The digital payments landscape is changing at a rapid pace. Consumers are finally adopting digital wallets, like Apple Pay and Android Pay.
The deadline for merchants to become EMV compliant, the global standard that covers the processing of credit and debit card payments using a card that contains a microprocessor chip, is quickly approaching.
Today’s consumers show an increasing desire to use new payment methods because they’re convenient. However, this presents a challenge to merchants, as many have not made the switch to the modern technology required to accept these methods since they’re generally hard-wired to resist technology changes.
Merchants must evolve with technology or they’ll find themselves unable to compete and in danger of losing customers.
Looking long term, the benefits of adopting new payment technology will outweigh the cost of transitioning. The fact is that new payment technology will reduce fraud risk due to counterfeit cards, provide greater insight into shoppers with sophisticated data and will ultimately lower costs for merchants over time.
The value merchants will get out of new payment methods:
Security
Investing in new payment technology will help reduce the risk of fraud. EMV, as an example. Beginning in October 2015, merchants and the financial institutions that have made investments in EMV will be protected from financial fraud liability for card-present fraud losses for both counterfeit, lost, stolen and non-receipt fraud.
EMV is already a standard in Europe, where fraud is on the decline. In turn, American credit card issuers are being pressured to replace easily hacked magnetic strips on cards with more secure “chip-and-PIN” technology. Europe has been using Chip, and Chip & Pin for years.
There’s nothing that can guarantee 100 percent security, but when EMV is coupled with other payment innovations, like tokenization that separate the customer’s identity from the payment, much of the cost and risk of identity theft is eliminated. If hackers get access to the token, all they get is information from one transaction. They don’t have access to credit card numbers or banking accounts, so the damage that can be done is minimal.
As card fraud rises, there’s a strong case to upgrade to a payment system that works with a smartphone or tablet and accepts both EMV chip cards and tokens.
Insight into Customer Behavior
In addition to added security, upgrading to new payment technology opens up a door to greater customer insights, improved consumer engagement and enables merchants to grow revenue by providing customers with receipts, rewards, points and coupons. By collecting marketing data at the point of sale a business can save on that data that they only dreamed of buying.
Investment Outweighs the Cost
New technology does have upfront costs, but merchants need to think about it as an investment that will grow top-line revenue. Beware of providers offering free hardware. Business can benefit by doing some research on the actual cost of the hardware.
By increasing security, merchants are further enabling mobile and emerging technologies, which will make shopping easier.
Customers will also be more confident in using their cards.
As an added bonus to merchants, most EMV-enabled POS equipment will include contactless technology, allowing merchants to accept contactless and mobile payments. This will result in a quicker check-out experience so merchants can handle more transactions.
Faster customer checkout.
The best system for is the one that makes the merchant as efficient and profitable as possible, as well as improves the customer checkout experience.
Retail climate is competitive, merchants have two choices:
Do nothing or embrace the fact that payments are changing. Transitions from old systems to new ones require work and risk, but merchants who use modern technology are investing in the future and will certainly outperform those who choose to do nothing.