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Kroger Details Its Fun-Filled Visa Negotiations

Have retailers suddenly started developing backbones, in terms of pushing back on payments companies? On Monday (June 27), Kroger sued Visa about how it was implementing EMV, in much the same way that Walmart and Home Depot have done. This follows Walmart kicking Visa out of Canada and a major German company rejecting PayPal after PayPal apologized and reinstated it. Did somebody spike the NRF water fountains with super-caffeine or something? Or have merchants decided that they can push back on payments giants with little risk of meaningful pain?

EMV rules seems to have been the PIN straw that broke the POS camel’s back, as even Apple Pay has suffered performance degradations following EMV migrations. The big picture arguments about security—that it’s blindingly obvious that PIN is far more secure than signature—are obscured by the reality that this is really a fight about interchange fees. And the EMV argument that the path to PIN must be glacially slow or else American consumers will freak out from the change, despite the fact that most are quite used to PINs from ATMs and debit cards, is frighteningly valid. And here it is in the land of EMV rules that grocery giant Kroger makes it stand.

How To Get Cracking On Your PayFac-ing

There are at least two great reasons to jump into the payment facilitator game– increased revenues and market share—and many many tools to help. One of those tools is advice from the hard-won success achieved by those who have made the leap.

In a session on the ins and outs of starting a payfac at the second annual Payment Facilitator Day at Transact16 in April, Kevin Harris of RunSignUp said training people was more of a challenge than software concerns, and David Weiss of Yapstone shared the difficulties of international expansion. Nick Starai of gateway tech company NMI told the audience to concentrate on the business they know best rather than focus on technological bells and whistles. The highlights of the discussion fill this week’s paymentfacilitator.com podcast, the next best thing to having been there.

Fraud And Compliance And Rules, Oh My!

The pain of keeping all the rules and regulations straight for a payment facilitator is only exceeded by the pain of not keeping them straight. A PF has to protect itself from merchant problems with underwriting and monitoring, while adhering to the mandates from card brands and acquirers. It’s a lot now, but as everyone knows, there’s more coming.

As heard in this week’s edition of the PaymentFacilitator.com podcast, the best PFs can do to mitigate excessive regulation from without is to do more within, said Rich Consulting president Deana Rich, moderator of the session Emerging Threats Cage Match: Compliance v. Fraud at the second annual Payment Facilitator Day at Transact 16 in April.

Alibaba-Backed PayTm Struggles With Global Payments. What Chance Do Others Have?

A brutal reminder of how convoluted and treacherous mobile cross-borders are today was shared by Paytm on Friday (June 10). That’s when the Alibaba-backed wallet said that it can’t be used for overseas payments based on current regulations, requiring instead that wallet users pay in Indian rupees.

Let’s be clear. Paytm is no slouch among mobile wallets and it’s backed by Alibaba—the multinational’s multinational. If Paytm and its partners can’t navigate payments from country to country, that’s frightening. “While the mobile technology can create lower cost and friction free alternatives for cross border small value payments, the same is subject to licensing under FEMA (Foreign Exchange Management Act, 1999). Any cross border payments services by the payments bank will be offered subject to FEMA authorizations and RBI approvals. As such, the current Paytm Wallet cannot be used for overseas payments,” the Paytm statement said. “As per the existing authorization, the wallet can only be used in India and any impression that the existing Prepaid Payment Instruments (PPI) semi closed wallet can directly used offshore/for cross border transactions is unintentional.”

Square Finally Settles Its Ren Holding Lawsuit

After seven years of back-and-forth legal bickering and on the eve of a civil trial, Square on Friday (June 10) blinked and finally settled with Ren Holdings 3 and Robert Morley. The case was the quintessential Silicon Valley founder tiff, involving arguments over who really came up with the key parts of the idea that launched the now-powerful payment facilitator player. (Why do we never see pitched legal battles over who came up with the idea for companies that quickly fizzled and died? Just asking….)

The particular ideas that were mostly at issue were the patent for Square’s payment card reader—seems that glass art business owner Jim McKelvey’s name was left off, after he allegedly pointed out the payment flaw that was the essence of Square’s raison d’etre—and other mobile payment approaches. The argument is that McKelvey came up with the idea and that he discussed it with Jack Dorsey—now the CEO of Square and, in his spare time, Twitter—and Morley. These arguments are classic Silicon Valley. Whose implementation idea is it? The person who noticed the problem and had a vague idea how to make it work, the more technical person who figured out a precise way to make it work, the specialist (in this case, payments expertise) who amended all of the above to work best with the rules and infrastructure of existing reality or the business person who figured out the way to let it generate revenue and profits? It’s usually something close to a true collaboration—which makes splitting up the money later more challenging. Also, these interactions are rarely transcribed, beyond some e-mails and texts. If key meetings happened in person, egos and greed-fueled memories dominate. Hello, judge and jury.

EMV Really Screwing Up Apple Pay

Oh, what a tangled web we weave when EMV data we receive. As more major retail chains fully accept EMV payments, Apple Pay is being dealt some serious experience setbacks, such as being asked twice for price verification and being asked for fingerprint biometric authentication and then, a few screens later, a signature. Neither of those steps were part of the Apple Pay process until merchants switched on EMV.

To be clear, those time-wasting moves are not part of the Apple Pay process at all, but are superimposed after the Apple Pay transaction is complete and customers think they are done. The reason this is now happening is due to very strict interpretations of EMV rules—and the fact that the nature of the payment mechanism (beyond that it’s contactless) is not always communicated to the POS. Hence, it must assume the worst. When two retailers—Trader Joe’s and Whole Foods–last week made the switch through upgraded Verifone POS terminals, customers used to speedy Apple Pay experiences were literally being called back to the checkout lane to complete the additional keystrokes. Before, once Apple Pay’s screen said “done” and displayed an animated checkmark, they were free to leave. Not so in an EMV world.

MCX Concedes The Obvious: CurrentC Is Dead. Indeed, It Was Never Really Alive

When MCX on Monday (May 16) issued a statement that “MCX will postpone a nationwide rollout of its CurrentC application,” it was akin to U.S. presidential candidates who suspend their campaigns. It’s a polite way of saying “it’s over” without having to say those words outloud.

But for many reasons, CurrentC never had much of a chance, having been created in the most merchant-centric (OK, I’ll admit it: Walmart-centric) manner possible. It’s creation was to give retailers a way to sharply cut back interchange fees and it was being pushed by a merchant who was already paying among the very lowest interchange fee percentages of anyone.

Chase Makes The Right Security Move After SWIFT Breaches

A report Tuesday (May 17) that J.P. Morgan Chase “has limited some employees’ access to the Swift global interbank messaging service amid questions about security breaches at a pair of Asian banks that used the funds-transfer platform” raises some concerns, but it appears to be just enforcing a stricter “need to know” and “need to access” approach from Chase.

Although there have been other reports raising the possibility of an earlier Swift attack—with a major Bangladesh bank—being an insider job, it could just as easily be an attack where the bank employees were victimized. Employees might have had their credentials stolen via keystroke-capturing malware or being tricked into visiting a credential-stealing site designed to look like Swift’s access area.

Walmart’s Visa PIN Lawsuit Puts A “We Want Security” Face On A “We Want More Money” Argument

With their frequent lawsuits and counter-suits, Walmart and Visa is that always-quarreling couple that stays together for the sake of the kids. Only in this case, the kids are the piles of money each makes from the other. Alas, anything that forces the argument of PIN versus signature into the light is a good thing for payments and, by extension, payment facilitators.

Quick update on the latest example. On Tuesday (May 10), Walmart sued Visa, with the largest merchant saying that the largest card brand is forcing Walmart to accept signature on debit transactions when it would rather accept PIN. Walmart’s argument is that PIN is more secure—which it is—and Walmart neglects to stress that Walmart can save money by processing PIN transactions elsewhere.

In Australia, Apple Pay Boosts Credit Card, Deposit Account Applications

In Australia, the ANZ Banking Group found something strange happen after it started accepting Apple Pay. It experienced “a surge in applications for credit cards and deposit accounts” to such a degree that it “has forced the other major banks to re-enter negotiations” with Apple, according to a report in The Sydney Morning Herald. In other words, Australian shoppers found the idea of the NFC payment method so significant that they wanted to engage in non-Apple Pay-related banking functions.

“ANZ chief executive Shayne Elliott said at the bank’s interim results last week that online credit card applications were up 20 per cent since the deal with Apple was announced on April 28,” the story noted, adding that the figures “were the highest on record” and “more than double the average.” Elliott was quoted as saying “that the higher level is continuing.” This is consistent with much of what we’ve said about Apple Pay, that this huge a behavioral change needs to be a psychological shift. This will need to be a right-brain move—focused on emotions, intuition and imagination—rather than a left-brain (logic, analysis, linear) move. Bankers and payment professionals are notoriously left-brain people, while Apple is the quintessential right-brain company.