Customer Scott Fiddelke uses his smartphone to make a purchase at Walgreens in North Liberty. All payment terminals at Walgreens stores accept EMV ‘chip cards,’ as well as the mobile payment service Apple Pay.
By Chase Castle
chase@corridorbusiness.com
For Harold van Beek, local businesses’ slow adoption of new payment card technology is playing out in a familiar scene.
Mr. van Beek, owner of Jewelry by Harold in North Liberty, emigrated to Iowa City with his wife, Astrid, in 2006. Prior to the move, he was a jeweler in the Netherlands, which like the rest of Europe, underwent a transition to freshly adopted Europay, MasterCard and Visa (EMV) payment card readers in the 1990s.
EMV technology improved on standard payment cards’ magnetic strips by using an integrated circuit card (ICC) that generates a unique, one-time for each transaction. The code is then sent to the customer’s bank account over a network, which then verifies the code’s authenticity and sends confirmation back to the terminal.
The transition was a slow process, he said, and closely mirrors U.S. merchants’ reluctance to adopt the same technology almost 20 years later.
“What we’re going through now is basically what we did [in Europe] in the mid-to-late 90s,” Mr. van Beek said.
In the United States, the switchover to EMV technology officially began Oct. 1, when liability for fraudulent in-store purchases made with MasterCard, Visa and American Express cards shifted to whichever party has not yet adopted the chip-based technology. That means the financial institution that issued the card or the merchant that facilitated the transaction may now be responsible for disputed charges, depending on which party was least EMV-compliant.
Prior to the change, consumer losses from stolen, counterfeit or compromised cards generally fell on the issuing bank or payment processor, depending on the card’s terms and conditions.
According to The Strawhecker Group, an international consultant for the payment industry, only 37 percent of U.S. merchant locations were EMV-ready four months after the liability shift. The group’s previous survey of payment processors and providers estimated that more than 40 percent would be EMV-ready by that time, showing a slower pace of implementation than expected.
Kristie Bell, director of communications for the Kum & Go convenience store chain, said her company plans to install EMV card readers in all its stores by the end of the year.
“We’re just waiting for some of those other pieces to come together with our vendor partners,” Ms. Bell said. “We’ve got to make sure that we’ve got the right software, that we’ve tested it appropriately, and that all of it’s working together the way it’s supposed to.”
Ms. Bell said although Kum & Go stores statewide use the same point-of-sale software, they don’t use the same card readers, some of which were inherited from acquired stores.
“It’s a complex process, so it’s not just a matter of buying a POS [system] and installing it,” Ms. Bell said. “There’s the software vendor that we work with, there’s the payment vendor. It’s a series of connected vendors, and if everyone’s not in alignment, it can’t happen.”
Phoebe Roberson is the owner of SonShine Dry Cleaners in North Liberty, which opened in September 2014. At the time of the store’s opening, credit card processing companies were already promoting EMV card readers ahead of the 2015 deadline.
At that time, Ms. Roberson said there were few cost-effective options for EMV-ready point-of-sale systems, namely due to the business’s inventory and service demands as a dry-cleaner, as opposed to more expansive software options available for retailers or restaurants.
“For me, I wanted everything to be able to run together, and so I can run the cards right out of my POS [system], which does a lot of things for me, as opposed to running a separate batch,” Ms. Roberson said.
She said she may, however, adopt a new, cloud-based computer system in September that would allow not only for EMV card readers, but also track dry-cleaning deliveries and automatically notify customers via email when their clothes are ready for pickup.
“There are some questions with that, too, though, because when you go cloud-based, you are even more so ‘out there,’” Ms. Roberson said, noting that privacy concerns arise whenever personal data is transmitted over the internet. “Even though it’s protected, nothing as we know is totally protected. It just isn’t.”
