This article was originally published on Business Insider here.
Mobile point-of-sale (mPOS) provider CardFlight announced that half of its merchants are now actively accepting chip card payments.
That’s a 13 percentage-point increase from the 37% that were enabled in February 2016.
The firm also announced that its terminals are now certified to accept EMV payments from Global Payments, a major US processor. The firm holds certifications from First Data, Stripe, and TSYS.
That means that any CardFlight merchants working with these processors can now begin accepting EMV payments. CardFlight is now certified by several major processors, which could boost acceptance moving forward.
That puts CardFlight well ahead of industry averages.
- Other merchants are seeing much lower penetration. Roughly 20% of Visa merchants were EMV-capable as of April. And Square, whose client base is likely similar to CardFlight, has onboarded an estimated 25% of its merchants to its EMV reader.
- CardFlight’s progress indicates that small businesses may be beginning to embrace EMV. As an mPOS provider, CardFlight likely serves a high number of small business clients — a population that had been initially reluctant to upgrade to EMV terminals but is becoming increasingly attuned to the service. CardFlight’s strong EMV penetration could reflect that shift among small business owners.
EMV adoption is becoming increasingly important, as fraud cost U.S. retailers approximately $32 billion in 2014, up from $23 billion just one year earlier. To solve the card fraud problem across in-store, online, and mobile payments, payment companies and merchants are implementing new payment protocols that could finally help mitigate fraud.
John Heggestuen, senior research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on payment security that looks at how the dynamics of fraud are shifting across in-store and online channels and explains the top new types of security that are gaining traction across each of these channels, including on Apple Pay.
Here are some of the key takeaways from the report:
- EMV cards are being rolled out with an embedded microchip for added security. The microchip carries out real-time risk assessments on a person’s card purchase activity based on the card user’s profile. The chip also generates dynamic cryptograms when the card is inserted into a payment terminal. Because these cryptograms change with every purchase, it makes it difficult for fraudsters to make counterfeit cards that can be used for in-store transactions.
- To bolster security throughout the payments chain encryption of payments data is being widely implemented. Encryption degrades valuable data by using an algorithm to translate card numbers into new values. This makes it difficult for fraudsters to harvest the payments data for use in future transactions.
- Point-to-point encryption is the most tightly defined form of payments encryption. In this scheme, sensitive payment data is encrypted from the point of capture at the payments terminal all the way through to the gateway or acquirer. This makes it much more difficult for fraudsters to harvest usable data from transactions in stores and online.
- Tokenization increases the security of transactions made online and in stores. Tokenization schemes assign a random value to payment data, making it effectively impossible for hackers to access the sensitive data from the token itself. Tokens are often “multiuse,” meaning merchants don’t have to force consumers to re-enter their payment details. Apple Pay uses an emerging form of tokenization.
- 3D Secure is an imperfect answer to user authentication online. One difficulty in fighting online fraud is that it is hard to tell whether the person using card data is actually the cardholder. 3D Secure adds a level of user authentication by requiring the customer to enter a passcode or biometric data in addition to payment data to complete a transaction online. Merchants who implement 3D Secure risk higher shopping-cart abandonment.
In full, the report:
- Assesses the fraud cost to US retailers and how that fraud is expected to shift in coming years
- Provides 5 high-level explanations of the top payment security protocols
- Includes 7 infographics illustrating what the transaction flow looks like when each type of security is implemented.
- Analyzes the strengths and weakness of each payment security protocol and the reasons why particular protocols are being put in place at different types of merchants.