Making the move to chip-and-pin mobile payments: what government agencies need to know
Just like virtually every business, most public agencies today accept cashless payments via credit or debit cards or are in the process of updating their infrastructure to support this capability. If your agency is among them or will be soon, two major trends on the horizon could soon change how you do business.
Whether you’re buying a latte or paying for your car’s registration, it’s become second nature to simply swipe, sign and go. Paying with a card can be easy and convenient, but it’s not without risk. Recently, several national retailers have fallen victim to major data breaches which compromised millions of credit and debit card numbers, putting consumers’ personal and financial information at risk.
These invasions of privacy have heightened awareness of data security issues and made it even more important to find effective ways to secure and protect consumer payment data, which has led to the new EMV mandate. EMV (Europay, MasterCard and Visa) is a chip-and-pin smart card technology which will become the global standard for all credit and debit card payments. If you’ve gotten a new credit card in the mail recently with a chip embedded in it, then you’ve already gotten a glimpse of the new features. These chip-and-pin cards are common in Europe, where they have been shown to drastically reduce incidences of fraud, but were rare in the United States until very recently.
Designed to increase security and protect financial information, this technology embeds a chip into bank cards which is then linked to a PIN assigned by the card user. The computer chip stores payment data that used to reside on the magnetic stripe, and enables more secure processing by generating a one-time-use code for each transaction. These features make it more difficult for criminals to create counterfeit cards.
If you haven’t seen a chip-and-pin card yet, you likely will soon. The shift will kick into high gear ahead of an Oct. 1, 2015, milestone, at which time U.S. merchants who do not support EMV will assume all liability for counterfeit card transactions.
What does this mean for government agencies? At the federal level, President Obama has already mandated that all payment terminals at federal agencies must be able to accept embedded chip cards. And state and local government agencies must follow suit by the deadline of the Oct. 1 liability shift, or run the risk of being on the hook for fraudulent activity.
The risk can be significant – a 2014 report from LexisNexis showed that every dollar of fraudulent activity cost merchants $3.08. In total, fraud cost retailers $32 billion in 2014, a 38% increase from 2013, according to LexisNexis.
The looming EMV mandate is leading many retailers to update their point-of-sale systems, and many are taking the opportunity to invest further in mobile payments. This trend too should be on the radar of government agencies.
As you may have experienced on an airplane, or even at certain retail stores, Internet-connected mobile devices can be used to perform credit card transactions that used to require a clunky cash register. These same mobile devices also store credit card information and can be used to make payments, as is the case with NFC-based technologies like Apple Pay. Mobile payments are becoming increasingly common as mobile technology matures and more people become comfortable with using it for payment purposes.
For retailers, mobile payments have a number of benefits: They enable increased speed of service and improve the customer experience, and also impart greater flexibility and free up floor space. These same benefits can apply for a government agency as well. Government can use mobile payments for everything from permits to parking citations and all other types of fees citizens pay, while increasing efficiencies for employees.
In many cases, a mobile point-of-sale tablet can help agencies achieve both goals – meeting the EMV mandate, and responding to growing demand from citizens for mobile payments. These tablets can be used in an office setting, or at other points of service like at a community center or in a park. Be sure to look for a device equipped with an integrated EMV card reader, as well as one with NFC and magnetic stripe reader technologies in order to accept all the types of payments your citizens may use.
As mobile payments become more commonplace across all industries, government needs to provide the services that citizens have come to expect. Understanding the latest trends and requirements will help keep both government and consumer data protected from breaches, and provide a more seamless experience for both parties.
Dominick Passanante is the Senior Director of Public Sector Sales for Panasonic System Communications Company of North America.