A great deal has changed in the payments space – and really any industry dealing with accepting and processing payments – since the EMV liability shift took place in October.
While some merchants were quick to hop on board with the new payment mechanism, there were many that instead chose to focus on ensuring their transactions were protected with security technologies like tokenization and point-to-point encryption.
And while EMV remained on a future roadmap for these companies, Merchant Link’s Chief Information Officer Scott Carcillo pointed out that the risk of chargebacks is closing the gap to making EMV a reality now rather than later.
“An interesting phenomenon that’s happened is that there’s the perception that EMV transactions are slower, so customers are more focused on having point-to-point encryption and tokenization in place,” Carcillo explained, noting the challenges many merchants face, especially those in quick-service industries, to provide a quick transaction flow that still meets the point-to-point encryption requirements for PCI compliance.
But now many of the businesses that Merchant Link serves — which primarily reside in the restaurant, hotel and retail sectors and are made up of both brand owners and franchisees — are putting a hyper focus on EMV.
So what’s got them all running toward the EMV light months after the shift?
Carcillo said it all points back to chargebacks.
“Processors have been doing a lot of chargebacks and chargebacks to the franchisees are pretty detrimental,” he stated.
Chargebacks can take place when EMV chip cards that are chip and PIN are being swiped in a magstripe scenario, and while it’s not impacting every single merchant, according to Carcillo, the risk is still driving a higher adoption rate and surge toward EMV acceptance.
For Merchant Link, whose portfolio is evenly made up of store front owners or franchisees who own 10 locations or less as well as big-name brands such as IHOP and Marriott International, seeing the recent trend toward EMV in the hospitality and retail industries presented a unique opportunity.
In an effort to help its clients meet the EMV requirements for chip-based payment cards, Merchant Link decided to acquire Precidia Technologies, a Canadian based payments technology company, and leverage its payments integration technology to support EMV software wherever it was most convenient for their customers.
“We realized that we needed a middleware solution because some customers would need us to run it in our cloud on their behalf, some customers would want to be able to run it in their own cloud, while others would want the ability to have it at their site, store or property level and some would want to have it on their terminal,” Carcillo stated.
“What it gave us was the ability to create differentiation in the marketplace because depending on the configuration chosen, we don’t have a limitation on store-and-forward.”
While Merchant Link has been around for over 22 years, Carcillo explained that in the last 6 years there has been an effort to diversify significantly and grow business within the retail and hospitality industries its serves.
At the same time, MPD CEO Karen Webster pointed out that these industries are themselves going through quite a transformation, as they rise to the challenge of accepting the various new payment mechanisms being thrown their way while also navigating the best way to leverage and secure new technologies like tablets and smartphones at the point of sale.
Within both the restaurant and hospitality spaces, Carcillo noted that there has been a greater interest in using reusable tokens. Merchant Link’s tokenization solution enables the same token to be used when the same card is used for purchases within a specific brand or chain, whether it’s an eCommerce, a POS transaction, a property management system transaction, a golf transaction, an online reservation, or even a retail transaction.
This use of this solution, especially within environments that are heavily franchise-owned and operated, can be leveraged to also provide data analytics and predict buying behavior which Carcillo said “becomes pretty valuable to them, especially when they get to see it across stores and potentially across brands.”
As a wave of new technologies and payment methods continue to approach the hospitality and retail landscapes, Merchant Link has its eye on not only servicing the owner-franchisee relationship and supporting consistent security standard, but also ensuring its customers are prepared for what’s coming next – such as alternative payments and mobility wearables.
“We have to make sure that we provide secure solutions across that gamut because now you’re introducing wireless and Bluetooth into the equation. We’re trying to turn our business into a series of service-oriented architecture components, which has allowed us to successfully decouple our security offerings from our gateway offerings,” Carcillo added.
“We are not focused on what we can sell that’s a Merchant Link product, we are focused on what that hotelier, restauranteur or retailer would be best served with.”