Digital Transactions Authoritative, insightful and timely information for payments professionals
By Kevin Woodward
@DTPaymentNews
No bones about it, adding EMV payment card acceptance to point-of-sale systems has been a challenge for retailers. Seventy-six percent of them, in the inaugural “State of Retail Payments 2016” study, said EMV implementation was their top challenge in the past 12 months.
Other top challenges from the study, which was fielded by the National Retail Federation in conjunction with Forrester Research and includes 59 responses from North American retailers, were chargebacks, 46%, and tokenization and encryption implementation, 37%.
Retailers of all sizes are contending with adding EMV acceptance capability to their POS systems following the Oct. 1, 2015, liability shift that means merchants must accept EMV cards or bear responsibility for counterfeit, and in some cases lost-and-stolen, fraud. The survey found that 86% will have EMV acceptance in place by the end of 2016.
For an enterprise retailer the task is complex and enormous, says Brendan Miller, the Forrester principal analyst who authored the study. It may have multiple locations, potentially with many operating on differing POS software, and it has to oversee the integration of the technologies, he says. That’s why encryption and tokenization technologies are being incorporated now, Miller says. Implementing them concurrent with the EMV upgrade was optimal, he says. Both technologies have been available for many years.
Indeed, 93% expect to have point-to-point encryption in place by the end of 2017, and 61% said they will have multichannel tokenization by then, too. Encryption protects sensitive card data while in transit and tokenization protects it by replacing the actual data with a reference number.
“EMV is important, but chip cards alone won’t do the job of making data secure, especially if they’re only chip-and-signature rather than more-secure chip-and-PIN,” NRF Vice President for Retail Technology Tom Litchford said in a press release. “That’s why retailers are working hard on technology like point-to-point encryption and tokenization that will ultimately do more to achieve the goal of putting hackers out of business. And the sooner security issues can be resolved, the sooner retailers can bring innovations to the way shoppers pay for their purchases like mobile and digital wallets.”
The report also asked about near-field communication and mobile wallets. By the end of 2016, 50% expect to be NFC-ready, with another 22% adding the technology by the end of 2017.
Doing so will enable them to move ahead on mobile wallets, though most—68%—have plans to accept one or very few of the digital wallets. Only 24% anticipate accepting as many digital wallets as possible.
Eight percent said they currently have their own branded-app with payments capability. Seven percent plan to launch their own app within the next 12 months. Just 3% will join an industry mobile-wallet consortium, and 14% have no mobile-wallet plans.
Of existing mobile wallets, Apple Pay, at 54%, will have the highest penetration, compared with 44% for PayPal, 34% for Android Pay, and 26% for Samsung Pay.
By the end of 2017, Apple Pay is forecasted to cement its position, with 22% expecting to add the service next year, compared with 15% adding PayPal, 21% adding Android Pay, and 8% adding Samsung Pay.
