The Point of Sale Industry Transitions to EMV. What Progress Thus Far?

 Merchants in the United States are working to comply with new rules for accepting credit cards. The rules are intended to increase security and protection of credit card data and to make it harder, much harder, for credit card data to be stolen. We reached out to five hundred members of the Point of Sale community, including hardware and software vendors, value-added-resellers and others, to get a reading as to how the implementation of EMV is going.

What we heard:

Point of Sale News: “ Give us an overview of what’s happening in the field”

Value Added Resellers:

U.S. implementation seems to be moving at a snail’s pace. – Lance Bell, POS Partners www.we-are-pos.com

There’s lot’s of activity including misinformation, fear based marketing and just general confusion. – Dwane Walton – www.TotalMerchantSupply.com

Although it’s a change, most of our customers are excited about the fact that it will reduce the amount of theft that currently exists. They are concerned with putting in new card devices that can handle EMV and the costs associated with it. With all of the advanced notice from the PCI Security Council, we believe that most of our customer base will make the standard deadline date leaving only a few to carry over to after holiday season.- Carl Mazzanti www.emazzanti.net

The EMV transition continues to be a fluid situation that we are patiently waiting to unfold. There are a lot of moving parts that we are trying to become experts on to ensure a seamless transition for our merchant base. – Steve Brown www.ZephyrHardware.com

It’s a slow go right to the end. Most new things are not in place yet. John C Guild, www.JohnGSolutions.com

EMV migration has started its initial phase and we are going to be ready for it ahead of most POS dealers – Stuart Perry, Pontiac Business Systems, www.pbspos.com

Software/ Hardware POS Companies:

We are finding that the processor, gateways and processing equipment vendors are falling behind schedule. This is particularly acute with many of the smaller players are finding that they do not have the financial and employee resources to meet the timing of the looming EMV deadline. I think that once the dust settles, many of these smaller players will fail to meet the deadline and merchants will have fewer options for gateways, devices and processors that they had prior to EMV. After years of merchants having more choices for processing (and driving prices and margins down), power will shift back to the larger players in the processing market. – Kevin Kogler www.MicroBiz.com

Here in Canada, our banking industry operates on different regulations than in the US and the Chip-N-Pin has been around for a while. It’s a fact of life that every merchant end-user has to deal with. There are no other types of cards offered by financial institutions, and the use of the mag strip has all but disappeared. I can’t recall the last time a store processed my payment by magstrip instead of the EMV because they were not properly equipped ! I use my card’s magstrip only when in the US 😉 Francis Martel , www.GenPOS.com

Payment Processor:

As a payment processor and acquirer, there are many details and considerations to learn and resolve in order to make EMV migration easy and convenient for our merchant and reseller partners. We’ve had to invest a lot of resources into this effort, but we are happy that the results are coming together well and we are now offering state of the art EMV solutions including contact EMV, contactless (NFC) EMV and electronic wallets such as Apple Pay and Google Wallet in our EMV solution. – Joe Gage, www.SterlingPayment.com

POS News: “Are you getting the support you need from various vendors?”

VARs:

We are getting support from our vendor partners to create a certified solution for EMV. However, we are being told … that a single solution certification (including POS software, EMV chip reader, and acquiring processor) takes an average of 6 months and $10,000 to complete. – Lance Bell.

Hardware and software vendors are supporting pretty well given all of the uncertainty surrounding the issue. Hardware manufacturers seem to be finally settling on hardware designs so software ISVs can begin writing the code to integrate to these devices. It’s beginning to look like DatCap and Verifone are the big winners with Ingenico also winning a good piece of the hardware battle. Apple Pay using NFC really disrupted the hardware battle when released last October . -Dwane Walton

Our vendor, ASI-Restaurant Manager POS, is leading the way in our industry. They have been planning and developing for EMV, ApplePay and more for over a year. -Stuart Perry

I have run into situations where the POS developers are still shaking things out. So, in the long run, the dealer is left waiting to find out what they need to do in order to “maintain compliance”. And, with that said, the merchant is also waiting and wondering. – Mark S Wolfe www.HCSPOS.com

Most vendors have been very supportive. – Carl Mazzanti

All our vendors are working to get a solution in our hands that we can deploy to our merchant base. It seems we are in that chicken or egg dilemma. I’m pushing for a decision on the integrated hardware that will ultimately support EMV, NFC, MSR even if all payment types aren’t certified out of the gate. Let’s start getting the correct equipment into the field and grow into it as certifications on the alternative payment methods are completed. This would minimize the replacement costs for us and the merchant once a solution has been decided upon. — Steve Brown

Software vendors:

Not as much as I would like. While vendors are claiming that they are ‘EMV ready’ when you start digging into the product lines and documentation we are finding that most participants are still scrambling to get all the services and devices certified. They are doing their best, but the certification process involves coordinating efforts will third parties and numerous repetitive internal testing processes. – Kevin Kogler

A separate certification has to be done for each credit card processor, and every device that we plan to use for EMV, which creates an enormous amount of work, time and expense that simply can’t be justified. As a result, we will have to choose one or two of our best processing partners, do the EMV certification specifically for them, and if the customer wants EMV, they will have to work with these ISO’s. Many of the smaller ISO’s are going to get squeezed out simply because there aren’t enough hours in a day to do a certification for every single ISO who wants to work with us. John Giles – www.FuturePOS.com

Payment processors/ POS Distributors:

For the most part, yes. Like all industry participants, we know that there is still a lot of application software development and certification that needs to be completed before all POS solutions will be EMV compliant. However, we enjoy very strong relationships with our key vendors and that is enabling us to stay at the forefront of obtaining solutions and making them available to our customers. – Joe Gage

Our suppliers have had the products ready to support this transition and are very supportive. Reseller customers and their end users need to be aware that there is high demand for product and, because of this, lead times are being extended. We believe resellers should be working with their customers now to make sure they are getting the necessary integration work completed and products on order. Nell Aversion, Director of Merchandising – www.ScanSource.com

The Point of Sale News: “Are merchants receptive to the new requirements?”

VARs:

Most Customers are confused and Numb – they really feel like it’s another thing forced at them to spend money. And the CC Pro’s aren’t making it any better using the fear of EMV to push credit card switches and trying to move Merchants from POS processing to standard Terminals because they are already ready. John C Guild

Customers are interested, even if by force, in solutions primarily centered around the most exciting aspect of the process – keeping the credit card in the customer’s hands. ‘Pay-at-table’/mobile and counter service devices are already in operation (as they have been for years) and both are awaiting EMV certification. – Lance Bell

I have found that merchants are not prepared for EMV, nor do they seem to be looking to update their point of sale(POS) terminals. Unless we actually educated the merchant on the upcoming EMV mandate in person, our efforts to send out written information has not created enough urgency for them to make the change. “ Jonathan Young Stryker Systems, www.Strykerpay.com

Software companies :

Yes, most merchants understand the payment processing is both inherently subject to fraud and expensive. Educated merchants know that EMV will help reduce the time and money spent combating fraud and potentially reduce processing rates. – Kevin Kogler

Payment processors/ POS Distributors:

Sterling has taken extra time to explain the information that merchants need to be successful to our customers, and we have been pleasantly surprised that our EMV-solutions are being deployed and used by our merchants with very little additional volume to our call centers. Our experience is that by carefully planning our deployments and communicating the proper information clearly and simply, merchants are able to adopt our new technology easily. – Joe Gage

The large tier one resellers have made the upgrade or are already in the process of upgrading their terminals to meet the EMV/liability shift timeframes. The smaller SMB retailers now seem to be getting their systems ready and working to get upgraded as well. We believe it is important that resellers are educating their customers on what the liability shift means to them and the best solutions to fit their business. – Nell Alverson

Point of Sale News: “Any other thoughts or comments to share? “

VARS:

For real protection, EMV is nothing without Point-to-Point Encryption. – Lance Bell

The big hacks like Target and Home Depot, etc would not have been prevented or minimized in any way by this technology. – Dwayne Walton

Merchants are overwhelmed with Gotta Have It Chicken Little’s The Sky is Falling tactics such as Gotta Have It Apple Pay (you need it or you will lose business) or, Gotta Have It My Processor is Better Than His Processor (I can save you a penny a swipe). This is not to say that it is the Merchant Service’s Rep fault. It is also not to say that it is the POS dealers fault. And, it is not the merchant’s fault. But the merchant needs to find one trusted source and listen to them. – Marc S Wolfe

Software companies:

It looks like it will be a train wreck in late summer as all the gateways try to get certified at the same time. Everybody is waiting for things to crystallize before moving forward at full speed, but given all the participants that are targeting gong through certification right before the deadline, there just will not be enough capacity to test and certify all the devices/gateways/kernels in that 60 day period. – Kevin Kogler

Because the EMV rollout has yet to really begin, it remains to be seen how quickly it will be adopted, and if many merchants will just forego being EMV compliant because of the prohibitive cost involved, as well as the low risk for this type of fraud in the hospitality industry. – John Giles

Payment processors:

The integrated merchant path to EMV compliance is far different than for small merchants choosing to use a separate credit card terminal. Even though much misinformation is being distributed in the separate terminal merchant environment by ISO’s claiming to have EMV terminals ready to process , we believe the terminal applications just coming out now will solve for EMV and Apple Pay as long as the merchant uses a high speed internet connection. Dial terminals with EMV simply will be too slow for the vast majority of merchants.

On the integrated payments side, the specifications needed for EMV ready payments were only recently made available. Therefore, EMV compliance for integrated merchants will come at a much slower pace. We don’t see even 20% of small to mid-size merchants being ready with integrated EMV payments by October 1st. This is in part due to the lateness in having certified payment specifications ready and partly due to the complex certifications required as well as the limited resources to certify those applications. It’s simply not possible for the integrated payment applications to be ready in time for most merchants to be compliant by October. – Joe Gage, Sterling

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There seems to be a bit of frustration, confusion and concern – participants are optimistic, or resigned, but have the ball and are running with it. It looks like the entire POS industry – from hardware manufacturer and software vendor, to channel partners and distributors , right down to the merchants, are in for a busy summer, fall and winter!

Our thanks to all those who were able to respond with comments. Our apologies to those companies that we did not reach out to for this article, we will be contacting you in the future when we check in again on this matter – however, you are welcome to send us comments at any time. Thank you.

Written by Craig Aberle