Progressive Grocer

JUN 2016

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180 | Progressive Grocer | Ahead of What's Next | June 2016 Point-of-sale Systems Technology Each unique combination of POS system, payment device and processor must be carefully tested and certifed. When you consider that the certifca- tion for MasterCard, Visa, Discover and American Express are all separate, there are thousands of these combinations." Daunting Delay Peter Larkin, president and CEO of the Arling- ton, Va.-based National Grocers Association (NGA), notes that his members are frustrated with the slow pace of EMV implementa- tion. Te vast majority of members — from single- store operators to regional chains — invested tens of thousands of dollars in new hardware and software well before the October 1 deadline, "only to be left waiting on a massive backlog in the certifcation process, which is controlled by the card networks," Larkin wrote in a recent essay. "Te certifcation process, which is mandated by the card networks, has experienced a number of delays that range from the card networks' late deliv- ery of technical code to other complications slowing the certifcation process," Larkin said in the essay. "None of these delays are the fault of merchants, yet it's the merchant who is facing an onslaught in new chargebacks as well as confusion among consumers who don't understand why they can't use their chip cards at their local supermarket." Merchants that have made the investment to comply with the Oct. 1 deadline should be given a "safe harbor" and shielded from EMV-specifc chargebacks, according to Larkin. "It's time for the card networks and banks to stop passing the buck onto the backs of merchants, but rather they should work together with merchants to further eliminate fraud by issuing credit cards with PINs and work to speed up the EMV certifcation process," he wrote. ECRS' Steele says that retailers spent a lot of money buying new payment-processing terminals for their stores despite the low adoption rate of the payment processors. "Without consideration for this expense and efort, the chargebacks began to roll in late in the year," he observes. "Retailers and their POS partners have watched powerlessly as this practice has continued into 2016." Other technology experts familiar with the EMV issue point to a more basic reason for the delay: cost. Bryce Austin, CISM, strategist and CEO for TCE Strategy, based in Minneapolis-St. Paul, says that the back-end systems needed to support EMV are antiquated and need a signifcant upgrade — or a complete replacement. "EMV requires grocers to invest not only in new hardware, but in software integration and operation changes to support it as well," afrms Ken Paull, chief revenue ofcer at Cayan LLC, a Boston-based provider of payment technologies. "Every time a card is swiped, instead of reading generic data from old magnetic stripes, new smart chip-enabled de- vices are now communicating with chips to process their unique data." Ready — or Not? When will payment terminals in grocery stores be ready for EMV cards? "EMV is trending in the right direction, ac- cording to Paull, "but it is still most likely going to take most of 2016 and into 2017 for all grocers to transition to EMV. Te petroleum industry was given two additional years, until October 2017, to be subject to the chargeback liability shift, due to the complexities of implementing EMV at the pump. With the complicated ecosystem, including EBT and e-WIC, in the grocery market, possibly there should have been a greater lobbying efort to attempt to gain at least a one-year extension." Steele, of ECRS, claims there never was — nor is there now — some specifc date when the "EMV Big Bang" will occur. In general, retailers will see diferent solution sets come online, one at a time, over the coming months. ECRS has completed certifcations for two major payment processors: First Data and WorldPay. When fnal implementation is complete, there will be signifcant advantages for grocers and shop- EMV requires grocers to invest not only in new hardware, but in software integration and operation changes to support it as well." —Ken Paull, Cayan LLC

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