Tuesday, April 23, 2019
Consumers and payments analysts are discussing JCPenney's recent decision to stop supporting Apple Pay and other forms of near field communications (NFC) payments at its stores. In a statement to TechCrunch, the company explained it was discontinuing support of legacy contactless payment schemes that no longer comply with EMV guidelines.
"A third-party credit card brand made the requirement for all merchants to actively support EMV contactless functionality effective April 13, retiring the legacy MSD [magnetic stripe data] contactless technology in place," JCPenney representatives stated. "Given the resources and lead time associated with meeting the new mandate, JCPenney chose to suspend all contactless payment options until a later date." That includes Apple Pay, which is not a legacy contactless payment scheme.
The company additionally noted that JCPenney customers can complete transactions manually by inserting or swiping credit cards at the POS, noting that these methods are used by "the vast majority of JCPenney shoppers."
The U.S. Payments Forum defines a contactless payment as a payment transaction that does not require physical contact between a consumer's payment device and a POS terminal. In a December 2017 paper titled EMV Testing and Certification White Paper: Current Global Payment Network Requirements for the U.S. Acquiring Community, the organization clarified that contactless payment devices can employ a variety of form factors, including plastic credit cards, smartphones and wearables.
Researchers also pointed out that NFC is not a payment technology but a set of standards that enables proximity-based communications. "Each global payment network independently has its own specification," researchers wrote. "An NFC-compliant mobile device or card can communicate with a point-of-sale (POS) system that currently accepts contactless payment cards. NFC and EMV are companion technologies. NFC applies to how devices communicate; EMV applies to payments made with contact and contactless chip cards or with a mobile NFC device emulating a contactless chip card."
Contactless payment transactions made using mobile NFC devices or cards use the same infrastructure as contact and contactless EMV chip card transactions, forum members noted. While contactless payments have been shown to facilitate faster checkout, increased transaction volumes and higher consumer spending, it is crucial to support the latest, most secure forms of contactless payments at the POS, they stated.
Referencing Visa's October 2017 bulletin titled EMV News: Getting Started on Quick Chip or Contactless Chip Frequently Asked Questions, JCPenney made an important distinction between the legacy magnetic stripe contactless technology it had previously supported and the newer, more secure contactless schemes that rely on EMV chip technology. The Visa document stated that "effective April 13, 2019, all terminals at U.S. merchant locations that accept contactless payments must actively support EMV contactless chip functionality." This requirement means that all U.S. contactless acceptance terminals must now comply with the Visa Contactless Payment Specifcation (VCPS) 2.1.1 or later and actively enable the qVSDC transaction path by April 13, 2019, when accepting contactless payments, Visa stated.
JCPenney said it will consider supporting the "qVSDC transaction path" in the future, leaving open the option that the company will apply to Visa for certification of its contactless payment acceptance technologies. For this to take place, POS terminals would have to process all chip data generated in each VisaNet transaction.
"For clarification, the VCPS requires that a qVSDC transaction must be performed when the card or device supports qVSDC and the reader supports both qVSDC and magnetic stripe data (MSD)," Visa wrote. These requirements apply to merchants that already accept contactless payments or elect to enable contactless acceptance in the future.
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