Tripling in One Year, Visa Chip Card Transactions Surpass 1 Billion in March

Source: Tripling in One Year, Visa Chip Card Transactions Surpass 1 Billion in March

Elo Paypoint debuted at Polo Championship at WestWorld


GCG Consulting, Inc. debuted a new POS unit by Elo using Verifone Cloud POS software at the Polo Championship held at WestWorld in Scottsdale, AZ.


PayPoint is an all-in-one mPOS solution that brings simplicity and elegance to the point of sale. Offering sleek, modern style with peripherals built in, the PayPoint platform is retail hardened and built to last with a three-year warranty.

Plug & play.

With its single cable design, PayPoint makes setting up the point of sale system fast and easy. Just unbox, plug in, connect, and go.

Sleek design.

For retailers and operators, counter space is always at a premium. Ensuring that the counter looks inviting and remains functional is of the utmost importance. With its small footprint and attractive design, PayPoint turns the cash wrap into a beautiful and functional space to allow you to better serve your customers.

Functionality delivered.

PayPoint integrates a receipt printer, cash drawer, MSR, barcode scanner and customer facing display. The flip-for-signature screen encourages shopper engagement and electronic receipt delivery. Bluetooth connectivity and expansion ports allows for the addition of optional peripherals such as a handheld scanner or weight scale.

For traditional payments, leverage the built-in MSR or add Elo’s optional NFC reader for contactless payments and proximity marketing. For EMV support, pair with your preferred EMV reader via USB or Bluetooth to provide your customers with a full-function, mobile point of sale experience that supports highly secure EMV transactions.

Integrated flexibility.

Whether working with one of Elo’s strategic point of sale software partners or deploying your own application, you can easily add the mPOS functionality you need to run your business.

Manage remotely.

With EloView, you have the power to manage your PayPoint system remotely. Deploy your POS application, load content, and update the operating system easily and effectively with the secure and scalable device-management platform.

Other features.
  • Integrated receipt printer, cash drawer, MSR, barcode scanner and customer facing display
  • 13.3-inch projected capacitive (PCAP) display
  • WiFi and LAN network connectivity
  • Bluetooth module and expansion ports for external peripherals
  • Ability to secure base to tabletop or desktop
  • Three-year warranty
  • Android SDK that allows developers to certify PayPoint with ease

Visa’s ‘Quick Chip’ EMV Gets a Chance to Sway Merchants

Visa announced Quick Chip four months ago, but until today the card brand has not had a place to showcase its faster EMV technology to merchants who feel burdened by the EMV payment process.

With the New Leaf grocery store chain in the San Francisco area becoming the first retailer in the U.S. to use Quick Chip, Visa says it now has the perfect example for acquirers and processors to follow.

“What we see now is a rapid development time and a go-live time in moving to Quick Chip,” said Stephanie Ericksen, vice president of risk products at Visa Inc. “This is encouraging news that we now can go straight to Quick Chip, and are showing how well it works.”

The example of how Visa and Index, a San Francisco-based payments gateway and technology provider, were able to set up a New Leaf store in just a few weeks is coming at a good time.

Quick Chip has started slowly, in part because merchant acquirers are still trying to wrap their arms around regular EMV deployment. “A lot of players in the industry have already been working on the full EMV implementation and many were right in the middle of that [when Quick Chip was introduced],” Ericksen said. “Many had to finish those before starting on Quick Chip.”

Index knows from experience how that works. The company had completed a full EMV implementation at one of New Leaf’s seven stores just weeks before upgrading it to Quick Chip.

“The other stores are going straight to Quick Chip,” said Joe Koenig, partner technology manager at Index.

While it is not a major learning curve for consumers to switch from waiting 10 or more seconds to less than three seconds for a card reader to authorize a chip card and create a cryptogram, it does help merchants with staff training if they can just go straight to Quick Chip now, Koenig said.

It also helped Index that the New Leaf chain uses Toshiba Ace POS and Verifone PIN pad hardware, two products the Index software integrates into quickly, Koenig added.

The initial launch of Quick Chip, a free upgrade for processors and acquirers, should be welcome news to an industry that has faced plenty of challenges with EMV implementation, said Thad Peterson, senior analyst with Boston-based Aite Group.

“The latency of the transaction at the point of sale was raising a real concern about the value of the transaction in the minds of consumers and merchants,” Peterson said.

Because Quick Chip converts an EMV transaction experience to one similar to swiping a mag-stripe card, everyone involved should find it more appealing, Peterson said.

“From that perspective alone, it’s a major enhancement,” he added. “”The process can also accelerate implementation of EMV with merchants who have yet to do so, and that will also be a real benefit.”

Quick Chip has the potential to carry such an impact, if other merchants have the same experience as New Leaf. “The upgrade to Quick Chip was fairly invisible from our perspective,” Brendan Lazarus, IT manager for New Leaf Community Markets, said in a statement through Visa. “Once we decided to move forward, working with Index, the process moved quickly.”

Want a Killer Wallet App? Forget About Rewards.

Despite improvements in technology, most consumers remain skeptical of mobile wallets, often testing them once or twice before abandoning the idea and returning to traditional payment methods.

So what feature will finally make a “killer” mobile wallet app?

It won’t be rewards. Rewards cards are frequently used as the payment vehicle for mobile wallets; however, rewards are expensive for credit card companies and generally subsidized with interchange. The difficulty of using an app instead of a plastic card is that issuers are not able to offer better rewards than those already available. Also, if interchange rates in the U.S. follow those in Europe, even current rewards programs may not be sustainable.

Payment account optimization is the way to go. Although not as alluring as rewards, transaction optimization might be the best opportunity for banks to provide a “killer” mobile wallet. Using transaction patterns, balances and payment schedules, a future mobile wallet might be able to make an educated recommendation for which account to use for a particular transaction, as in the examples below.

Grocery store visit. Trips to buy food for the family tend to follow a fairly regimented schedule. A “killer” mobile wallet will recognize this trend and suggests which account to use based on grocery-related rewards.

Gas station purchase. Mobile wallets in the future will remember that one of your credit cards provides a rebate on each gas purchase. The mobile wallet will confirm the credit card has sufficient funds for a typical gas purchase and suggest the appropriate card to receive the optimal reward for the transaction.

Electronic upgrade. When making a large electronics purchase, the mobile wallet app will recognize the total cost is higher than a typical transaction. Based on available funds and account patterns, the mobile wallet will realize the purchase will likely be paid over several months, so it suggests a credit card with a lower APR to take advantage of the lower interest to account for the lack of rewards.

Home improvement. When purchasing kitchen appliances and cabinets for a home renovation, the “killer” mobile wallet will check your home equity line of credit and suggest that account for the household upgrades.

In each of these cases the user will have the option to override the suggestions based on individual circumstances. However, this level of transaction optimization might by the feature that increases adoption and continued daily use of mobile wallets.

Large banks have already announced proprietary mobile wallets will allow customers to view account balances before a purchase, so transaction optimization might be in the not-so-distant future.

Chargeback Policy Changes – What Are They and How Did We Get Here?

Chargebacks to merchants have become a hot topic of late. And for good reason. According to a recent report by First Annapolis Consulting, chargebacks for card-present transactions increased 50% following the October 1 EMV liability shift. While this took merchants by surprise, it did not surprise issuers who, until the October 2015 liability shift for chip cards processed at card-present non-chip terminals, were absorbing the cost of fraud for counterfeit cards. Now issuers are allowed to chargeback, or pass back the fraud to the merchants who were not processing chip cards.

Many merchants had their chip-capable terminals in place in time for the liability shift, or shortly thereafter. The problem came that having the terminal be hardware-capable of reading a chip wasn’t enough; the terminal had to be certified. Some merchants didn’t know how to obtain the certification while others were waiting on their terminal vendors or 3rd party organizations to perform the certification. These vendors and 3rd parties were swamped with requests, and faced with an entirely new process, creating a backlog that continues today.

This last point is important, as the data shows that there are two drivers of the high chargebacks –

1) According to Heartland Payment Systems, criminals are avoiding businesses that are processing chip cards and merchants processing mag stripe only are bearing the brunt of chargebacks. For example, a small grocery store chain in south Florida was hit with $10,000 in chargebacks from October 2015 through March 2016; in the same period in the prior year they had just $89 in chargebacks.

2) A new headache has been created, dubbed “friendly fraud”, when the cardholder disputes a charge knowing that the merchant did not read the chip on the card. Friendly fraud is especially difficult to detect and stop because it essentially pits a cardholder’s word against the merchant and bank, according to PaymentsSource.

Merchants are beginning to fight back, primarily through lawsuits against the Visa and MasterCard branded networks. One such lawsuit claims that “major credit card companies and the nation’s largest banks conspired to shift liability for fraudulent credit card transactions in the U.S. to merchants. The complaint claims that the move to cards that include electronic chips designed to be more secure—so-called EMV chips—has been plagued by technical glitches and used as cover to illegally shift fraud-protection costs.”

With the difficulty some merchants are having getting their terminals certified, with the chargebacks and mounting ire, the card networks acted quickly to take necessary steps to mitigate the underlying issues. Visa went first, announcing several merchant-friendly changes. Visa streamlined the certification process with the intent to reduce the length of time for certification process by 50% and then went even further by allowing merchant acquirers – banks that process merchant’s card acceptance business, to “self-certify”.

Visa also laid out two major changes to chargebacks, with a goal to reign in the friendly fraud and the volume of chargebacks merchants have to deal with. Beginning July 22, 2016, chargebacks for counterfeit fraud for transactions under $25 will be blocked – meaning issuers will have the liability for this fraud. This is a temporary change that will expire in April 2018. Another change is that the merchant is now only liable for the first ten chargebacks on any given card, as of October. After that, the issuer takes responsibility for fraud. This is to limit serial abusers of the chargeback process. Visa estimates these last two changes will cause merchants to see 40 percent fewer counterfeit chargebacks and a 15 percent reduction in U.S. counterfeit fraud dollars being charged back.

As a follow-up to Visa’s announced changes to its chargeback policy, limiting issuers to chargebacks over $25, and no more than 10 per account, MasterCard announced similar policy changes. MasterCard also added that “The MasterCard network system will now prevent invalid chargebacks for fraud occurring at ATMs and automatic fuel dispensers where liability shifts do not go into effect until October 2016 and October 2017, respectively.” American Express likewise followed suit in making similar changes to its chargeback policies.

Walmart Pay’s National Rollout Validates Mega-Retailer’s Strategy

Seven months after revealing its branded mobile payment app, Walmart is making Walmart Pay available in more than 4,600 of its stores throughout the U.S., with early figures indicating consumers approve of its “connected” app model.

In establishing Walmart Pay as a mobile payment option within its broader menu of mobile services, the retail giant emphasizes the importance of putting the retailer at the center of a mobile shopping experience. In addition to payments, Walmart’s app also supports price-matching and other services that shoppers can use within its stores.

“There is something very powerful about the ease and simplicity of Walmart Pay,” Daniel Eckert, senior vice president of services for Walmart U.S., stated in a July 6 press release. “We’re connecting all the parts of Walmart into one seamless shopping experience.”

Walmart says transactions with Walmart Pay, which launched in Texas and Arkansas in May, increased 45% in the past week, while 82% of its customers say they would recommend using the mobile payment system. In addition, three of four customers have given Walmart Pay a five-star rating.

Of the Walmart Pay transactions, 88% came from repeat Walmart Pay users.

Walmart Pay launched around the same time that the Walmart-backed venture, Merchant Customer Exchange, shuttered its plan to launch a multi-retailer mobile wallet called CurrentC.

This growing adoption of Walmart Pay reinforces the retailer’s position that it can maintain ownership of its customer relationships even as more companies bring their own mobile wallets to market.

The advancement of Walmart Pay also comes at a time when Walmart is engaged in multiple conflicts with Visa, including a lawsuit the retailer filed against the card brand related to debit transaction routing and a disagreement over the use of a PIN or signature to authorize debit transactions.

Visa quickly counter-sued Walmart, saying the retailer has reneged on a previous agreement to accept signature debit authorization.

Walmart’s relationship with Visa has deteriorated to the point where its stores in Canada no longer accept Visa transactions, citing steep fees. It is unclear at this time if the stance against Visa would extend to the Walmart Pay app when it becomes available in Canada.

But the Walmart Pay expansion in the U.S. also clearly reinforces the retailer’s longtime stance that it did not need to accept PayPal or other mobile wallets in its stores.

Swifter EMV Certification Will Aid Chip Card Transition—And Terminal Makers

Getting point-of-sale terminals through the EMV-certification process should become a bit quicker thanks to the card brands’ efforts to “streamline” the testing process. That should bode well for POS terminal maker VeriFone Systems Inc., says Vin D’Agostino, executive vice president of VeriFone Services.


MasterCard Inc. and Visa Inc. separately announced programs that would hand acquirers more responsibility to either follow the network’s testing procedures or conduct alternative test procedures if they wish. In this way, MasterCard says it is reducing by 58% the number of required tests to which acquirers must subject terminals to certify them as EMV-ready. Visa said its own policy change reduces its roster of recommended test scripts from about 35 to 14.

They also announced plans to ease the number of EMV chargebacks, which have spiked for some merchants as more consumers use their chip cards.

While the programs will take a little bit of work to get into place, D’Agostino tells Digital Transactions News the testing changes will shorten the adoption of the EMV technology.

“Ultimately, it helps merchants,” D’Agostino says. “These changes Visa and MasterCard made will allow more merchants to get EMV acceptance enabled in their stores sooner than if they’d not been made,” he says.

Getting more terminals activated for EMV on merchant countertops will accelerate EMV adoption, which potentially could boost the fortunes of POS terminal makers like VeriFone, Ingenico Group, ExaDigm Inc., and Equinox Payments.

D’Agostino anticipates VeriFone could post a record revenue figure for another quarter this year, like it did in the second quarter. The second quarter, however, was saddled with lower profits because of EMV certification delays, a slowdown in advertising revenue from taxicabs, and price competition in VeriFone’s emerging markets.

The certification delays have been particularly vexing for terminal makers’ reporting of sales on services such as tokenization and estate management. VeriFone, for example, can’t recognize EMV service revenues until systems are actually processing chip card transactions, VeriFone chief executive Paul Galant noted in an earnings call early this month. It recognizes terminal sales when devices ship from the warehouse to customers, D’Agostino says.

Historically, the second quarter is weaker than the other quarters, D’Agostino says. What many customers did was move their purchases to the third quarter, he adds. “We have a big wind at our back because the fact of the matter is more countries are adopting electronic payments,” he says. “When that happens more devices and more services from VeriFone will be consumed.”

Banks Step Up Push to Repeal Durbin Amendment

More than fifty state bankers associations have rallied behind legislation from Rep. Randy Neugebauer, R-Texas, to repeal caps on debit interchange fees.

The groups argue in a letter Friday to Neugebaurer and other members of the House Financial Services Committee that an amendment added to the Dodd-Frank Act by Sen. Richard Durbin, D-Ill., failed to help consumers and instead just benefited retailers. While the amendment has not dramatically changed payment company business models, it has sparked legal battles for years and has also played a role in the EMV migration as it took the industry several years to develop compliant routing protocols for debit transactions.

“The amendment capped debit card rates under the false promises that it would somehow benefit consumers through lower prices at the cash register and that community banks and their customers would not be harmed,” the letter says. “Congress deserves to know that an industry will keep the promises they make during the lawmaking process, but retailers cannot produce evidence that they have returned the proceeds of the Durbin Amendment to consumers in the form of lower prices.”

House Financial Services Committee Chairman Jeb Hensarling, R-Texas, has also proposed legislation that would roll back the Durbin Amendment.

Molly Wilkinson, executive director of the Electronic Payments Coalition, whose members include the American Bankers Association, Consumer Bankers Association, Credit Union National Association, Financial Services Roundtable, Independent Community Bankers of America and National Association of Federal Credit Unions also released a statement Friday endorsing Hensarling’s bill.

“The Electronic Payments Coalition supports the hard work of Chairman Hensarling and his push to repeal the Durbin Amendment as part of the Financial CHOICE Act… we thank Chairman Hensarling for his leadership and commitment to end this failed policy,” said Wilkinson.

As Signature EMV Draws Merchants’ Ire, Industry Opinion May Be on Their Side

Merchants, in their argument for PIN rather than signature authentication for EMV chip card transactions, may have industry opinion on their side.


According to an informal poll conducted this week by Digital Transactions News, two-thirds of readers agree that the merchants suing the card networks over the issue have a case. The remainder say they don’t.

The issue over the cardholder-verification method for EMV transactions has come to a head in recent weeks with two separate lawsuits.

Wal-Mart Stores Inc. in May sued Visa Inc. over claims the card brand’s rules demand signature authentication for EMV debit card transactions which, as a result, flow via Visa’s debit network rather than the merchant’s choice of network. Weeks later, The Home Depot Inc. filed suit against both Visa and MasterCard Inc. over antitrust allegations and the use of higher-margin signature authentication with chip credit cards instead of PIN authentication.

The merchants have a case, says Adil Moussa, principal at Omaha, Neb.-based Adil Consulting. “Yes, the networks and issuers would prefer signatures because of the higher interchange revenue,” Moussa says in an email to Digital Transactions News. “By switching to PIN, they wouldn’t be able to justify higher interchange rates under the pretext of risk.” Networks determine the rates for interchange, which is collected by card issuers.

While PINs have been used with debit cards for years, they have been rare with credit cards. One issue early in the EMV transition is the readiness of third-party processors that serve issuers to process PINs on credit cards. Also, most issuers choose signature authentication for their chip credit cards because consumers already are used to signing for credit card transactions. Introducing PINs for credit cards is too confusing, at least in the early stages of the EMV migration, they argue.

“Cardholders have been using PINs for their debit cards for decades, and on their cell phones for years and they don’t seem confused,” Moussa says.

Merchants have long battled the costs of accepting credit and debit card transactions, regardless of the presence of a chip in the card. “The interchange rates seem unjustifiable to many merchants given the [low level of] fraud committed,” Moussa says. “What’s more is that PIN can lower fraud even more. So the argument of the card networks is shaky.”

While credit card interchange is unregulated, debit card interchange for big banks falls under the Durbin Amendment to the Dodd-Frank Act. Issuers subject to Regulation II—the formal name for the Federal Reserve’s rule implementing the Durbin Amendment—saw their average debit interchange per transaction fall from a 2004 peak of 41 cents to 24 cents. The regulation applies to financial institutions with $10 billion or more in assets.

Most Small Businesses Still Don’t Understand the Ramifications of EMV

For the first time, retailers are facing sizable costs for counterfeit transactions but still not taking measures to mitigate their own risk, raising the question – after six months, how effective is EMV in the U.S.?

Target, Home Depot, Wal-Mart and some other large merchants are now processing chip transactions, but there are still plenty of large and SMB retailers that haven’t installed the new equipment.

Despite such a lofty increase in financial liability, many small businesses are unaware of the consequences of not updating their payments systems.

A local restauranteur I spoke with recently about EMV said he had no idea it was an issue and that the restaurant had not been contacted to upgrade their POS systems and related software. I’ve spent years talking to another local vendor, a flower shop, about not storing credit cards on his unsecured public-facing servers, but he’s elected not to upgrade because he says: “we haven’t been hacked yet.”

It seems the response to EMV has been lackluster on both sides: 88% of retailers are still unable to process chip cards, according to a survey released last month by Boston Retail Partners, and consumers don’t seem to notice or care.

We’ve all had firsthand experience with this, bearing witness to point of sale terminals with tape over their chip readers, accompanied by cardboard signs that read “do not use chip card.” Why, when the EMV liability shift has been in place since October 1, 2015, are we still swiping?

The biggest inceptive for EMV adoption is that retailers who haven’t made the transition to chip cards are now liable for counterfeit transactions that used to be covered by banks. The costs of the fraud, known in the industry as “chargebacks,” are beginning to stack up and have even more potential to grow.

Chargebacks among small and medium-size merchants rose 15% in the fourth quarter from a year earlier, according to a recent survey by The Strawhecker Group. Other experts claim the total loss due to chargebacks is probably in the tens-of-millions of dollars, and will likely continue to rise.