5 Big Stories in Payments in 2012
December 10, 2012 | No Comments | Credit Card Processing, Data Breach, Legislation
It was a big year in electronic payments in 2012. Our dynamic industry is proving again that the only thing you can count on is change. As we near the end of the year, I wanted to take a moment to reflect back on some of the bigger stories from 2012 that will continue to be prominent in 2013.
PCI’s Long-Awaited P2PE Requirements Finally Released!
This was big news and exciting for the team at Merchant Link when the PCI Council published their point-to-point encryption requirements, SAQ and testing procedures for QSAs which will allow them to validate P2PE solutions. Once solutions are validated, the Council will provide a list of validated solutions on their website and we expect to be among the first listed in early 2013. We are eager to start working with our clients to complete the first P2PE SAQ.
- NET: Merchants using P2PE gain very real PCI scope reduction benefits.
Visa and MasterCard Settle Lawsuit, Debate PIN vs. SIG
The seven-year-old interchange fee antitrust lawsuit brought by retailers and retail groups against Visa and MasterCard seemed to be nearing an end this summer. Instead, many of the plaintiffs spoke out against the proposed settlement. Complaints mostly centered on the temporary relief it provides. After a big victory in 2011 on debit interchange the comparatively moderate and temporary gains provided in the credit interchange suit did not hit the mark in retailer’s minds. It appears as though this story will continue into 2013 and it will be interesting to see how the current political environment might shape the results. MasterCard and Visa also publicly debated the merits of Chip and PIN vs. Chip and Signature when it comes to defining EMV standards for the United States. PIN is certainly more secure but some industry insiders (your author included) wonder if the reason the brands are mandating EMV in the U.S. is really about security and fraud prevention, or about forcing NFC technology adoption at the POS to accelerate mobile payments.
- NET: Don’t break out the champagne just yet, the battle rages on. And if deployment timelines for EMV in Canada are any indication, we’ll be debating Chip and PIN vs. Chip and SIG for the next several years.
What’s in Your Digital Wallet?
I recently blogged about how exciting it would be if I could digitize everything and ditch my “analog wallet.” The buzz and movement in the mobile payments space continued in 2012. It was interesting to see Google opening up their wallet to additional issuers and changing their card data storage to a cloud-based model. I am very curious to see how the ISIS pilot does as well. The pilot was delayed initially but has since launched in my home town of Austin, TX. At our inaugural Formula 1 Race in November the ISIS readers were at every point-of-sale, and though I spent a lot of time in shopping lines I didn’t see anyone use one. I continued to search for the readers in other locations in Austin but have not seen many (though the advertising is everywhere). As I mentioned in my blog post, I think mobile payments will be more slowly adopted than other wallet features but I’m excited to see the progress.
- NET: As with anything in our industry, consumer usage and merchant acceptance will ebb and flow until we reach a critical mass but the movement to date is encouraging.
Square Emerges as a Major Payments Player
Having spent a few years in mobile payments, I am fascinated by the growth of mobile payment provider Square. Merchant adoption and processing volumes seem to be growing at an incredible pace. They also got a big nod from Starbucks who will begin processing all credit card payments in its 7,000 stores in the U.S. through Square. However, late this year AnywhereCommerce was granted two U.S. patents covering solutions that use an audio jack to process payments. The company believes their patents are enforceable so it is hard to imagine this story won’t be one to watch in 2013.
- NET: Mobile payment acceptance will continue to be a huge story in 2013. Square isn’t the only audio jack solution and with this, many transactions and players. I’m sure we’ll see some heated public battles over these patents.
Data Breaches Continue
Finally, the lead stories in our industry continue to be data breaches. Barnes & Noble made the headlines when they announced a card data breach at 63 of their stores. Other notables included Global Payments, GoTickets.com, The State of South Carolina and several other state and local government entities and some are calling for greater collaboration between government agencies and the private sector to combat the threat. In fact, the Obama administration reportedly plans to issue an executive order to guard against cyber attacks.
- NET: Data security remains a challenge in both sectors. Employ a layered approach using tokenization and encryption to decrease the chances of experiencing a breach.
Which stories were you most intrigued by this year? Let us know by leaving a comment, below.