OAKBROOK,Ill. — The convenience channel’s biggest migraine today has to be EMV.
Confounded by a prolonged certification processes, retailers have to wait to activate equipment they invested in months ago in preparation for last October’s liability shift. At that time, credit-card companies put the onus of fraud onto merchants if crimes were committed using Europay MasterCard Visa (EMV) chip cards inside the store. Such a shift will apply to outdoor in-pump point-of-sale (POS) as of October 2017.
While attending Gilbarco Veeder-Root’s Retail Technology Conference in Hilton Head, S.C., last week, I sat in on sessions discussing the logistics surrounding EMV implementation: the choices, the costs, the potential need to break concrete, and on and on.
It’s a mess in many ways. Because certifications are taking so long, many retailers who acted in good faith by installing EMV equipment are still waiting to turn them on. In the meantime, chargebacks seem to be mounting, with one retailer estimating the figure at “$1 million per week” for larger chains.
That kind of financial effect is forcing retailers to devote time and resources to solving EMV, thus becoming the ultimate time suck.
As this image of a black hole came to me, I started wondering: What will EMV’s legacy ultimately be?
Could such a large devotion of energy, time and talent mean a costly disadvantage down the road? Certainly, addressing EMV conversely means not spending those resources on developing a new loyalty program, a menu-ordering interface or a more compelling branded app. In lieu of EMV, retailers could have built a sophisticated customer-relationship management (CRM) platform or devised an economical business model for home delivery.
I’m not the only one considering these types of losses. One technology consultant, who spoke to me under condition of anonymity, brought up a recent lawsuit retailers filed against the credit-card companies. In his mind, these retailers are positioning themselves to negotiate down the mounting chargebacks resulting from the sluggish EMV-certification process. In his voice, I heard disappointment: “Instead of making things, we’re spending money on lawyers.”
While I may be assuming, I have to guess that innovation loses out because these retailers had to direct resources toward litigation.
I understand. We all have to prioritize our time and budgets. Every company goes through a vetting process where executives review every department’s priorities and decide where limited resources should go. Sometimes the answer is to address the immediate vs. prepare for tomorrow.
To that end, I started to consider not what EMV is keeping the industry from doing, but what it’s forcing retailers to improve. Here’s my short list:
Dataflow: One of the biggest things EMV is forcing retailers to upgrade is data flow to and from the store. EMV requires large amounts of data going from the store to multiple third parties, handling everything from payment authorization to loyalty rewards.
Pumpinnovation: The last massive technology push to hit convenience retail was pay at the pump. It seemed to happen overnight, and every pump suddenly had it. EMV may impose pump innovation on a major scale, including increased payment options, video displays and equipment diagnostics.
Security: The EMV and Payment Card Industry (PCI) discussions have forced chain executives and single-store operators alike to understand the vulnerabilities of their operations to data thieves. That’s especially important as pumps become a bigger target for skimming rings and both organized and one-off criminals.
While I’m typically a glass-half-full person, I’m not a Pollyanna. I know the industry could have moved on any or all of these advances without the headache of EMV. They probably could have come up with better, less expensive solutions to the challenges of security, payment and loyalty. Well, at least the forward-thinking retailers would have.
What EMV will ultimately do, in my opinion, is force the entire industry to another level of technological capability, one that will prove critical for the channel’s survival in the years ahead.
Angel Abcede is a senior editor at CSP magazine, covering industry trends, investigative topics and technology. His 25-year history with the channel fortifies his perspective and motivates him to seek out what's relevant, innovative and telling. Reach him at aabcede@winsightmedia.com.
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