this increased demand, to help drive the market towards swifter adoption of stronger security standards. Institutions like the United States Post Office have already made this transition across tens of thousands of retail facilities across the country.”

The BuySecure initiative may be just be nudge retailers in the U.S. need to understand the serious nature of credit card fraud, and take their own initiative to becoming EMV compliant.

Regardless of whether U.S. retailers follow the lead of the government’s BuySecure initiative and become early adopters, sooner than later they will be required make the transition to EMV credit card compliance.

If you have questions about EMV, give us a call. We’d be happy to help.

Merchant Accounts for Iphone & Android | Credit Card Readers

Tuesday, October 14th, 2014

It goes without saying that smartphone technology is amazing. Not only do these iPhone and Android devices add convenience to our personal lives but they offer incredible functionality for small business. Even in the way of merchant account processing.

Today, smartphones are being used more frequently in small business as a tool to take credit and debit card payments from customers. Compact credit card readers designed for smartphones allow businesses to offer cash-alternatives and traditional terminal alternatives.

smartphone credit card readerBy simply plugging in a credit card reader device and running the app, the smartphone is transformed into a fully-functioning credit card processing terminal. Minus the receipt printer, the smartphone acts just like a traditional terminal, enabling businesses to use the device anywhere there is a cellular signal, even in their retail storefront in place of a traditional terminal. If you’ve visited and purchased anything at an Apple store in recent years, you’ve probably had your credit card swiped on one of their iPhone credit card readers and had your receipt conveniently emailed to you.

These credit card readers also work exceptionally well for processing credit cards on the go. Business owners attending tradeshows never miss a sale with a mobile smartphone card reader. Other small businesses, like stands at outdoor farmers markets and other events, can take credit card payments without having a dedicated phone or Ethernet line or a power outlet using their mobile phone.

More and more companies are getting into the smartphone credit card reader racket. Some companies market their devices to the masses, and are thought to be the only smartphone solutions available.

The company known as Square, with its cute little square device and easy to use smartphone app, seemed to have the high ground on the market, but is now facing some serious competition. The PayPal powerhouse recently released their version of a credit card swiper that they call PayPal Here. And a handful of other companies like Wells Fargo are introducing their solutions and apps.

Costs for SmartPhone Credit Card Processing

Square and similar devices can be purchased in many places these days, including Staples and even Starbucks. The unit itself is sold for about $10 and can be easily implemented and used on iPhones and Droids. There is no monthly fee for using these devices to swipe and process credit cards via the reader and app.

Although the solutions mentioned above work very well for small businesses that need to process credit cards on their smartphone on occasion, they are not necessarily ideal for businesses that handle many credit card transactions on a daily basis.

While there are typically no monthly fees with these solutions, most of them operate on a standard per-transaction rate that is quite a bit higher than a typical swiped merchant account rate. Businesses that do a high amount of transactions end up paying much more than they would if they had a traditional merchant account.

Similar smartphone credit card processing readers are available from merchant account providers. These devices look and operate much like Square’s device, but at a significantly lower swiped transaction rate.

A low monthly merchant account service fee applies to these alternative devices, but businesses that use their iPhone or Android as their primary credit card processing terminal and do a good amount of swiped transactions with the device will actually save money using a traditional merchant account. After a certain number of transactions, the lower transaction rate will more than make up for the monthly service fee.

Which Solution is Ideal for Your Business?

If you own a business and are considering a mobile or smartphone credit card processing solution, the question you need to ask yourself is “how many transactions will I be processing each month using the device?”

For merchants that simply need a basic backup debit and credit card terminal, or will benefit from using their smartphone to process sales from time to time at events or trade shows, a Square-like solution will work fine.

However, merchants intending to use their smartphones to take credit card payments frequently should consider more robust smartphone credit card reading solutions available from a credit card processing provider.

Another benefit to a credit card reader from a merchant account provider is the ability to process transactions in the event that the magnetic strip on the customer’s card is damaged. The merchant has the ability to use a virtual terminal feature to key in the transaction.

If you have questions about smartphone solutions, credit card readers and terminals or merchant accounts in general, give us a call! We’d be happy to steer you in the right direction.