STORES Magazine - July 2010 - (Page 70)

CONSIDER THIS / ARTS UPDATE Mobile has Potential to Change the Payment Paradigm BY RICHARD MADER The most important process in all of retail is payment: It all comes down to the ability to accept the customer’s cash, credit card, debit card, check or gift card to complete the sale. • Significant costs to implement, maintain and Retailers spend mega-millions to make the update requirements for PCI compliance, payment process fast, convenient and seeven as unsecure transactions continue. cure, and we are now on the verge of a revoBut changes are coming, beginning with the lution in payment processing enabled by mofinancial reform legislation moving through bile technology. Congress that will regulate debit card fees. Payment began as barter and evolved Chip-and-PIN — using an intelligent chip in through cash, check, proprietary (store) credcards with a PIN — has been implemented in it, third-party credit cards and debit cards. Europe, and Canada is in the process of doing During this evolution the cost of payment proso. Chip-and-PIN has been proven to reduce cessing has become a huge issue; in 2009, fraud, and Wal-Mart recently announced that the interchange fees that card companies its POS hardware is Chip-and-PIN-ready. Becharged retailers reached a staggering $48 fore spending millions to implement Chip-andbillion. Richard Mader is PIN, however, we strongly recommend you reAs recently as the middle of the last centuexecutive director of ARTS. view the capabilities of mobile payments. ry, cash was king and only department stores Alternative payments for e-commerce and mobile transhad their own credit cards. The Diner’s Club card was inactions come in many forms, from the use of credit cards troduced in 1950: It could be used by consumers at multior PayPal to placing charges on a cell phone bill, using eple businesses for a fee to participating merchants of 7 checks and processing payments based on token numbers percent. Consumers liked the ideas, as numerous acrather than actual card account information. All promise incounts could now be consolidated. Visa and American Excreased security and reduced fees, and many eliminate press were established in 1958; seeking to increase sales, the need for PCI compliance. retailers promoted use of these third-party cards and made them so popular that, by the late 1990s, most merchants had sold or co-branded Alternative payments for e-commerce and mobile transtheir credit operations. The fee percentage actions come in many forms, from the use of credit cards had declined, but the sheer volume of card or PayPal to placing charges on a cell phone bill, using sales created a huge cost for retailers and consumers. e-checks and processing payments based on token Technology changed: Consumers began numbers rather than actual card account information. shopping on the Internet and account data was sent over wireless and public netSecure Vaulted Payments from NACHA, for example, works, but the credit card approval system was not updatallow consumers to pay directly through their banks, with ed. The criminal element started stealing confidential acguaranteed clearing for the merchant. Some new mobile count data and selling this information or making unauthomarketing applications enable consumers to post offers for rized purchases. Card companies, led by Visa and goods and create buying groups at that negotiated price MasterCard, created PCI-DSS to protect this data, largely with other consumers via social media. It’s almost as if passing the buck to the retailer/merchant. But the fraud we’ve come full circle back to another form of barter. continues. You can read more about alternative payments in the reIn 2010, the impacts of card payments on the retail incently published Mobile Blueprint prepared by the Mobile dustry are: Retail Initiative of NRF, and decide how to employ them to • High interchange fees that add to the cost of products lower your fees and increase data security. and services. 70 STORES / JULY 2010 WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES Magazine - July 2010

STORES Magazine
Editor's Page
President's Page
Retail People
Corporate Leadership
Top 100 Retailers
Location Apps
Food Safety
Risk Management
ARTS Update
Point of View
NRF News
Retail Industry Calendar
End Cap

STORES Magazine - July 2010