Like retailers throughout the United States, Maddie’s Motorsports in western New York state recently had to make changes to its point-of-sale systems to support Europay Mastercard Visa chip cards.
But when the motorcycle and powersports dealer looked at upgrading its POS system to be EMV compliant, it also examined other ways to improve operations, including security and the overall customer experience.
“We wanted to be compliant with new [card company rules], but we also wanted a better experience at checkout for our customers,” said Graham Marcus, the co-owner and general manager at Maddie’s. “Our new system allows customers to swipe their own cards so they don’t have to hand them over to a clerk. And the total amount of purchase pops up on the screen, so the clerk does not have to type it in and risk making an error.”
The new system from Verifone also allows Maddie’s to accept PIN-based debit cards, which improves security over signature transactions. The company had been using a system with a card reader that wasn’t integrated to the POS; the new semi-integrated system allows data to flow from the POS to the reader.
While the design of the system is not unusual for national retail chains, it is just becoming available to smaller retailers like Maddie’s, which has only one store.
Initially, the biggest concern for Maddie’s was security. The new system allows the store to accept EMV cards, which keep the store from being hit with increased liability for fraudulent purchases under card industry rules that took effect in 2015.
Maddie’s looked at different options before deciding on the Verifone system. Some systems required the store to purchase a lot of additional equipment and software and perform some integration work internally. An advantage of the Verifone system is that the card-reader manufacturer worked with the store’s POS systems provider, DX1, to integrate the system. Verifone also worked with CardConnect and MIC BankCard on the system.
Once DX1 and Verifone had the system integrated, Maddie’s received its readers within a week. It took an hour to get the system installed. “There was about five minutes of training, and we were up and running,” Marcus said. “That was one of the main reasons we went with this system. There was very little work and time required by us.”
Both customer and employee feedback has been positive. “The only comments we have gotten from customers is that it is clean and easy to use,” Marcus said, “and employees like the simple ease of use.”
Now that it has the payments side of the card reader down, Maddie’s is looking at what else it can do with the system.
One opportunity is to display details of store promotions on the card reader so customers see the messages when they swipe or insert their cards for payment. The store is also looking at using the terminal to handle reward and gift-card programs. Currently, the store’s rewards program involves manual stamps on receipts; gift cards are sold and redeemed manually.
“We want to integrate these programs with our payments program so it is seamless to track by both customers and our staff,” Marcus said.
Maddie’s is looking to add a second store in another town; the Verifone system has been designed so additional card readers can be added in other locations.
Maddie’s current location typically runs four checkout lanes and can expand to six during the busy season. Since the store sells both equipment and parts, ticket sizes are quite high, making security an important component of sales.
“We wanted to be compliant with new [card company rules], but we also wanted a better experience at checkout for our customers.”
– Graham Marcus, Maddie’s Motorsports
Marcus said he was originally surprised that a store the size of Maddie’s could get all the features available at the big chains. “We didn’t have to compromise at all in our needs, and we now have the same capacity and same security as the big chains have at our much smaller operation,” he said.
That experience is not unusual, according to Joe Mach, president of Verifone North America. While semi-integrated POS systems had previously been common only with large retail chains, Verifone is now seeing smaller retailers work with providers to integrate their POS and card readers as well.
“We’re now doing the same things for small retailers that we used to only see with the McDonald’s and the Nordstroms of the retail world,” Mach said. “These systems can now drive the operations of smaller retailers.”
Secure and efficient
A semi-integrated system, which Verifone recommends for most retailers, keeps card data on the card reader. The POS device simply sends the card reader the total cost of the purchase. The card reader gets the card information when the card is used and then sends the data via a gateway for authorization. The POS device never receives the sensitive card data, which makes the overall system more secure.
In a fully integrated system, the POS device receives the card data from the reader. The POS device must be compliant with PCI rules, however, which puts more security requirements on the retailer, Mach said.
In an unintegrated system, the sales information is not sent to the card reader. Instead, the clerk must enter the information, allowing for the possibility of errors.
“If a purchase is for $1,000 but the cashier types in $100 by forgetting to enter a zero, the merchant can be out $900,” Mach said. “We believe the semi-integrated approach is the most secure and efficient.”
Mach believes close to 20 percent of small retailers will soon have similar systems. “All during 2015, 2016 and early 2017, we were putting these systems into the stores of the big retailers,” he said. “But throughout the second half of 2017 and into 2018, we expect to see a lot of small retailers use this type of system.”
A semi-integrated system with an EMV card reader is important for smaller chains, Mach said. “There has been a security shift, and consumers feel more secure with the chip readers,” he said. “More small retailers are focusing on security because they can’t afford a security breach.”
While current efforts to get integrated EMV readers are focused on general retailers, specialty stores and quick-service restaurants, Verifone expects to expand the availability of systems to restaurants with table service in 2018.
Critical to making this integration work are efforts by card-reader manufacturers like Verifone and POS systems providers to work together. Mach noted that there are hundreds of such POS companies in the U.S. serving the payments needs of smaller merchants.
It can take 60 days to six months for Verifone to integrate its card readers with a POS systems provider. However, once that is accomplished for one retailer served by a particular POS company, all other retailers served by that company can plug their systems together within hours, Mach said.
“Once a point has been validated, then it is plug-and-play for the others. The next retailer is ready to go,” he said.
Lauri Giesen is a Libertyville, Ill.-based business writer with extensive experience in covering payment and finance issues.