Although the October 2015 deadline has passed for brick-and-mortar stores to become EMV-compliant, many archery retailers are still deciding whether to become EMV-compatible and accept credit cards with embedded chips.
EMV stands for Europay, MasterCard, Visa. It’s the global standard for chip-based debit- and credit-card transactions. It’s a joint effort between Visa, Europay and MasterCard to ensure security and global acceptance so Visa and MasterCard cards can keep being used everywhere.
EMV cards are embedded with microprocessor chips that make it difficult for thieves to steal account information when credit-card users make payments.
The liability shift is a sensitive subject for many retailers. No one likes being forced to alter their business practices, especially when some changes can take months and cost thousands of dollars. Even if your shop isn’t EMV-compliant, the liability shift will likely affect your bottom line.
After getting quotes from multiple credit-card companies, owner Randy Phillips at Archery Headquarters in Chandler, Arizona, stayed with the same company. It provided and installed EMV-enabled credit-card machines for both sales terminals for free. Photo Credit: ATA
Here’s what six business leaders in the archery industry think about it.
Marty Stubstad, owner, Archery Headquarters, Rochester, Minnesota.
Changed to EMV credit-card readers in early 2016.
Cost: $350 for one credit-card terminal and installation.
Number of sales terminals: One.
Annual sales: $700,000.
Marty Stubstad, who has owned Archery Headquarters for 39 years and serves as president of the Archery Range and Retailers Organization (ARRO), said switching his shop’s credit-card reader was a relatively straightforward process. It needed no major upgrades, and his point-of-sale system and credit-card reader aren’t connected. Although his shop has never been hit by fraud, Stubstad had to upgrade to the EMV reader.
“Unless I stopped accepting credit cards altogether, which would have hurt my business, there was no way around installing the new credit-card reader,” Stubstad said. “Currently, my rate to accept a credit card is 0.3 percent, but that would have increased to 0.4 percent per transaction if I didn’t accept the EMV cards. In the long run, changing the terminal cost less than paying more for every credit-card transaction.”
Stubstad used to go to the bank daily, but because most customers today pay with a credit card, he now visits no more than three times weekly. He estimates his store processes 100 to 150 credit-card purchases weekly, with most transactions being made with EMV cards.
“When a customer hands us a credit card, we must protect their information because our store will be held liable in a dispute,” said Jeff Poet, president of Jay’s Sporting Goods in Clare and Gaylord, Michigan.
Len Marsh, owner, Macrotech, Baltimore, Maryland.
Changed to EMV credit-card readers in May 2016.
Cost: $200 for one credit-card terminal and installation.
Number of sales terminals: One.
Annual sales: $500,000.
Because Len Marsh didn’t upgrade to an EMV credit-card reader until months after the original deadline, it might seem he resisted change until the last possible moment. However, Marsh, who has owned Macrotech since 1993, said misinformation kept him from switching.
“I was ready to upgrade my credit-card terminal in August of 2015, but my contact at my old credit-card processing company kept telling me the new readers weren’t necessary, and that there were bugs in the EMV system,” Marsh said.
So, what caused Marsh to reject the advice of his credit-card company? A word of advice from ATA President/CEO Jay McAninch.
“Jay told me I needed to start accepting chipped cards,” Marsh said. “He explained that I would be responsible for any fraudulent purchases made with an EMV-enabled card if I continued swiping those cards at my shop. I immediately began researching my options.”
After shopping around for credit-card companies just as he would for new cell-phone service providers, Marsh’s research led him to Heartland Payment Solutions, which saved Macrotech $3,000 annually.
I chose a company that saved me at least $300 every month in credit-card processing fees,” Marsh said. “With annual credit-card sales of about $400,000, a lower processing rate makes a significant difference financially. I also can buy register tape through Heartland for half of what I was paying at Office Depot. It pays to shop around for the best deal.
Richard Johnson, manager, Hall’s Arrow, Manchester, Connecticut.
Changed to EMV credit-card readers in August 2015.
Cost: Free credit-card terminals and installation.
Number of sales terminals: Two.
Annual sales: $1.8 million. Johnson estimates 80 percent of payments to Hall’s Arrow are made with credit cards.
While researching new companies to process credit-card transactions at Hall’s Arrow, manager Richard Johnson received an “unbelievable” deal from one company. He said shopping around and comparing bids from various companies was important to getting the best deal.
“Ours is a very credit-card and debit-card society,” Johnson said. “Delaying this change could have cost a significant portion of the 200 to 300 credit-card transactions we process each week. Upgrading the shop’s payment terminals was better than losing sales to one of our competitors.”
Johnson said the only problem so far is that the new Verifone credit-card machines couldn’t read some credit-card chips. However, once he switched the machines from regular phone lines to a high-speed internet router the machines had no trouble processing EMV-enabled cards. In fact, they work lightning-fast.
PCI (Payment Card Industry Data Security Standard) rules require companies that process, store or transmit credit-card information to maintain a secure environment.
Randy Phillips, owner, Archery Headquarters, Chandler, Arizona.
Changed to EMV credit-card readers before the October 2015 deadline.
Cost: Free credit-card terminals and installation.
Number of sales terminals: Two.
Annual sales: $1.1 million. Phillips estimates 85 percent of payments to his shop are made with credit cards.
Randy Phillips, a member of the ATA Board of Directors, has owned Archery Headquarters for 28 years. He realizes businesses were forced into this change, but didn’t “go kicking and screaming” in protest. After getting quotes from multiple credit-card companies, Archery Headquarters stayed with the same company because it provided and installed EMV-enabled credit-card machines for free.
“It might not seem so at first, but this liability shift is good for retailers,” Phillips said. “Customers will pay with credit cards and eventually you will deal with fraud. This whole EMV process makes sure retailers get paid. Embrace it!”
Phillips notes that credit-card rates are “funny,” and based on a shop’s level of business. The smaller the business, the longer it will take to recoup the cost of upgrading credit-card machines and other systems. But the smaller the business, the more fraudulent purchases hurt financially.
“If someone’s going to hit you, they’re going to hit you big,” Phillips said. “When I’ve dealt with fraud in my shop, it didn’t matter if I had the guy’s picture ID and fingerprint, and knew his mother’s maiden name. The credit-card company wouldn’t reimburse me even if it was known fraud. Sooner or later, I’ll deal with fraud again, but if I run a chipped card through the reader, that money won’t come out of my pocket.”
Phillips tells his sales staff to watch for customers who buy high-dollar items like bows, but know nothing about archery, especially if they pay with a non-EMV card. Chipped cards’ only negative, Phillips said, is that they take longer to process, which makes them less convenient to use during busy seasons.
“When we have a long line of customers wanting to pay, waiting for the chipped credit-card transactions to process and clear out of our sales system is like waiting for water to boil,” Phillips said. “But knowing I’ll get paid for those purchases no matter what makes it worthwhile to wait those few extra moments.”
Phillips’ tips for changing to EMV readers:
- Get quotes from multiple companies and negotiate what you want;
- Never sign a contract with a credit-card company;
- Keep your agreement with a credit-card company open so you can opt-out at any time without penalties or financing charges.
Randy Phillips, owner of Archery Headquarters in Chandler, Arizona, said the only downside to chipped cards is that they take longer to process, which makes them less convenient to use during busy seasons.
Kevin Werts, Cabela’s, chief financial officer and executive vice president of the Cabela’s Club, the Cabela’s-owned bank.
Changed to EMV credit-card readers over the past few years. The readers are in place and will be enabled later this year.
Number of sales terminals: Multiple terminals at 72 Cabela’s stores.
Changing Cabela’s sales terminals to EMV-compatible credit-card readers was a complicated, years-long process. Kevin Werts, chief financial officer and executive vice president of the Cabela’s Club, served on the project’s steering committee. He said changing to EMV readers can be difficult and expensive if a shop’s point-of-sale system and integrations are complicated.
“We knew about the liability shift years in advance, so Cabela’s began installing EMV readers in newly built locations, and purchased readers for our other locations over a few years,” Werts said. “This kept us from having to replace all the readers at one time, which would have been a tremendous expense. This was a significant project because we not only bought new credit-card readers, but we also changed our acquiring bank, which processes all our locations’ transactions.”
Werts said Cabela’s has dealt with fraudulent purchases, but they haven’t been a big problem.
Every time a retailer accepts a payment without the card present, whether it’s an order by phone, email or internet, they’re taking a risk.
Jeff Poet, president of Jay’s Sporting Goods, Clare and Gaylord, Michigan.
Changed to EMV credit-card readers in March 2016.
Cost: About $20,000.
Number of sales terminals: 40 between two locations.
Annual credit-card transactions: about 96,000 between the stores and e-commerce sales. Poet estimates 70 percent of sales are paid with plastic.
Poet has worked 35 years with Jay’s Sporting Goods, a family-run business his dad started. Jay’s first upgraded to EMV-capable point-of-sale software and installed Ingenico credit-card terminals to ensure the stores complied with PCI (Payment Card Industry Data Security Standard) rules, which require companies that process, store or transmit credit-card information to maintain a secure environment.
“When customers pay with a credit card, rules dictate what happens to that number,” Poet said. “If you store credit-card information on a secure server onsite, it must be in a locked area with strictly limited access. We work with Shift4, which stores information offsite and uses a tokenization to keep data secure.”
Shift4 defines tokenization as:
Introduced to the payments industry by Shift4 in 2005, tokenization replaces card data stored in a merchant’s database with a globally unique, random string of letters and numbers that cannot be mathematically reversed to reveal the card number. This allows retailers to keep card data on file for future purchases or returns without the risk of losing sensitive card data to a cyber attack. Shift4’s TrueTokens® hold no value to hackers if stolen.
Poet said compliance rules vary depending on the number of transactions a retailer completes.
“When a customer hands us a credit card, we must protect their information because our store will be held liable in a dispute,” Poet said. “We’ve never had a compliance officer check in on us, but there’s always a ghost of a chance that they’ll visit. We want to make sure our policies and equipment do everything necessary to protect sensitive data.”
Fraud is more common in Jay’s Sporting Goods’ e-commerce business than in its in-store purchases. Every time a retailer accepts a payment without the card present, whether it’s an order by phone, email or internet, they’re taking a risk. A couple of employees at Jay’s are especially good at triple-checking customer details and card-not-present payments before shipping merchandise.
“If someone calls and orders expensive items, especially if it’s multiple high-dollar items like bows or fish-finders, we do in-depth research before shipping their order,” Poet said. “We check addresses and call back customers to ask questions. We’ll even look up the Google street view of an address, and if it’s a warehouse or looks suspicious, we’re extra cautious. Retailers lose most of the time when there’s a disputed transaction, so it’s the retailer’s responsibility to make sure orders are legitimate.”
Poet said Shippers International handles all international orders for Jay’s Sporting Goods. SI takes responsibility for following guidelines, shipping and accepting payments on international orders, which removes liability for fraudulent purchases from Jay’s Sporting Goods. International customers pay a 10 percent upcharge to cover the cost of SI’s services.