Tuesday, June 14, 2016

Credit Card Processing Changing at Retail

I often eat breakfast at a low end very nice diner which I like because of location, food, and they have a nifty high tech looking cash register. It's basically a tablet mounted on a little stand. It integrates credit card processing presumably as an and probably has sorts of other useful apps on it.

Square Retail Credit Card Processing
Square Retail Credit Card Processing

When I take a closer look at it and ask some questions, I hear that it's the Square Credit Card system.  The stand has a magnetic strip reader built into it. The attached little white thing is the chip reader. And it also takes Apply Pay.  I asked about fees, payment schedule, and reports. She's nto entirely sure about the fees today but thinks that they are rising to 2.75%. She loves the daily reports. She's a little vague on when she gets her money into her account. I asked about the tablet for credit cards and she says it's an ordinary iPad and she's thinking of adding the Square app for payroll on it too.

Square Credit Card Reader, Chip Reader, Screen
Square Credit Card Reader, Chip Reader, Screen

What's funny is from this little restaurant, I can also see another recent innovation in credit card processing. There is a retail store peddling credit card processing equipment and presumably processing services.  Notice the retail sign below for Ignite Payments and FirstData?

Retail Vendor of Credit Card Processing Services & Equipment
Retail Vendor of Credit Card Processing Services & Equipment

And while I don't yet have a picture, there are also parking meters nearby which are the new variety incorporating credit card payments.  In the credit card processing world, the times they are a changing...

Sunday, June 12, 2016

Apple Pay on the Rise: Credit Cards Doomed?

I think the use of Apple Pay will quickly and greatly expand at retail, I think the credit card industry will, after its decades of poor management, be totally shaken up.

As a consumer, I just tried using Apply Pay at retail. It was fast and efficient. In contrast, the use of the new chip technology on credit cards in the US is incredibly messed up. It's slow, inconvenient, and does not greatly increase security.  The chip would have been a big step forward if it was implemented with additional security, say a PIN. But instead, the great expense of switching to chip-based technologies does not make sense there are not enough increases in security.

What's wrong with the US credit card system?

The the US credit card system keep relying on signatures. It's an expensive technology (all those touch screens etc) and does not really improve security. A credit card system in which your picture is taken for large pictures would help crack down on fraud.  A credit card system with a PIN would greatly increase security. And while the chip is a step forward over the magnetic stripes, they didn't require (as they do in Europe) a switch to mobile terminals so that customers are never separated from their credit card.

The US credit card system keeps getting more expensive. Of course, the consumer pays these costs but does not see them.  Seen all those ads about credit cards giving you 1%, 2%, even 5% and 10% back? Who do you think pays for this? The credit card companies just charge the increased fees to the merchants who, in turn, have to increase costs to cover the transaction costs of these credit cards.

The use of an Apply Pay-like system greatly increases security and at this point, the costs to merchants are lower and the convenience to consumers is lower.

"Apple Pay is a mobile payment and digital wallet service by AppleInc. that lets users make payments using the iPhone 6, 6 Plus, and later, Apple Watch-compatible devices (iPhone 5 and later models), iPad Air 2, iPad Pro and iPad Mini 3 and later."