Magazine Article | July 18, 2014

How To Make Money Off EMV Today

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By Business Solutions magazine

Most merchants are laser-focused on doing one thing: selling their wares. POS terminals and payment processing only gain mindshare when they stand to help the merchants sell more or threaten to lose money. While EMV is important and something retailers are going to have to deal with, the deadline for compliance is still far enough on the horizon that merchants who are aware of it aren’t feeling much urgency to spend money to update their payment infrastructures. And, of course, there are plenty of merchants who are unaware of EMV and the deadline. So, if merchants aren’t feeling the urgency of the deadline, how can VARs make money off EMV now?

“There is certainly value and money to be made in being a knowledgeable and trusted adviser, but very huge risks in using scare tactics to drive a merchant into a purchase decision. We recently advised a VAR who was selling the ‘futureproof’ concept with a specific terminal manufacturer to a sizable merchant. It turns out that the processor that the merchant wanted to use was not going to initially support that particular terminal for EMV. Had the dealer completed that transaction with the merchant, and the merchant was ultimately forced to toss out those terminals or change processors upon EMV upgrade, certainly that dealer would have been in harm’s way for misrepresentation. Instead of trying to sell them product immediately, he sold them advice and positioned himself for the longer-term relationship sale.

“We think it’s important for the VARs to develop the right relationships with industry partners that have experience with EMV development and implementations, work with those partners to develop a clear understanding of the issues, and learn how to properly present an appropriate transition strategy to their merchants. One thing about selling an evolving EMV requirement is that the VAR has a true value-add proposition for the merchants in terms of being their trusted adviser.” — Terry Zeigler, president/CEO, Datacap Systems

“Merchants will only start to comply out of fear, perceived or real, and will follow along once they see examples of other merchants gaining advantages by adopting EMV or by seeing other merchants realizing substantial losses by not adopting EMV. VARs will need to add EMV-compliant solutions and their customers will need to purchase these in order to remain compliant. In short, upgrades will be necessary and the merchants will have to pay for these. We still believe a mixture of Point-to- Point Encryption (P2PE) and EMV is still the best course of action for any VAR and/or merchant.” — Rick Taylor, CEO, BridgePay Network Solutions

“The breaches at Target and others have caused all sizes and types of merchants to rethink EMV and security. The retailers we speak with daily are more informed about the need to keep cardholder data secure and they are asking how best to do so. Would EMV have stopped Target’s breach? Not as long as magnetic stripe cards are around, and as per one of the card brands, magnetic stripe will not be going away for at least 10 years. VARs need to educate their merchants about EMV and transaction security as well. EMV is a great solution, but a comprehensive transaction security solution needs end-to-end encryption as well as tokenization to ensure customer card data is not accessible to crimeware.” — Michael English, executive director, product development, Heartland Payment Systems

“It is important to realize that EMV is not a data security solution. Rather, it is a counterfeit fraud solution. The other key benefit that merchants can realize with EMV is better accommodation of global consumers, a majority of whom are already chip card users. Due to the attention EMV is receiving by our legislators, there is also an advantage from a publicity, consumer perception perspective.” — Ed Learned, payment industry product specialist, Merchant Link

“Most EMV-enabled PIN pads support P2PE, a valuable weapon in the fight to secure cardholder data. With the future PCI P2PE standard, merchants can potentially benefit from reduced-scope PCI-DSS audits. As merchants become more EMV aware, many will expect to see new systems future-proofed with EMV support. In short, EMV support will become a threshold value and will be factored into the purchase of new systems.” — Jeremy Gumbley, CTO, Creditcall

“It’s a good service practice to let all of your merchants know now that EMV is coming and they need to be prepared for it. One way they can make sure they are prepared is that if they are looking at a POS solution, they will probably save money in the long run by purchasing an integrated point of sale solution now, rather than buying a terminal. That way, EMV can be simply added on later.

There are numerous benefits to the merchant and the VAR with an integrated point of sale solution. The merchant gets more services like inventory management or kitchen management functions, while also getting access to more payment options like prepaid and mobile.

“By getting in early, VARs will be able to attract merchants who have EMV awareness now, and will also be able to gain market share from others that waited until the last minute.”

Bill Lodes, TSYS

For the VARs, they’re creating recurring revenue for themselves, which increases their profitability. They’re also saving themselves from going back to the merchants with their hats in their hands a year from now, telling the merchants they have to upgrade their systems again.” — John Berkley, senior vice president of product, Mercury Payment Systems

“We believe there is an advantage for those VARs who get into the game now. They will have a leg up as we move into 2015. By getting in early, VARs will be able to attract merchants who have EMV awareness now, and will also be able to gain market share from others that waited until the last minute.

“A merchant may opt to switch point of sale (POS) solutions by this time next year, should their current POS provider be unable to get certified in time to meet the deadline. We don’t necessarily see a monetary gain for the VAR who is EMV-certified right now, but with each passing month, this opportunity will increase.” — Bill Lodes, director of developer partnerships, TSYS

“EMV provides security, but more importantly it provides peace of mind for both merchants and consumers. VARs should impress upon merchants that delaying their adoption of EMV is only delaying the inevitable. The sooner they begin accepting and processing these transactions, the safer their businesses will be, and the more their customers will trust them. Moreover, adopting EMV is a great way to convey to customers that merchants are keeping up with the times and implementing the best technology available. This can help them stand out from the competition.” — Russ Harty, SVP key accounts and partner channel, Merchant Warehouse

“To a great extent, VARs work for the merchant. The merchant goes to them and asks for a POS solution, but if the merchant is totally uninterested in EMV, it impacts the services the VARs can offer them.

“Basically, it depends on the merchant and on the vertical within which the merchant sells its product. For example, in fast-food restaurants, EMV needs might not be as high priority as a large retailer that is more vulnerable to counterfeit cards, security breaches, and thefts. So, while one merchant may not be motivated to make the switch to EMV just yet, another might invest in upgrading sooner than later to reduce risk. Even merchants that aren’t at high risk for fraud may consider migrating to increase interoperability, which can lead to an increase in sales due to the higher approval rates on foreign cards when processed with EMV.

“Although merchants did not face a card-brand mandate to support EMV as acquirer processors did, market forces may come into play here. If a competitor adopts EMV and promotes this to its customers as evidence that it cares about security and fraud protection, and implies that the competition doesn’t care, that could push merchants to upgrade to EMV rather than lose business. There is also reputational risk in the case of a breach or fraudulent activity that could be a larger motivator than actual fraud liability for some merchants.

“Finally, there are other motivating factors for merchants to upgrade devices besides EMV. For example, many terminals in the field still rely on PCI PTS v1, which expired in April 2014. As these devices get upgraded, the likelihood that they will be replaced by another non-EMV accepting device is nearly zero.” — Allen Friedman, director of payment solutions, Ingenico Group

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