Retailer “To Do” List

Posted March 30, 2015

New Survey of Retailers Has Security and Upgrading Point-of-Sale Payment Systems as Top Priorities

Boston Retail Partners, an independent consulting firm, recently surveyed more than 500 retailers. Even a quick glance at the survey’s results suggests that top-of-mind subjects for retailers are protecting customer data from breaches, the shift in liability for those breaches from banks and credit card companies to retailers and upgrading point-of-sale systems to take advantage of EMV and NFC technologies.

In his story on digitaltransactions.net, Kevin Woodward details results of the Boston Retail Partner’s report. The following has been excerpted from Woodward’s piece and edited to fit our format.

Security is number one

In the survey…63% cited payment security as their top priority in 2015.

Equipment for processing EMV

[Retailers] need new equipment to accept [EMV] cards. [The] survey found a 650% increase in the number of retailers supporting EMV transactions within the next year.

Encryption, tokenization, NFC

Forty-five percent…said they expect to add encryption services by October to help protect card data as it moves within their payment networks, with 40% planning to add tokenization by channel to mask the card data. Thirty-five percent plan to add near-field communications (NFC) support, and 23% plan a single tokenization scheme across all of their sales channels.

Emphasis on protecting customer data

The combination of EMV, tokenization, and encryption signals a retail strategy to protect customer data on a variety of fronts. [Ryan Grogman, a vice president at Boston Retail Partners] says. “Retailers realize there are significant costs associated with a breach event and are taking significant steps to protect their customers’ data on a variety of fronts,” he says. “Retailers [who] employ a multitiered approach, combining EMV compliance with [end-to-end encryption] and tokenization, will have the strongest payment security platform.”

Apple Pay outdistancing rivals

As for why 35% of retailers plan to add NFC support, part of the explanation is that Apple Inc.’s Apple Pay has excited consumers. The survey found that 30% of retailers plan to add Apple Pay support within the next 12 months. That is the highest rating among the alternative-payments types. Only 18% plan to add PayPal support, with 13% anticipating in-app acceptance; 15% Google Wallet; 13% Softcard; and 8% each for CurrentC and Bitcoin.

One Apple Pay alternative could be a contender. Or not

With the future of Softcard uncertain, CurrentC, the mobile-payments app proffered by Merchant Customer Exchange, could be a top contender. “While CurrentC may [catch the attention of] many retailers [who] are excited by the opportunity to eliminate credit card fees, the key issue is how cumbersome the process is for consumers and sales associates,” Grogman says. “Consumers have to open the CurrentC app on their phone, open the scanner, scan the code from the cashier, and wait for the transaction to be confirmed. That may present more friction from consumers than simply paying with a credit card, and it’s certainly more clunky than the sexy interface on Apple Pay.”

Retailers looking to Apple Pay as the answer?

Apple’s branding expertise may be a factor. “However, when you combine Apple’s iconic brand, their significant investment and marketing efforts behind this service with the iPhone 6 line, and their savvy and loyal customer base, it is widely expected that adoption of Apple Pay as a payment source will continue to increase dramatically,” says John Eagles, a vice president at the consulting firm. “This will also allow retailers to start to recoup some of their investment dollars from their payment-terminal upgrades, which should create a win-win situation for both merchants and customers.”

 

 

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