Of the seven billion people on the planet, more than 1 billion individuals have smartphones or tablets. Increasingly, data shows that more consumers rely on mobile technology to help them as they make important day-to-day buying decisions -- from gathering information about products and services to paying for transactions at the point-of-sale (POS).
To capitalize on the proliferation of smartphones and tablets, retailers and other companies need to make their business processes more mobile-friendly. This helps businesses improve efficiencies, enhance customer satisfaction, reduce costs and drive more revenue. But, before businesses can incorporate mobile into their sales processes, they need to address one huge concern: security.
In the United States, POS security presents a major concern because it’s where 46% of worldwide credit card fraud takes place. One way businesses in other parts of the world are countering this issue is by transitioning to the Europay, MasterCard and Visa (EMV) global payment standards. Yet even though almost half of the world’s credit card fraud takes place in the U.S., the country lags behind the rest of the world in adopting the EMV standard.
What it means to be “EMV approved”
The EMV global payment standards were first introduced in France in the mid-90s. It is the most widely accepted payment standard outside the U.S. According to the EMV standards organization, more than 1.55 billion EMV-accepted cards are in use around the world.
While many people have heard of EMV, most aren’t exactly sure what it means to be “EMV approved.” EMV approved technology requires certain specifications for the physical and electronic components of smart chips designed for payment instruments--mainly debit cards and credit cards. EMV certified devices assure that payment instruments contain embedded microprocessors that meet certain standards for storing and securing cardholders’ data.
EMV enabled devices communicate with a microchip inside customers’ smart card. The chip contains the information required to authenticate the card when it is presented to make a payment. The customer must then enter a PIN into the terminal to validate their identity (Chip and PIN) or provide a signature (Chip and Sign).
The two-factor authentication process validates the card and the cardholder. These smart cards provide consumers and businesses a more secured payment alternative compared to the traditional magnetic stripe that contains encoded customer information which can be copied much more easily.
Benefits of adopting EMV
The primary benefits of EMV POS technology centers on providing a more secured buying experience for you and your customers in the following ways:
In essence, EMV reduces the chance of your business accepting bogus cards and incurring unwanted liability.
The countdown to 2015
While U.S. acquiring banks had until April 2013 to migrate to EMV, merchants and card issuers have two years left to migrate until their time runs up. During this period, EMV chip cards will also have a magnetic stripe, which ensures that businesses will have the ability to accept all payment methods during the transition and have the time needed to adopt an EMV certified system into their operations. While most of the world is already using EMV approved devices, failing to implement this technology into your operation can put you at a competitive disadvantage in local and global marketplaces.
Why mobility matters
As merchants and their customers become more technology savvy and reliant on mobile devices, businesses are looking for a point of sale solution that leverages industry best practices, incorporates all of the latest security features, and uses technology that’s going to be around for years to come. Therefore, it’s important to implement the right solution up front, so you’re not investing a substantial amount of money in one technology, only to replace it the very next year.
While many businesses have yet to transition to mobile point of sale, all signs point to the fact this technology is here to stay. And although there remains some speculation over whether the entire word will ever truly adopt the global EMV standards, the countdown to the 2015 deadline continues on. As a result, many businesses have decided to use the “kill two birds with one stone” strategy, and are now implementing a POS solution that’s not only mobile-enabled, but also EMV approved.
Now the challenge lies in finding a mobile EMV solution that’s not only cost-effective, but is also quick and easy to implement so your business doesn’t get left behind. Luckily, solutions such as these are starting to emerge so that the most forward-thinking businesses have the tools they need to stay ahead of the curve.
Expands to businesses of all industries, sizes and global regions
By Ken Paull, CEO of ROAM
Mobile point of sale (POS) is changing at lightning speed.
Demand is moving upmarket. Technology, while more widely available, has also become more complex. Meanwhile, the sales and support infrastructures required to support the needs of midsize and large businesses continue to grow.
The stakes are high; there’s both tremendous opportunity and risk for all the players in the industry.
The (not so) good (not so) old days
Mobile POS has evolved as an outgrowth of the traditional countertop payment terminal business.
When payment terminals with wireless capabilities and battery power came to market about 10 years ago, a high cost of ownership and a lack of network coverage limited their use. The terminals were expensive to acquire, maintain and replace. Plus, wireless coverage was inconsistent outside the downtown areas of major cities. As a result, the use and market for early wireless terminals was limited to high volume businesses in metropolitan locations. One example of early use would be a major railway transportation company accepting passenger payments aboard its trains.
The wireless payment terminals got some initial traction, but not the trajectory toward critical mass we see now.
Starting at the bottom
To provide ISOs and Acquirers in the market with a more universally available product with a more practical form factor, the founder of ROAM created a business using a specialized phone with a magnetic stripe reader. When you build a discreet hardware package, however, you run the risk that it may quickly become out of date. Back then, no one could imagine how rapidly smartphones and other technology would advance.
ROAM came up with a subsequent innovation – a more ubiquitous hardware package that included the industry’s first secure mobile card reader with an audio jack that attached to the phone. Adoption was initially slow; the technology was ahead of its time. Plus, while financial services raced very quickly to embrace ecommerce, that wasn’t the case with mcommerce at the outset.
Then Square came along, galvanizing the lowest tiers of the market and shaking up the players in the distribution channel. The traditional ISOs and Acquirers weren’t focused on servicing the lowest tiers of the market – the babysitters, lawn mowers, mom and pop shops and other very small businesses that weren’t previously considered true merchants. At the time, these merchants couldn’t typically justify the cost of a dedicated terminal or qualify for an underwritten merchant account.
With online enrollment and automatic approvals under an aggregated merchant account, Square became a marketing machine focused on this new tier of merchants. Quickly, other companies, including PayAnywhere (North American Bankcard) and GoPayment (Intuit) were also competing for market share.
Typically, emerging technology starts at the top with large business and trickles its way down to the smaller ones. It’s unusual – and notable – when technology starts at the bottom of the market and works its way up.
Signs of success
Mobile commerce has followed the evolution of the payments industry. Both have come a long way, quickly.
Today’s mcommerce platforms include POS and payment terminal functionality. For example, integration with backend systems, including order management and accounting, is already starting to happen. In addition to the core payment applications, other value added applications are gaining popularity, such as gift card and loyalty programs; the evolution is similar to storefront and ecommerce businesses. Mcommerce platforms are being used for personal shopping, home delivery, curbside pick-up and a growing number of other use cases.
The traditional merchant categories doing substantial volume in the U.S at all tiers of business represent a tremendous growth opportunity for the mcommerce industry. But there are also some challenges.
As mcommerce moves upmarket, the level of integration and support needed increases. At the low end, e-mail support is questionably okay. But mid-tier businesses need everything packaged and integrated. The technology becomes more complex and so does the sales and support infrastructure.
Presales engineers, technical support reps, integration troubleshooters and a variety of other experts are required. The bigger businesses are looking for solutions that include operations to support a higher commitment to uptime, version control, international support and many other specialized demands.
Regardless of the increased complexity of integration and the added operating costs, there’s a very good reason why mcommerce continues to move upmarket: mobile POS technology provides a strategic opportunity for businesses to stay ahead of their competitors. It’s likely to get easier and less expensive over time, too.
That’s good news for all tiers of the market.
Ken Paull is the chief executive officer of ROAM.