Guest post by CEO Lynne King Smith.
For nearly a year now, my clients (live event venues) have been asking—some very fervently—about compatibility with EMV (Electro magnetic compatibility or Europay Mastercard Visa, otherwise known as chip card readers) for our point of sale system used at box offices across the US and Canada. As merchants with card present sales, we were all notified by our processors that October 1st, 2015 was doomsday for card swipers.
Here’s what changed. If you had a card present sale and if that cardholder had a card with a chip, and if that card present transaction was later disputed by the customer, then you would likely lose the dispute—even if the merchant knew that the card was present and you had a signature. That’s still a lot of ifs.
The credit card industry put out these requirements long before two crucial aspects were in place: 1) New cards with chips were issued, and 2) Merchants were ready to begin using readers.
As a result, software companies like mine were left with little time to rewrite code and integrate with a provider, and the pressure was on from an industry that wasn't ready to manage it. We ended up telling our customers that while the new regulations went into effect on October 1st, 2015, most cardholders had not been issued new chip cards and a lot of the equipment was still not ready.
Fast forward a year later, and while we're now fully compatible on both our current box office solutions with EMV readers, we are way ahead of the industry. Elsewhere, things are far from perfect.
Take my experience at my local Sprouts Grocery, which I'm sure is akin to many of your own experiences of late.
Me: “Is the chip reader working?” (After 10 months of it not working, with a sticky note attached over the reader saying PLEASE SWIPE, I’m not making assumptions).
Cashier: “Yes, but you’ll have to insert it 3 times.” He smirks.
He’s right. I insert 2 times to a card error message and he says, “One more time!”
Third time, still get an error.
Cashier: “It only works with some cards. Go ahead and swipe. They came to fix them yesterday as you can tell, they’re working well now…”
Then there's a different issue: everytime I've successfully used a chip reader as a customer, I’m amazed at the long transaction time. With the now dated swipes, we were printing tickets on our system within a second or two after the swipe. Chip readers routinely take 5-10 seconds. When you’re looking at a long line out the box office window, 5-10 seconds is an eternity. Multiplied by say, a thousand patrons in line, and that 5 additional seconds becomes over an hour of additional time to process orders.
At a restaurant or drugstore, those seconds probably aren’t as precious. In our industry, we’ve got to get people through the line and in the door.
Worse yet? Some vendors still require a signature after waiting around 10 seconds for the card to process. The FBI even weighed in on the chip and signature last October, saying the chip and pin system the rest of the world uses is more secure, to no avail.
The only upside for venues may be an increase in pre-sales and more mobile ticket purchases. But in the end, it’s simply not acceptable to add that much time and hassle to an in-person ticket purchase.
The real question is whether Mastercard and Visa will spend as much time addressing the processing time and hardware issues, as they have putting pressure on merchants to comply with the new rules—or lose money in disputed, card present transactions.
Perhaps for my clients the best solution is to comply and use judgement—as many merchants are doing—on each event, based on line length, risk of chargebacks, or size of the purchase. Until we figure this out, at least.
And by that time (and yes, I’m a cynic), we’ll be tapping our phones to pay and the landfills will be full of chip readers with pink sticky notes still attached saying, “Please swipe.”