The Pellucid Perspective - December 2014 - (Page 11)

GOLF COURSE OPERATIONS New payment processing technology offers challenges and opportunities for courses By Stuart Lindsay I n September we covered the changes that all golf courses will have to make in their credit card processing procedures in order to accept the EMV (Europay Mastercard/Visa) smart cards that are finally being issued in the US after years of deployment in Europe and Canada. Golf courses will be required to install new "smart" terminals by October 15, 2015. These new terminals are not cheap, but they will also open up a whole new set of processing options that will potentially save golf courses money in terms of processing fees and also provide their golfer/ customers added convenience by accepting mobile payments. Some of these new terminals have a tremendous amount of programmable computing power that can be used for better analytics, with more effective communication with POS systems for customer identification and transaction habits. Of course, this means that a golf course operator needs to make an informed choice, both as it pertains to which new terminal to install and whether their current processing partner is fully up to speed on all this new technology that in many cases requires new certifications for PIN pad use and which terminals can be used. We also talked about the QR Code mobile payments made popular at Starbucks and the introduction of Apple Pay mobile payments. For those of you paying attention, the excitement surrounding the intro of the IPhone6 and its payment process was quickly tempered by a decision by Rite Aid and CVS (along with other retailers) to withdraw their stores from the Apple Pay network. It turns out that many of the major retailers have created an alternative payment universe based on CurrentC, a QR-based technology that links mobile payments directly to bank accounts and/or cards issued in partnership with the retailer (think of your Target-branded card here). The CurrentC process bypasses or greatly reduces the cost of processing payments through the "interchange" system developed by MasterCard, Visa and major bank platforms that actually control the traffic of processing card payments. The first thing you need to understand is that credit card processing is a complicated business with many transactional layers. It's also a very competitive business that is being made more cutthroat than ever with the advent of these alternative payment systems like CurrentC, Level Up, Apple Pay and others. These alternatives present a real threat to traditional processing fee "interchange" revenues. The second thing you need to know is that most golf courses' merchant processing starts with being set up by an Independent Sales Organization (ISO/MSP) that is affiliated with one or more banks that provide their actual "gateway" to an "interchange platform." It's also important to understand that the services offered by your ISO are actually dependent on the services offered by their affiliate bank(s) - each of the major interchange WWW.PELLUCIDCORP.COM platforms such as Chase Paymentech and First Data have a different suite of services (and charges). We could go into more detail; but the major takeaway for a golf course is that services and charges do vary and it is often difficult to understand all the nuances in a very complicated process. The other problem is that some ISOs are less than transparent in explaining these differences. Nowhere is this more evident than in the processing of Debit Cards. All ISO processors can accept Mastercard/Visa branded Debit Cards, but it requires a separate certification to process Debit/PIN transactions that carry a much lower cost for transactions over about $10. The Debit/PIN transaction fees were also further regulated, reduced and capped by the Durbin Amendment to the Dodd-Frank Bank Bill passed by Congress in 2010 and effective October 1, 2011. The required additional certification coupled with the lower fees that mean less revenue for the processor have combined to restrain the number of merchants that are offered Debit/PIN processing capability. As we have said many times in previous articles, every golf course should have the ability to process Debit/PIN transactions - it will save money. Further, if you have a processor that talks about Signature Debit and won't offer you Debit/PIN, it most likely means they don't have the proper certifications to do so - or even worse, want to keep you paying the higher rate for Signature Debit (which is actually a new euphemism for the old way of doing things). We probably haven't cleared up the murky waters of payment processing. In fact we have read there are thousands of new payment programs like Google Wallet, CurrentC and LevelUp that are being developed - all looking to cash in on this transition to smart card and mobile payments. We actually will tell you the water is getting cloudier (an intended play on words) than ever. However, this transformation and making the right choices of terminals and processing partners will open up a whole new world of opportunities. As some of you know, we did an extensive look at technology use in skiing operations and became familiar with the concepts of RFID (Radio Frequency Identification), QR Code and NFC (Near Field Communication). Most of these systems have been developed in Europe and are largely based on smart card technology. I also met with Caroline Chisago of URCart in Washington, DC in late September. Her QR Code based advertising program has been successfully used at one of client courses. I asked her if there was a payment terminal that could handle traditional credit cards and QR Code based mobile payments. She replied she wasn't aware of one, but if there was one, it would really open up a bunch of options. (See Operations on page 16) THE PELLUCID PERSPECTIVE 11 http://WWW.PELLUCIDCORP.COM

Table of Contents for the Digital Edition of The Pellucid Perspective - December 2014

TOC
The Northern Golf Alliance – A new challenge to the NGCOA?
Troon strengthens Southeast presence with Honours Golf acquisition
2014 in review: where is the hope?
A new day indeed, or in Breed, for Independence
New payment processing technology offers challenges and opportunities for courses
November golf weather impact: A parting shot from Mother Nature
Orlando operators need some magic to be in the black
Tucson muni courses struggling despite turnover to private management
Tiger: balm, or bomb

The Pellucid Perspective - December 2014