Magazine Article | June 17, 2014

VARs' Guide To Payment Processing

By Business Solutions magazine

EMV: Hype Or Real Opportunity?

Don’t Miss The Boat — “EMV is big. It will be one of those things that if you turn your back to it for too long, you could lose your advantage. With companies like PayPal and Paydiant coming into mobile payments, all you have to do is look at how much money is being spent on not only mobile payment, but EMV preparedness.” — Andre Nataf, sr. business development manager, Digital Dining

Nugget — “EMV appears to be overhyped because it doesn’t necessarily fit how people use payment cards in the United States. The Chip & PIN flavor of EMV might be fine technically, but I question whether most cardholders in the U.S. are ready to scratch yet another PIN code in our heads, and signature is just plain smartless. I’ve read that EMV terminals would not have prevented the breach at Target, but from what I understand, E2E might have. So is E2E underhyped? Same for ‘POS-integrated payments.’ That said, the coming of EMV is an opportunity to promote POS system sales and upgrades based on the need to update existing payment technology. And while they’re working out the particulars and deadlines of EMV, provide fully integrated POS with E2E payment terminals.” — Dana Bargell, director of marketing, SBS/Keystroke

EMV-Related Upgrades Are Happening — “The slow adoption of EMV technology in the U.S. is primarily due to the debate over who should incur the cost. However, with the number of high-profile breaches, and the impact on customer loyalty, the conversation is beginning to turn, and we are starting to see more upgrades as retailers accept that this technology is coming soon.” — Nell Alverson, director of merchandising, ScanSource

EMV: Why? How? When?

VARs And Retailers Can’t Keep Putting Off EMV — “EMV is probably the elephant in the room that everyone is ignoring. I know the deadline has moved once, and no one seems to be that worried about the new one, but it’s going to be a big opportunity for VARs to guide their merchants through that transition in a timely manner. Plus, it actually means the end of the MSR swipe as we know it. When was the last change that big?” — Will Atkinson, president, CAP Software

EMV Means Secure And Scalable — “In payments in general, EMV is the most significant opportunity to create a secure and scalable environment. EMV would provide the ability for cloud issuers to incorporate the technology into credit cards for a global standard. This is significant because it is a natural evolution of technology and security to provide a foundation for the next generation of payments (whatever they may be). Because the EMV deadline has shifted, people are shifting from the utility of EMV to the downside of EMV, which is the regulatory compliance side. EMV is so significant because of the offline PIN support, which means true offline transaction support, that a common user can experience across the globe and the ability to add new features into EMV over the years.” — Jeremy Gumbley, CTO, Creditcall

Be Wary Of Those Who Overpromise — “While there are a number of payments solutions that claim to be ‘EMV ready,’ the reality is that there are few, if any, processor-approved EMV hardware devices ready to support EMV. Additionally, associated integration documentation doesn’t yet exist for most processors. Until there is collective guidance from the acquirers on which initial hardware/software systems will be supported, I’d be wary of solutions providers who are ensuring instant U.S. EMV support. As EMV solutions begin to filter into the market (once specs become finalized and available), ISVs should choose between those that offer support for multiple hardware devices to ensure mobility between payment processor relationships going forward.” — Justin Zeigler, marketing director, Datacap Systems

EMV Is A Disrupter — “As new players come into the mobile payment scene and old players try to role out EMV, we will see changes to the landscape that will be disruptive. This will open the door for larger companies with mobile platforms to take market share.” — Andre Nataf, sr. business development manager, Digital DiningSubscribe to Business Solutions magazine

EMV Creates Upgrade Opportunities — “Given the liability shift that is coming in October of 2015, relative to credit card data security, we believe there is opportunity to capitalize on the upgrade cycle to deploy EMV-compliant payment terminals. This can also come with opportunity to upgrade in-store network infrastructure with more robust solutions that feature advanced security, while also embracing mobile solutions for both store associates and customers.” — Nell Alverson, director of merchandising, ScanSource

EMV Isn’t Easy — “The time and effort required for an EMV certification are far beyond the mag stripe certifications that ISVs are accustomed to. ISVs will need to either significantly increase the resources dedicated to keeping their in-house payments solution current, or use a third-party solution. Resellers will have to understand how to properly install these new solutions.” — Harry Hargens, director of PAYware channel programs and business development, VeriFone

Barriers, Obstacles, & Roadblocks

Competition — “Many VARs will likely encounter encroaching technology vendors in this space, particularly companies that offer low interchange fees, but little service. It is incumbent that VARs educate themselves on the variety of new services that are entering the market, including mobile marketing and analytics. It gives providers an excellent opportunity to break out of commodity selling by offering new solutions that can make a profound impact on merchants.” — Mitchell Cobrin, CEO, AnywhereCommerce

More Competition — “There are lots of competition, education, and cost so you have to work with your partners to give you solutions that are sellable and profitable. The barriers here are that no one knows the tsunami is coming and they are caught up looking at the receding water line. It is your job to educate your clients and prospects before your competition does.” — Andre Nataf, sr. business development manager, Digital Dining

Option Overload — “There is a handful of potential stumbling blocks for VARs. There’s mobile payment ‘option overload’ due to all the mobile payment options being pushed at retailers. Complicated and lengthy solution sale cycles for these solutions are common as well.” — Kathy Crumley, global payment solutions, Motorola Solutions

Lack Of Understanding — “The merchants may not feel they need to update their hardware since the mandates related to EMV don’t take effect until 2015. They may also feel that their infrastructure is ‘secure’ enough and that they don’t need to be concerned about breaches of card data. This is an opportunity for the reseller to become a trusted advisor and help the merchants understand how to be compliant and protected from being liable for any breaches in data.” — Nell Alverson, director of merchandising, ScanSource

Lack Of Urgency — “Customers will argue that most of their customers don’t have EMV cards yet, so why should they put in terminals now when they can do it later? Focus on the benefits of integrated payments and E2E, the two combined with the bonus of being ahead of the game by being EMV-ready.” — Dana Bargell, director of marketing, SBS/Keystroke

Payment Processing Sales Advice

To Educate Your Customers, You Must Be Educated — “VARs should help educate the changing dynamics that are impacting the payments industry, including new fraud prevention securities. The major card brands like Visa and MasterCard will soon be requiring merchants to support EMV-ready cards, which have chips embedded in them. VARs should identify technology partners that are already EMV certified — as well as PCI certified, to ensure that there is no disruption to their merchants when these new technologies are rolled out.” — Mitchell Cobrin, CEO, AnywhereCommerce

Don’t Treat Payments Like A Commodity — “Integrate the technology into your sales process. Don’t just mention that you can link to so and so, or trot out a list of integrations and hope the customer picks one. Have a preferred partner in mind on each deal, and show the customer the benefits of that partner, the same way you show the benefits of the specific hardware or software solution you’re proposing.” — Will Atkinson, president, CAP Software

Don’t Put All Your Eggs In One Basket — “Work deals with several payment partners so that you don’t put your entire portfolio at risk if you have a partner or two fall off during this disruptive time period.” — Andre Nataf, sr. business development manager, Digital Dining

Listen & Learn — “Craft a merchant/retailer profile which identifies pertinent details around the retailer’s business model [it will be amazing what you will learn about the retailer through this data collection process]. Be an active thought leader — not only to your customer portfolio, but within the industry. Above all, listen!” — Kathy Crumley, global payment solutions, Motorola Solutions

Sell New Capabilities — “With the advent of iBeacon and a host of other technologies surrounding GPS and location fencing, it’s clear that tablets/phones are going to be invaluable information gatherers. Knowing where someone went and for what will be followed shortly by how much they paid and test marketing around how a customer can be swayed to make alternative choices next time. It’s important for VARs to explain to merchants how their guest experience will likely change as a by-product of deploying the latest payment solutions.” — Scott Carcillo, CIO, Merchant Link