Learn about Datalink Bankcard Services Company announcements, awards, and major news.
- December 2013 – Datalink Bankcard Services Company Helping Merchants With MasterCard Primary Account Number (PAN) Verification Change
- August 2013 – Datalink Bankcard Services Company Offers Enhanced Merchant Features on Their Redesigned Corporate Website
- June 2013 – Datalink Bankcard Services Company Achieves MasterCard Mobile Point-of-Sale Program (MPOS) Compliance for EMV MPOS Solution
- March 2013 – Datalink Bankcard Services Views Mobile Devices as Future Opportunities for Merchants
Notice of Visa and Mastercard Rule Changes
Visa and Mastercard have announced important rule changes that apply to a merchant’s ability to surcharge cardholders for purchases. Click below to review the rule changes and find out more about the merchant requirements for enabling these surcharges.
Merchants in Legal Hot Water After EMV Shift
Merchants are facing consumer lawsuits stemming from the introduction of EMV-chip card security at the point of sale in the U.S., exposing the issues many stores must contend with now that they are held liable for fraud and chargebacks. In February, a Wendy’s customer filed a class action against the fast food chain, alleging that it failed to protect customers’ credit and debit card information, as well as other personally identifiable information. The suit claims all of that information was exposed when Wendy’s experienced a data breach in January, and that Wendy’s failed to take “adequate and reasonable measures” to make sure that its data systems were protected beforehand. Although the lawsuit does not specifically reference EMV, it does allege that Wendy’s was not using the most up-to-date processing equipment. The suit suggests that hackers employed the same malware that enabled recent cyber attacks such as the breaches at Home Depot and Target. “While many retailers, banks and card companies have responded to these recent breaches by adopting technology and security practices that help [make] transactions and stored data more secure, Wendy’s has acknowledged that it did not do so,” the suit states.
Lawsuits are not the only consequence merchants face. Typically if a merchant suffers a data breach, it can expect fines for violating the Payment Card Industry data security standard, which describes how organizations must protect cardholder data. There may also be a reputational hit and a loss of business. eBay faced this issue after a 2014 cyberattack led it to ask users to reset their passwords; many consumers did not, and even those that chose a new password did not resume their previous level of activity. The breach became a major factor in eBay’s decision to lower its full-year revenue guidance by $200 million. But consumer lawsuits are a new risk, experts say.
Attorney Stephen Aschettino, chairman of the payment team at Foley & Lardner LLP, says that although the Wendy’s case is noteworthy, it’s not necessarily the “test pilot” case the industry has been watching out for because no one is placing chargeback liability on the retailer. “I think they’re just trying to show that Wendy’s failure to use the EMV chip is some form of negligence,” Aschettino says. “If my analysis is correct, I think that’s very different than the liability shift issue that we in the industry are very worried about.” Aschettino says he’s still waiting to see the type of lawsuit in which a credit card company denies a customer’s chargeback, and then the customer goes after the merchant for damages.
A closer example, he says, is a lawsuit filed in March by B&R Supermarket against most of the major card networks and issuers — including Visa, MasterCard, American Express and Wells Fargo —claiming thousands of dollars in losses because of the EMV shift. B&R owns Milam’s Market and Grove Liquors in Florida and claims it bought all-new equipment for its stores well in advance of the liability shift but never received EMV certification from the card networks. As a result, B&R was held liable for $10,000 in charges in four and a half months because of fraud, chargebacks and fees. .Aschettino says it’s likely that the supermarket chain isn’t alone in its predicament. “Depending on the magnitude of the chargebacks and resources of the merchants, some merchants may be willing to challenge those rules,” he says. “I do foresee there will be more litigation going forward on these issues.”
The potential for future lawsuits stems from the fact that many merchants have taken steps to purchase new EMV equipment and train their employees how to use the system, but are still stuck having to use the old mag stripe systems because they’re still waiting for certification from the card networks.. Rianda says ISOs and merchants have consulted with him about problems they’ve had with EMV, but that lawsuits can be difficult to bring against the parties empowered to make changes.“ Other than suing your processor, what else are you going to do?” he asks. “Usually the amounts are so small that unless you do a class-action suit, there’s not a whole lot you can do for them.”
As far as consumer-led lawsuits like the Wendy’s case go, merchants are in a compromising position from allegation that they failed to protect consumers’ information from a data breach. Ever since the 2007 TJ Maxx data breach, concerns have mounted about hackers pulling off data theft on a large scale, and those kinds of attacks can be damaging to a retailer’s reputation. Aschettino cautions that banks, merchants and anyone else who could be implicated in these types of lawsuits need to have a well thought-out position ahead of time, and to implement strategies to make sure that these suits don’t fuel the creation of laws that are hostile to the industry. “The whole EMV shift paradigm was designed to protect consumers,” he says. “If the failure to adopt it can somehow be used as a sword by the plaintiffs against merchants, I don’t believe that was the intent.”
Kroger Sues Visa Over Chip-and-Signature Debit Verification
Kroger is suing Visa, alleging the network threatened to raise fees and cut off the supermarket chain from accepting its debit cards.
Kroger said it has already received $7 million in fines from Visa in connection with a monthslong dispute over the routing of debit card transactions, The Wall Street Journal reported Monday. Kroger did not respond to a request for comment. On Tuesday, Visa issued a statement saying “Visa does not require Kroger to route its transactions only through the Visa network. Visa is focused on protecting a cardholder’s right to choose whether to sign or enter a PIN when completing their payment with a Visa Debit card at checkout.”
Kroger requires customers to enter a personal identification number to verify their transactions and then routes them to other third-party PIN debit networks. According to the grocery retailer, Visa said Kroger’s payment terminal configuration does not comply with Visa’s rules and has pressured it to route transactions of Visa debit cards only through the Visa network.
The suit follows a similar suit Walmart filed in May, contending Visa urged the retailer to use the less secure signature verification to have transactions routed through its own network.
To cut off Visa debit cards, as the payments company has ostensibly threatened, would have “catastrophic consequences for Kroger’s business,” the grocer said in the lawsuit, which was filed in U.S. District Court for the southern district of Ohio. Kroger said it processed $29 billion in Visa debit card transactions last year.
EMV’s Poor Usability Shoves Consumers to Contactless Mobile
Since consumers find EMV cards frustrating and difficult to use, EMV may do more to promote NFC as the preferred payment method among consumers and business owners.
That may sound silly when you consider the fact that the credit card issuers are compelling merchants to install new point of sale systems that accept EMV payments. Failure to do so leaves retailers at risk of being found liable for cases of fraud. Meanwhile, the card issuers are rushing to get chip cards into their customers’ hands. CreditCards.com reports 70% of U.S. consumers now have EMV cards. That means more than 30 million Americans are using EMV cards.
Or, at least they’re trying to.
It turns out the process of “dipping” a smart card into the POS system isn’t as simple and straightforward as swiping the older magnetic strip cards. Sales associates too often have to instruct a shopper on where to insert the card, how to do so properly, and not to remove it until the transaction is complete. The systems can take about 30 seconds longer to process payments, holding up checkout lines. And consumers are more prone to leaving their cards in the machines when they leave. Merchants are therefore hesitating to install the new POS systems. CardHub’s 2016 EMV adoption survey finds that 42% do not have the new POS systems, despite the fact MasterCard and VISA set the deadline of October 1, 2015. They cannot afford to process fewer transactions every day, and don’t want to force their customers to use a payment method they find unnecessarily time-consuming and complex. It boils down to preventing longer lines at the checkout counters.
That opens the door for NFC payment technologies, which are much simpler and faster for both consumers and retailers. So it’s no surprise that major technology manufacturers such as Apple, Samsung and Google are incorporating NFC payments technologies in their smartphones and smartwatches. Instead of making a customer wrestle with an EMV card PoS system, the sales associate can simply say “hold up your phone” or “flip your wrist.” A quick scan of the device, and the transaction is complete. You don’t have to take a card or cash out of your wallet. Heck, you don’t even need to bring your wallet. It’s important to note that card issues are both aware of, and addressing, the shortcomings consumers and retailers attribute to EMV. For example, the card networks have all recently introduced solutions designed to speed checkout times on chip transactions.
But consider the fact that there are so many payment methods available today: cash, checks, traditional magnetic strip credit and debit cards, EMV chip cards, and NFC. Having all of these choices confuses consumers and business owners. I believe this confusion, and the mounting frustrations over the complexities of EMV cards, will combine to position NFC as the preferred solution for both consumers and retailers.