By Simon Gamble
Reading the Herald on Sunday this week, I was pleasantly surprised to see an article about the processing delays retailers are encountering as they begin accepting more chip-and-PIN type cards in stores. As we told the New Zealand Herald back in April, most New Zealand merchants still need to upgrade their payment terminal connections to prevent long delays in processing chip-and-PIN cards, and it seems that more are starting to experience slower transaction times.
These chip-and-PIN cards (known as EMV, for Europay, MasterCard and Visa, the three companies responsible for pushing the technology) are becoming increasingly popular around the world to secure credit card transactions. Instead of relying on the outdated magnetic stripe, EMV cards have an embedded microchip that contains encrypted account information used to authorise purchases.
One significant issue that merchants encounter with these cards has to do with the length of time it takes to get an approval after a customer dips their card. The encrypted microchip data needs to be interpreted at the terminal, then transmitted to a bank for authorisation, then sent back to the terminal. It sounds simple, but there’s a lot more data to transmit compared to a typical mag stripe transaction because of the added layers of security.
Merchants here in New Zealand typically have a dial-up connection for their EFTPOS terminals. Every time a card transaction is processed, a modem in the terminal dials a phone number and sets up a connection, just like your home computer used to do to reach the Internet. The information is exchanged, and an authorisation received. But for the same reason you’ve upgraded your home Internet connection from dial-up to ADSL or broadband (speed!) these connections are also due for a round of upgrades.
You may recall that earlier this year, merchants in New Zealand were required to upgrade their payment terminals by 1 June to accept EMV cards. Most of these new terminals are broadband-capable, and have a connection port ready to be used. All merchants need to do is setup a broadband connection and plug in their terminals, two steps easily accomplished by contacting their terminal provider.
Broadband connections can carry a larger quantity of data more quickly, alleviating the delays many businesses are experiencing. I’d encourage all businesses to take the next step and activate their connections today.
Have you experienced slower transactions with chip-and-PIN cards? Let us know in the comments.