By Steven Feldshuh
ISOs are faced with multiple issues today, including shrinking margins, increased costs and competitors on the street who promise unrealistic savings. An additionally major struggle we continue to face, almost one year after the EMV (Europay, Mastercard and Visa) liability shift went into effect, is the limited number of EMV terminals that are fully certified for processing on the various platforms.
After month upon month of promises, I want to know why life is so difficult when it comes to terminal and restaurant software. Why is the information we receive so fuzzy as to what equipment really works and where it works?
At our offices, we get calls on a daily basis about restaurant tip adjustment. The standard question being, "You sold me a Verifone terminal [or a Dejavoo terminal] and we still can't adjust the tips so, what can we do?" Or rather, "What are you going to do for me?" When the First Data group of processing platforms seems only to have one terminal, a First Data terminal, capable of handling tip adjustment, there isn't too much we can do.
(Calls are also logged in from merchants who claim that chip-based debit cards can prove to be a problem, based on who the issuer is, but that is a topic for another article.)
So, First Data, what about the Verifone and Dejavoo terminals? Are you ever going to grant certification? We have several thousand of these branded EMV terminals out in the field, many with restaurants, coffee shops, pizza places and bars, but all these merchants still don't have the ability to adjust tips.
Though in good faith as an ISO, we supplied these customers with terminals, which were EMV capable at the time, and promised that they would be able to do tip adjustment; we are now being forced to switch merchants to First Data terminals at twice the cost. So, in essence, to hold onto an account today, we have to switch out a terminal that is less than a year old for the only terminal that is currently working properly for our merchants.
When you look at the overall cost of deploying a new terminal, it approaches $500, with shipping, downloading, and call tag on the year-old terminal that we initially paid for and was subsequently returned.
In life prior to EMV, there were many equipment options a tip-dependent merchant could use. Additionally, what is equally as bad as the lack of terminal certification, merchants are getting hit with a tremendous increase in chargebacks, which some industry experts estimate has been a 50 percent increase over the last few months. Unscrupulous cardholders have learned the trick for not paying a tab and have taken advantage of restaurant and retail businesses that haven't implemented EMV on their terminals.
Today, as an example, a restaurateur told us that on a split check with three couples, one of the cards was charged back. The other two cardholders were contacted and were fine with paying. However, the third cardholder, though positively identified as dining at the restaurant and leaving an $80 gratuity, wouldn't return the call from the restaurant. The business had the cardholder's name and phone number from the reservation. So this loss of revenue produced more pain for all parties involved.
Yes, merchants were warned about the implementation of chip-based cards, but I am not sure if there was one restaurant software program that had updated its software to EMV, let alone EMV with tip adjustment. Today, almost a year later, most restaurants are still struggling for an answer.
I know there initially was no EMV terminal that did tip adjustment. Today, we have the ability to work with only one. The merchants suffer, we suffer from the angry calls, and the processor loses the accounts or it just costs us more money to replace the EMV-capable terminals the merchants already have.
Many larger retailers still have not implemented EMV, as well. Recently I visited a major upscale mall in my area, and I would guess half of the merchants still hadn't updated their retail software systems. I wonder how much they are losing.
I am not writing any of this necessarily to bash First Data, and I am unsure to this date who really is at fault. Other processing platforms may be just as guilty. But here's the thing: if the First Data terminals were easily certified, why wouldn't the terminals from Verifone, the largest terminal supplier in the United States, and Dejavoo, the most technically advanced terminal available, have also been certified?
Maybe First Data feels this is the only way it can get its more costly machines solidly into the marketplace. But who is really being hurt, and who is gaining here? Merchants want answers, and I know for a fact some merchants are being swayed to leave First Data and are going over to Heartland and TSYS, where EMV certification appears to be an easier process.
As an office representing First Data, this is not a good thing. Business is challenging to begin with, and I am not sure how aware First Data is of the situation or whether it really cares. I know we have lost business to Heartland, which I believe was first on the market with an EMV-certified terminal solution that could do tip adjustment.
I don't believe we are the only ones losing accounts due to the inaction or slow response of First Data. The attrition is probably the highest it has ever been since I have been in the industry. I am just wondering what it will take to wake First Data up. With Square, Paypal and others knocking at the door, we need solutions now.
Steven Feldshuh, President of Merchants' Choice Payment Solutions East, has 18 years' experience in sales and ISO development. Directly prior to joining MCPSE in 2012, he was President of Payment Partners.