Building Supply Industry Profits Impacted by EMV chip card terminals

EMV terminal selection directly impacts interchange rate qualification, the bulk of credit card processing fees.

November 4, 2015– EMV, short for Europay, MasterCard,Visa, chip card terminals are in high demand, short supply, and most likely an unwelcome expense. Building material suppliers go to great lengths to negotiate with their payment processors for reduced rates, but this approach only impacts a fraction of costs. There is much bigger value is managing the entire payment process to affect the biggest component of fees – card interchange. The EMV terminal implemented will directly impact interchange rate qualification, and none of the most popular terminals recommended today meet critical lumber and building supply requirements.

Interchange rates are non-negotiable, but they can be influenced. There are hundreds of fees that can be tacked on based on each transaction type. Due to complexities, building material suppliers must have an intelligent solution to manage the payment process and ensure compliance with all the rules.

PURCHASING CARDS

To qualify for the lowest interchange rates, transactions must meet all the rules for the specific card and transaction method. For building material suppliers business to business (B2B), processing level III data for Corporate, Purchasing, and Business cards is critical. Their card use is growing and savings of 90 basis points or more for some cards is an attractive margin difference worth achieving.

mastercard rates level-lll

Sample interchange rates for the same credit card transaction; Failing to follow rules results in costly extra fees.

Countertop terminals like the popular First Data FD Series, Verifone VX series, or Ingenico iCT series, with downloaded programming, cannot support level III. The US EMV ecosystem requires a web-based payment gateway with EMV terminal and level III retail certification. For example, CenPOS has certified the Verifone MX915 to First Data, Chase Paymentech and Tsys, the latter which enables use with most processors. Merchants can use CenPOS via a web browser virtually instantly or an integrated application.

EMV COMPLIANCE DATES

While EMV is not a mandate, effective October 1, the party that does not support EMV (short for Europay, MasterCard, Visa) chip card acceptance is liable for counterfeit card, and sometimes lost or stolen card transactions. Because card issuers previously absorbed most of these losses without any notification to the merchant, businesses can expect losses if action is not taken. Additionally, non-EMV compliance fees have already been announced by at least one provider, NPC, starting January 1, 2016.

Christine Speedy, CenPOS global sales and integrated solutions reseller, 954-942-0483. CenPOS is a merchant-centric, end-to-end payments engine that drives enterprise-class solutions for businesses, saving them time and money, while improving their customer engagement. CenPOS? secure, cloud-based solution optimizes acceptance for all payment types across multiple channels without disrupting the merchant?s banking relationships.

EMV TERMINAL SELECTION IMPACTS PROFITS FOR BUSINESS TO BUSINESS

What’s the most important EMV implementation criteria for business to business retail? Supporting level III data, which increases profit margins by qualifying credit card transactions for the lowest interchange rates possible. With proper terminal selection, businesses can quickly offset the cost of compliance for chip card acceptance, and protect long-term profit margins.

“The most recommended terminals in the US, including all the First Data FD series, Verifone VX series, and Ingenico iCT series terminals, do not meet critical business to business needs to protect profit margins, ” said Christine Speedy, a global CenPOS Authorized Reseller.

Interchange is the primary component of credit card processing fees, typically accounting for over 95% of fees. For business to business (B2B), including building supply and HVAC, many customers use corporate, business and purchasing cards. By qualifying these cards for level III interchange rates, B2B merchants can boost margins significantly. For example, the MasterCard interchange rate can drop from 2.65% to 1.80%, for transactions under $7500, and even more for larger transactions.

What’s needed to qualify for level III rates? The US EMV ecosystem at a minimum requires a web-based payment gateway that has certified an EMV terminal with level III processing to a specific acquirer. That’s because the extra data needed for the transaction is too cumbersome for a countertop terminal, but can be easily managed with a cloud solution. For example, CenPOS has certified the Verifone MX915 to First Data, Chase Paymentech and Tsys, the latter which enables use with most processors. Merchants can use CenPOS via a web browser virtually instantly or an integrated application.

While there is no mandate for chip card acceptance, effective October 1, the party that does not support EMV (short for Europay, MasterCard, Visa) chip card acceptance is liable for counterfeit card, and sometimes lost or stolen card transactions. Additionally, non-EMV compliance fees have already been announced by at least one provider starting January 1, 2016.

About CenPOS
CenPOS is a merchant-centric, end-to-end payments engine that drives enterprise-class solutions for businesses, saving them time and money, while improving their customer engagement. CenPOS’ secure, cloud-based solution optimizes acceptance for all payment types across multiple channels without disrupting the merchant’s banking relationships.

For global sales and integrations, contact authorized reseller Christine Speedy 954-942-0483.

 

Credit Card Processing and EMV For Business to Business

Are business to business merchants being steered to expensive EMV credit card processing solutions? Yes. Too many banks, acquirers and software companies have limited EMV terminal solutions, and none of them are the best solution for business to business (b2b) companies that have a retail component.

Critical Credit Card Processing Needs for Business to Business

  1. Level 3 processing to reduce merchant fees. level 3 interchange rates
  2. Card not present risk mitigation for key entered and online payments, including securing card data collection, and preventing fraud.
  3. Token billing to securely store card data for variable recurring billing.
  4. Flexibility to collect payments from multiple sources and multiple payment types.

Common B2B EMV terminal solutions

There are two types of terminals. The most common type has software loaded on the terminal. For example, the Verifone VX520 with Vx820 EMV & NFC pinpad.

Verifone VX520 VX805 EMV terminal

Verifone VX520 with VX805 EMV terminal

The second type requires an internet connection to a payment gateway. The gateway  manages the terminal, which is essentially a slave to the gateway.

ingenico isc250 signature capture terminal

ingenico isc250 touch signature capture terminal with EMV and NFC.

The first option above doesn’t meet any of the critical B2B needs, yet is the most common solution offered to every company, without regard to business type. The second option is capable of meeting critical B2B needs, but only if the payment gateway supports them.  The only payment gateway with EMV certified terminal and level III processing retail certification is CenPOS. CenPOS is a merchant-centric, end-to-end payments engine that drives enterprise-class solutions for businesses, saving them time and money, while improving their customer engagement. CenPOS’s secure, cloud-based solution optimizes acceptance for all payment types across multiple channels without disrupting the merchant’s banking relationships. 3D Merchant Services is an authorized CenPOS reseller.

Business to business merchants with a retail business element are advised to consult with a payments expert who offers level III processing for retail. The rest doesn’t matter if this need cannot be met, so it’s an easy way to differentiate those who are selling whatever they have to offer and those who are solving problems to make your business more profitable.

Need an EMV terminal? The problem with desktop terminals for mixed retail & card not present

For mixed retail and card not present merchants, especially with a business to business customer component, a traditional desktop terminal can cause problems including failed PCI compliance, higher merchant fees, and increased losses from customer disputes  – the dreaded chargeback. To comply with EMV, now is the time to address multiple business needs to maximize profits.

Why is a traditional desktop terminal bad for mixed customer base?

Verifone VX520 VX805 EMV terminal

Verifone VX520 with VX805 EMV terminal

  1. Merchants have retail merchant accounts with their swiped terminal. When a transaction is key entered, it’s automatically qualifies for the worst non-qualified rate for the card type, because expected magnetic stripe data is not received.
  2. Key entered or card not present (CNP or MOTO/ mail order telephone order) transactions require additional data to protect against fraud losses. Users can bypass prompts if asked, but more importantly, the transaction is still presented as RETAIL, so retail rules apply for responding to disputes.
  3. Internal paperwork such as credit card authorization forms are PCI compliance nightmares and often don’t meet requirements to win disputes.
  4. For any business with a commercial account aspect, there is NO desktop terminal capable of qualifying merchants for the lowest fees, available only by supplying level III data.

What’s the alternative to a desktop terminal?

verifone MX915 EMV terminal

Verifone MX915 multilane signature capture terminal

Desktop software like PCCharge and ICVerify have all announced end of life because they cannot support new payment technologies like EMV. The swiper wedge that many small businesses have used do not support EMV and that won’t be changing, so they too will disappear. The alternative is a payment gateway with virtual terminal; a cloud based solution. Buyer beware. There are significant differences between gateways; many of them are not much better than a desktop terminal.

Virtual Terminal with EMV Buyer Tips:

  • Choose an agnostic gateway. That way if you want to change processors in the future, it’s not disruptive to operations.
  • Verify the gateway has an EMV certified terminal for your processor today. For example, First Data publishes their list of certified solutions here: First Data Integrated Partner Solutions Certified Listing.
  • Beware language such as, ‘EMV ready’ for both gateway and desktop solutions. EMV certified terminal is not the same as a certified solution that can be EMV enabled today with your processor.
  • Ask if the gateway supports level 3 processing for retail.
  • If the gateway cannot dynamically change transaction representment from retail to MOTO – and virtually none do- key entered transactions have the same risk as a desktop terminal.

What about mobile? Mobile EMV will largely be rolled out next year, as hardware needs to first be certified, and then all the other certification components will follow.

The only payment solution today that is supports level 3 processing for retail is CenPOS, which also has the most EMV terminal certifications of any gateways to date.

CenPOS is a merchant-centric, end-to-end payments engine that drives enterprise-class solutions for businesses, saving them time and money, while improving their customer engagement. CenPOS’ secure, cloud-based solution optimizes acceptance for all payment types across multiple channels without disrupting the merchant’s banking relationships. CenPOS is available globally. For additional information, contact Christine Speedy, 954-942-0483.

EMV chip terminal for Microsoft Dynamics RMS

What are RMS user options for EMV terminals? Here’s four options for merchants to choose from while waiting for RMS integrated EMV terminal; as of August 24, 2015, there are no gateways driving US EMV certified terminals yet.

Which is best EMV terminal for RMS users to accept chip cards today?

emv smart card

EMV chip smart card.

Which option would you choose?

  1. Choose working virtual terminal and US EMV Verifone MX915 certified terminal with signature capture, hoping the gateway gets integrated into RMS later?  Or use it short term, and switch later if another option is integrated first?
  2. Choose a payment gateway that’s working on EMV certification and RMS integration with unknown ready date? hopefully will add 3-D Secure?
  3. Wait and see? The challenge is time. The closer it gets to Ocober 1, the harder it may be to procure terminals (shortages have been common all year), implement & train etc. Additionally, merchants may have stability challenges with gateways that are integrating terminals for the first time.
  4. Buy a countertop terminal with EMV certified pinpad, and use non-integrated? The units certified will vary by payment processor. This is probably the last choice, because it can never be integrated later.

Today, card issuers bear the fraud loss if they give merchants authorization to accept the payment for a counterfeit card at the point of sale. Merchants never know about this fraud because the processor/acquirer automatically manages the response. Starting October 1, this process no longer applies. If merchant doesn’t support EMV, but the card issuer does, the acquirer is liable and can immediately chargeback the merchant’s bank account via ACH. What’s the financial risk? Nobody knows, but an estimated 63% of card present fraud losses were covered by issuers in 2012.

UPDATE 2016: Contact us for Microsoft Dynamics RMS EMV certified solutions today!