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Theatre Manager and EMV credit cards

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Visa/Mastercard in the USA is implementing an October 1, 2015 policy change introducing EMV (short for Europay, Mastercard and Visa -- credit cards with chips in them) to assist fraud management. EMV cards have been used throughout the rest of the world for long time. This will be a good thing for US consumers doing walk up purchases at supermarkets, large box retailers, restaurants, gas stations etc.. Responsibility does not change one iota for web, mail and phone order sales - which are deemed cart not present.

Our thoughts are below. Interestingly, after writing this, a credit card authorization vendor that wants you to buy EMV reader had very similar things to say - meaning you have to think what it means to your venue.

 

Theatre Manager and EMV

We've been asked a number of times if Theatre Manager and people who own EMV credit cards can work together. The short answer is YES.

 

How does an EMV credit card affect Card Not Present sales?

There is no impact.

90% (i.e. the vast majority) of ticket sales by arts and entertainment organizations happen in advance of the event. This is simply because people want to guarantee they have tickets before they show up at the door. Most ticket sales occur:

  • by calling the box office and telling the credit card info to staff
  • using online web sales and entering the credit card number in a web form
  • mailing subscription renewal forms along with check or card info for payment

The credit card companies refer to these payments as Card-Not-Present. It simply means that the patron did not come to a venue and physically present their credit card.

Card-not-Present purchases will continue to work as they currently do since it is the only way to do web and phone sales using existing technology. Online site will require a card to be typed and phone sales need it spoken over the phone . Canadians have been using chip enabled cards for years at Theatre Manager venues in this exact manner.

 

What about EMV and Box Office Card Present sales?

The direct processing service providers integrated with Theatre Manager work with card not present. There are a couple service providers that accept Track II card swipe information - providing a card present option. None of the service proividers currently have an API to interface with an EMV reader that we are aware of.

Essentially this means that box office sales are treated as if the credit card was typed (card swipes are just keyboard devices) so any existing technology continues to work without modification.

 

What about Merchants being responsible for non EMV Authorizations?

Visa and Mastercard are somewhat disingenuous stating that all Card Not Present transactions will be exempted from existing fraud protection efforts after October 1, 2015 (generally web and phone sales already are eligible for chargebacks). Furthermore, since a very large proportion of ticketing sales are phone/mail/web card-not-present transactions, there is nothing that a chip on the card will do to help. This is a convenient way for the banks to move all financial onus to merchants for most sales.

The remaining 10% +/- walk up business could be covered for fraud protection if an EMV card reader was used and the card had an EMV chip - which not all cards will have initially. Therefore, merchants have two possible options for box office sales:

  • Get enough EMV chip/pin readers for their box office stations
  • Continue with current credit card swipes or typing card numbers into TM

 

What would using an EMV card reader mean to the box office?

If you rent one or more EMV card machines from a bank, the process to integrate them is quite simple.

Setup

  • Add payment options to the payment code table.. When setting them up:
    • make the payment type other
    • use short codes for the payment methods like EMVISA, EMV-MC, etc.
    • make the descriptions like 'EMV-Visa' , 'EMV-Master Card' so that they are obvious in the payment popup menu
    • make the card number and authorization number fields optional.
  • Note: DO NOT CHANGE the existing credit card payments or merchant accounts. These will still be used for any card you will accept online and by phone. The additional payment methods are used to track payments put through an EMV machine

Taking a payment

At the box office, if somebody:

  • uses a chip and pin card, then put it through the EMV machine and then use the EMV payment method in TM
  • uses a card without chip and pin, then you might want to use the existing CC payment methods and let TM authorize it.

The End of Day Process

The end of day process hardly changes at all

  • Any Card-Not-Present processed through Theatre Manager for web, phone or mail order sales will work the same
  • Any payment taken through the new EMVxxx payment options will in each employee till balance, just like cash and check.
  • you will need to compare the EMV totals in the till balance with closing tape balance from the EMV machine

 

What about the cost - is it worth using EMV terminals with TM

This is a very good question. Financially, we don't think so for most venues. We do for some.

Cost

It has been suggested that EMV terminals will rent for between $60 and $120 per month per terminal (payable to the merchant service provider).

Benefit

There has been no indication of rate reduction. Historically credit card companies may discount a small amount (eg 1/4%) to give a better rate for less risk. It will be small because they like profit and can justify the enhanced security as a benefit to you. So suppose it is 1/4%. That means you would need to:

Take $24,000 to $48,000 in CC authorizations per terminal per month in walk up sales to break even.

Multiply the amount above by each terminal you need and adjust for rate savings. The math is simple:

number of terminals * monthly rental * (100/rate saving %) (eg 1 * $60 * 100/0.25 = $24,000).

We don't think EMV would do much on preventing chargebacks because most business is via web/phone and mail sales. It seems a case of paying for limited benefit. It also affects the ability to refund credit cards taken for walk up sales - because you can't refund them if you don't have the number.

 

What if I didn't use an EMV card reader?

Theatre Manager and your current card swipes would continue to work.

Credit card charges continue be sent to the bank as Card not present or Card Present with Track II (if your merchant provider supports it). There really isn't any change to your business, other than you may now be responsible for fraudulent walk up chargebacks. In my experience, people who see a show rarely dispute a charge. On the other hand, you may save enough money to cover the occasional problem if you don't rent terminals - its like self insuring.

 

Do EMV cards have any impact on PCI compliance?

Absolutely Not - EMV credit card readers are merely an additonal fraud prevention technique.

PCI compliance is simply risk management and focused on how credit card numbers are stored/managed within your venue. You can choose any retention period for cards, including never storing them (a choice dependant on your venues needs). You reduce risk by storing only the card information you think you need and making sure you implement network security, firewalls and Apache updates that we recommend in our installation instructions. Risk is mitigated by using the PCI Schedule 'C' settings, or entering a short retention period for Schedule 'D'

 

What might ArtsMan do in the future?

There are so many EMV devices out there, the least expensive of them are stand-alone and programable ones are more expensive to rent. Each bank uses a different/custom EMV device., many of them are from Ingenico or Verifone.

If the vendors and Banks can settle on a standard API to talk to the machines and cause them to charge credit cards (that doesn't have to change for each device), then we will write some code that can talk to them. We've been in discussions with some vendors, but the banks are all about proprietary and never about standards and easy.

This means we will take a cautious approach regarding what machines to build and interface for -- mindful that the economics of EMV machine rental are really marginal for our venues because of the ratio of Card Not Present sales to Card Present EMV walkup.