Investing in a credit card terminal carries obvious benefits. A combined 75 percent of consumers prefer to shop with a credit or debit card, so accepting credit cards opens your business up to a wider market than businesses that only accept cash. Some modern credit card terminals can also process alternative forms of payment, such as mobile payments. One downside is that researching credit card processing terminals can be daunting. What do you really need to know about EMV, NFC and PCI DSS?
Consider this guide your key to understanding some of the more technical credit card terminal features that could affect your business. We’ll skip past some of the more basic comparison shopping elements (like pricing and customer support) that you probably already feel comfortable assessing. Instead, we’ll dive into features that impact your business’ ability to strengthen information security, avoid fraudulent transaction liability and more. We’ll tell you the questions you need to ask before choosing a POS terminal and break down the jargon so you feel confident about evaluating the answers.
Why Does EMV Matter?
If you’re shopping for a traditional credit card terminal model for in-person transactions, one of the first features to look for is EMV technology. Skipping out on this feature puts your business behind the credit card security curve and can even leave you liable to cover the cost of fraudulent transactions.
EMV (Europay, Mastercard and Visa) is the secure technology standard that most parts of the world use for credit cards. You may also know EMV as “smart card,” “chip and PIN” or “chip and sign” credit card technology. The United States adopted EMV technology after concerns rose about credit card fraud and large data breaches (such as the Black Friday 2013 Target data breach that compromised 70 million customers’ information).
Old cards worked by scanning the information stored on a magnetic strip when the cardholder swiped their card. Because the information on the strip didn’t change, a thief who successfully accessed the data could use it over and over again. EMV cards use a tiny computer chip that is embedded in the card. The chip creates unique transaction codes each time, making it much harder to steal information and make unauthorized transactions.
As of October 1, 2015, the liability for card-present credit card fraud falls on whichever party was least EMV compliant. That means it is essential to keep EMV credit card processing standards up-to-date so the potential cost of a fraudulent incident doesn’t fall back on the merchant. There are three levels of EMV certification:
- Hardware: Testing the physical terminal you use for credit card processing
- Software: Testing the software kernel that transmits payment information
- Application: Testing how well each major credit card brand works with the entire processing solution
How Will the Terminal Keep Up With Future Tech Developments?
You want to select a credit card reader that can keep up with the times. After all, it would be a shame to devote so much time to comparing products and investing in technology only to select an option that feels obsolete in a year or two.
Near-field communication (NFC) is a form of technology that allows two applicable electronic devices to communicate when they’re within roughly 1.5 inches of each other. You may have seen NFC in action when a concert ticket or airplane boarding pass is scanned off someone's phone, or if a customer at a store used Apple Pay or a similar form of mobile payment.
Mobile payment is by no means a major payment method yet, but it’s worth considering this consumer demographic. A TSYS report from 2016 stated that only 13 percent of consumers had made a mobile payment at a retail location in the last year. But the year before, only 7 percent of customers had done so. A report from PYMNTS and InfoScout stated that around 22 to 25 percent of consumers used Apple Pay, the most popular mobile payment option, in 2017. Another reason for low adoption might not be consumer preferences but NFC availability at the point of sale. Fitbit released its first NFC-enabled fitness tracker in 2017, showing that there is likely demand among consumers. Mobile payments may or may not taper off in popularity, but choosing a terminal with NFC capabilities allows your business to support customers who prefer this option.
Some developments in credit card processing technology sound like something out of a spy movie, or even a science fiction universe. Using biometrics for transaction authorization is far from the norm, but it’s a feature some credit card companies already offer. MasterCard released a biometric card with a built-in fingerprint scanner in April 2017. Should we all expect fingerprint scanning to become the new norm for credit card transactions? It’s too early to tell, but biometrics shouldn't be considered off the table (not to mention that even a fingerprint isn’t fraud-proof).
The bottom line is that credit card agencies and other companies are experimenting with exciting new developments in payment options and credit card security. Keeping tech developments in mind when you’re equipping your store helps you stay ahead of trends.
Is a Smart Terminal a Smart Investment?
Credit card processing options have expanded far past standard terminals, and for good reason. Traditional credit card terminals can’t communicate with software or other devices. They rely on paper receipts to record transactions. If you have an e-commerce component to your business, you’ll need a separate system to handle online transactions. Look into Smart Terminals instead, and you’re more likely to find a tool that simplifies your transaction processing workload.
Ideally, you want to store customer transaction information in one place, so you don’t accidentally overlook or misplace data. A Smart Terminal can connect with a corresponding Virtual Terminal to combine and log a complete transaction history. This is important for accounting reports, too. Digitally stored batch reports eliminate the need for long paper receipts that need to be organized and filed. Searching through digital records may be faster and easier than hunting through a physical filing cabinet for reports that can get water-damaged or slip into a hard-to-see spot.
Other features, like digital signature capture, provide a higher level of information security and a more convenient customer experience. Remote signatures let you capture an electronic signature for customers shopping online or by phone. Taking advantage of the e-commerce market gives businesses a wider reach and customers a chance to shop at home at whatever time is most convenient for them. Signature capture also protects the business by storing a digital record that proves the customer authorized the transaction. In the event of a chargeback, a business that can’t prove customer authorization loses the dispute by default.
Although chip-and-signature authorization is on its way out, there are still numerous instances when you'll need to capture your customers' signatures. These include when processing magstripe cards, when requesting a tip, in the event of an EMV fallback and for warranties, refund policies, and other terms. Advanced terminals with an email receipt option can be useful as a marketing tool. Giving customers the power to select an email receipt at checkout is a perfect opportunity to invite them onto a digital mailing list.
In some cases, Smart Terminals can be shared across multiple computers, instead of requiring a one-to-one connection. This can cut down on the number of terminals required to handle multiple checkout points, and can reduce or eliminate bottlenecks. Terminals have progressed past the simple functionality of processing a transaction. An advanced Smart Terminal, in a savvy business owner’s hands, can be an accounting and marketing aid as well as a crucial piece of point-of-sale equipment.
Does the POS System Require Middleware?
Point-of-sale (POS) systems run on one of two kinds of software. Native software is a program you install and run on your computer. Software as a service (SaaS) runs online and stores information in the cloud. Typically, native software uses an additional software component, called a software driver or middleware, to process transactions.
Middleware is additional software downloaded onto the computer you use to process credit card transactions. The middleware communicates with the Level 2 kernel (i.e., the software level of the EMV credit card reader), the POS system, the processor and often the cardholder’s bank. As you may imagine, adding an additional software system that the transaction codes need to move through also adds time. EMV chip cards have a reputation for taking longer to process than traditional, magnetic-strip cards, and the additional step of middleware is part of the reason why.
Using middleware puts your business within PCI scope: Anything that stores, processes or transmits cardholder data has to meet PCI security standards. Middleware is stored on your computer, so both the computer and the network you use to run the middleware software fall under PCI scope. This means you could be subject to annual PCI audits and quarterly software scans to check the security systems you use to protect sensitive cardholder information.
PayJunction has found a way to relieve the burden of PCI compliance responsibility from the business. PayJunction’s EMV API and semi-integrated solution is EMV Level 3 certified and PCI Level 1 compliant, and it can communicate with native POS software as well as SaaS solutions. The terminal is cloud-controlled, rather than downloaded on your computer. If your computer is transmitting the cardholder’s transaction information directly, all the information is there to get hacked. With a cloud-controlled solution, the computer never touches the data.
As a business owner, you don’t have to worry about adhering to the same strict credit card standards as you would if you used middleware. You take less liability onto your business and rely on the Smart Terminal to protect customer information. Meanwhile, customers may not know their EMV from their PCI DSS, but they can appreciate a transaction speed of 3.61 seconds — nearly four times faster than average.
Why Are Customer-Facing Terminals Better?
The orientation of the terminal and keypad is one of the simplest features to consider, but it can have a big impact on customer convenience, satisfaction and security. The next phase of chip-card technology is expected to be chip-and-PIN authorization. To promote EMV card use in the coming years, you need a terminal that’s easy for the customer to access.
As a reminder, the fraud-prevention improvements of EMV credit cards benefit both merchants and consumers. Taking steps to let customers use a chip card that requires PIN authentication may reduce the number of chargebacks your business faces for fraudulent transactions. A customer-facing screen supports several other important benefits, including:
- Paper waste reduction: Signature capture can save hundreds of dollars that would otherwise go to printing and storing traditional receipts. You’re benefiting the environment along with your company’s office supply expenditures and security. Storing signature information can be helpful for card-not-present transactions later, too.
- More convenient, alternative forms of payment: If the terminal also runs NFC technology, customers may be able to use mobile payment methods. As with a PIN or signature authorization with a chip card, customers need the terminal to be within reach so they can scan codes or connect devices via NFC.
- Minimal card-handling responsibilities for employees: Credit cards can carry a surprising number of germs. Minimizing the number of times your employees need to handle cards promotes a healthier workplace.
Although credit card terminal features may seem cluttered with acronyms at first, it’s worth understanding the technical side. Your choice of credit card processing equipment will impact transaction ease, speed and security, so it’s smart to consider your options carefully. When you understand what features to look for, you’re better poised to find a terminal that will improve the register experience for both customers and employees.
What considerations did you learn about from this guide? What factors are you weighing as you make your purchase decision? We'd love to hear from you!