The EMV liability shift gets very murky!

According to new research provided from our friend Tom McCrohan of CLSA America’s Research, less than 6 % of overall US merchants were set to meet the EMV deadline of October 1, 2015 for the shift of liability of fraudulent transactions.

As of September 15th, only 314,000 merchant locations were ready. At the same time, only 21% of the Visa cards in the US and only 40% of MasterCard cards were now chip enabled at the point of the deadline. The research further found that only 40% of merchants would have terminals by the end of NEXT YEAR – 2016.

Here’s how the liability shift shakes out after October 1, 2015. When a merchant is still using the “swipe and signature” methodology and the customer has a smartcard, the merchant is liable. If the merchant has the new Chip and PIN technology but the bank hasn’t issued the customer a Chip and PIN card, the bank is liable. If the merchant uses Chip and PIN technology on a customer’s smartcard and fraud still takes place, the credit card company bears the liability, as is the case today.

So based on the 40% issuance of chip enabled credit cards and the fact that it is estimated that only 6% of merchant are ENV compliant where is the liability shift going to fall?  The NRF or the appropriate government agency needs to step in and create a new timeline for compliance before it becomes a problem.

Retailers are you ready for the EMV deadline? The statistics say no!

The new EMV Chip Technology is more secure than magnetic card readers and will reduce credit card fraud.

 59% of retail locations will be EMV-compliant by the end of 2015.

 70% of U.S. credit cards will be EMV cards by the end of 2015.

 22% of small retailers will be compliant by the deadline

 10% of retailers still have no knowledge of EMV or the deadline

 29% of small retailers will upgrade their credit card processors before the deadline

 46% don’t want to pay for a new EMV terminal

 41% are concerned about the liability shift if they don’t become compliant

 5 to 8: Seconds is how much longer than magnetic stripe reader transactions will take. You and your employees will doubtless have to show customers how to dip instead of swipe to keep checkout lines moving.

23% of small retailers believe that EMV compliance is unnecessary (This is very troubling)

The new EMV Chip Technology is more secure than magnetic card readers and will reduce credit card fraud.


  • Chip card

The vertical dilemma of retail!

The retail marketplace is defined by vertical segments, typically by size and type of retail. Each segment has its own unique challenges and characteristics. There is however one common trait that cuts across all verticals, that being the internal silos. Typically the term “Silo” in retail has referred customer data that is separated by how the customer engaged with the retailer. In store purchases were stored in a separate data silo than on-line purchases which resulted in the inability to get a single view of all a customer’s activity across all channels. This presents a problem when marketing to a customer.

However the silos I’m referring to are the internal silos that that causes retailers to be vertical rather than horizontally integrated companies. When I’m engaged by a retailer to determine the best POS solution for their stores my first objective is to determine if they have a vertical or horizontal structure. Do the departments of the organization, store ops, merchandising, IT, accounting and marketing understand each other’s role in the total operation, or do they operate in their own silo? The 4GL database structure that most POS use allow for data to be drilled into by almost limitless criteria. A single item can be traced back to the purchase order it was received straight through to the GL entry. Although each department has some unique requirements, systems that operate on enterprise architecture have eliminated the barriers of siloed data. Since data is horizontally accessible across all the departments there is sound business reason for a retailer to adopt a horizontal structure to increase efficiency and avoid duplication of effort. Silos foster tunnel vision which is a disrupter to the agile model needed to survive and grow in today’s environment.


Customer surveys, are they really credible?

I just went through the car buying experience for about the twentieth time. In all candor the salesperson, the sales manager and business manager were efficient and very respectful of my time. I set the parameters immediately for the car and the price immediately and they worked creatively to make the deal. After the deal was signed the salesmen asked if I would log onto and post a review of him and the dealership. When I was about to leave the sales manager requested that when I received a survey from the manufacturer that I respond with all 10’s. If for some reason there was a question didn’t deserve a 10 that I call him to resolve the issue before completing the survey.

I get weekly surveys from my bank of about 20 questions concerning their service. The clerks at the bank always ask me to please respond to the surveys with “Very satisfied”. I also get periodic surveys from Panera Bread and the manager always asks that I respond favorably since it reflects on him. The bottom line is this is another good concept that has gotten devalued. There may be some constructive aspect of these surveys but in reality it’s all about how these companies get portrayed by the “Satisfaction Surveys”, J D Powers etc. So when you look at a company’s satisfaction rating be suspicious.

Consistency is the key to success in retail!

A successful retail operation is about consistency. Customers become comfortable with certain stores based on a number of factors: Ease of shopping, knowledgeable staff, product assortment, appreciation shown for their business and of course pricing is always a consideration. I purposely put pricing last because it is a factor, but it is not the primary reason people shop at an independent retailer.

Businesses sustain and grow for a number of reasons:

  • They have a proprietary or unique product no one else has-  a Pharmaceutical company
  • A strong relationship with their customers that allows them to connect very deeply with them
  • A business model that sets high standards and can be repeated every day to ensure consistency

The two points that apply to a retailer are about building stronger relationships and repeating high standards. So how do maximize the potential sustainability and growth of your business. Here are few ideas:

  • Have clearly defined rules of behavior and how you want customers treated
  • Allow your employees to challenge assumptions
  • Indentify the sources of conflict and deal with them quickly
  • Rely on facts and data – the bedrock of any good POS system
  • Focus on the exceptions that matter, some are just not important.
  • Empower your employees to resolve customer issues immediately

Windows XP – another milestone passes ending all Microsoft support for the aged OS

36718118_sThis was copied from a STCR newsletter. I felt it was worth reposting due to the security implications.

Windows XP, which has been without Microsoft update support since April 2014, is on the radar again.  Microsoft originally said it would stop shipping Security Essentials’ signature updates to XP PCs after April 8, 2014 the same as when their support ended.  Microsoft postponed ending their free Security Essentials updates to this July 14.  With that date and all Microsoft support for the operating system behind us, now is the time to stop using Windows XP, especially if it exists on your Point of Sale network.

If you currently must use Windows XP then you should make plans to replace it as soon as possible, look for and install a new antivirus program that will support XP in the meantime, and disconnect the XP computer from any network or internet connections.

These measures may help prevent an intrusion but they should only be used for a temporary stop gap plan and do not help with any PCI issues connected with the aged Windows operating system.

What does the culture of a company mean?

I hear this so often from clients, our culture is to be more responsive to customers, or customer centric or other variations of the same theme. It’s an aspiration of how the retailer wants to be perceived because their lifeblood is their ability to keep customers coming back to their store. The reality is that in many instances there’s a disconnect between the aspiration and the reality. Don’t get me wrong there are many retailers that talk the talk and walk the walk, but others simply don’t execute on the promise. Company cultures are living, breathing organism. The framework has to be developed top down and then allowed to grow organically. It’s learned behavior when executed properly and it starts internally. I witnessed instances where management treats employees discourteously and dismissively while espousing a customer centric culture. The framework starts with treating your employees the way you want them to treat customers. If management’s behavior mirrors the age old adage “Do as I say not as I do” your customer centric culture is doomed. On the other hand once if it’s consistent to your defined goal it will flourish organically.

A great book to read that will provide an in-depth blueprint on the value of customer retention and the importance of loyal employees in achieving customer loyalty is “ The Ultimate Question” by Fred Reichheld.

Ten questions to ask perspective vendors before upgrading your POS system!

  1. Is your system EMV complaint?
  2. Is your inventory updated in real time?
  3. Can you see a single view of a customer’s purchase history across all channels, in-store and online?
  4. Does your system offer an integrated e-commerce platform?
  5. Does your system integrate with social media for marketing purposes?
  6. Is the data in your system easily accessible for reporting and analysis?
  7. For multi-store operations is the data from the stores replicated back to your central office in a timely fashion?
  8. What value added services do you provide to help me better utilize your system?
  9. Do you have a user conference where you solicit feedback and input from retailers?
  10. Does your system offer a Mobile POS solution that would allow us to enhance the customer experience in our store?

Bonus: This is the question you need to answer as a retailer:

Is your organization ready to adapt and change?

Resistance to change is the biggest inhibitor to successful implementation of a new system.

Are you a proactive or reactive retailer?


Here are ten questions that will help you make that determination!

  1. Are you open to new technologies that will help you better connect to your customers?
  2. Have you taken the necessary steps to be EMV complaint by October 1st. 2105?
  3. Do you collect customer purchase data?
  4. Do you personalize offerings to customers using their purchase data?
  5. Do you review your credit card processing costs every year?  You understand your rate is not the sole factor when analyzing your total cost.
  6. Do you review these numbers every month: Year over year sales, gross margin by department, average transaction, number of item per transaction, number of transactions?
  7. Do you hold a weekly meeting with your staff to review problems that they encountered and discuss best practices to resolve those problems in the future?
  8. Do you have a social media presence for your business and respond to both positive and negative feedback?
  9. Do you review your website analytics monthly and explore options for improving your SEO (Search Engine Optimization)
  10. Do your review all variable expenses at least twice a year

Bonus question:

  1. Can you name three strengths of your business that distinguish you from your competitors?

The minimum wage debate in retail, a practical solution!

The debate is on, what effect will the increase in the minimum wage have on independent retailers? Some states and even some cities have taken it upon themselves to mandate the new minimum wage at between $12.50- $15.00 an hour to be phased in over the new few years. Wall-Mart has announced it will increase their minimum but not to the$15 level. The main issues central to the debate are how will these increases effect store profits and will there a net negative effect on retail employment. We don’t a lot of data to reference but both Costco and Trader Joe’s have consistently paid above the minimum wage scale and maintained their profitability. Costco has been a model of worker productivity resulting in greater profitability. One of the factors for this is certainly their compensation plan. Economics 101 tells me that when a minimum wage worker receives a $2 or $3 per hour increase 100% of that goes back into the economy as retail spending, the prime driver of our economy. The issue has been become political fodder with no real substantive debate. I have a simple and pragmatic solution. Tie the minimum wage to the CPI and adjust it yearly the same way Social Security benefits are adjusted. This approach accomplishes a couple of things: It takes the issues out of the political arena, and the incremental adjustments become manageable for retailers to absorb. My closing thought is a few years ago congress decided to avoid the political debate over their salary increases and make them automatic, so they do understand the concept of how depoliticize an issue.


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