What is Chip and Pin?

Will smarter credit cards be in our near future? What is Chip and Pin? Chip and Pin is a UK government-backed initiative to implement the EMV (short for Europay, Master Card and Visa) standard for smart payment cards.


EMV has been adopted in virtually every part of the world, including Canada and Mexico, for the storing of payment-card data. The U.S. maintains a vested interest in magnetic stripe based cards and the devices associated with them. Expense is currently the biggest barrier for US implementation along with liability for fraud loss. Criminals already working around the system also figure into the reluctance to bring it to American cardholders.

Javelin Strategy & Research estimates an EMV roll out across the United States would cost about $8.6 billion including the following:

• POS terminal replacements -- approximately $6.75 billion
• EMV card issuance -- around $1.4 billion
• ATM upgrades -- approximately $500 million
Also to be considered is the fact that the greatest beneficiaries of Chip and Pin are the card issuers with merchants and customers taking the brunt of the losses. The same merchants that will need to pay for most of the upgraded equipment to accept the new devices.

"(Chip and Pin's) main attraction to banks is the 'liability shift,' which is precluded in the U.S. by Regulation E," wrote Ross Anderson, a professor of security engineering at the University of Cambridge, in an e-mail. "This shift means that disputed transactions will be blamed on the customer if a PIN was used and the merchant otherwise. Thus, in theory, the bank would never again be liable.

Such a shift isn't possible in the U.S. because of rules set up under the Electronic Fund Transfer Act of 1978, says Steven J. Murdoch, Ph.D., a security researcher at Cambridge University. This is probably good news for U.S. consumers: Murdoch says that since the standard was fully adopted, it's been next to impossible for British consumers to recover money stolen in fraud.

"The banks get to effectively make up their own rules, and the rule they've chosen is that if your PIN is used, then you must have been negligent about protecting your PIN, therefore you're liable for the fraud," says Murdoch.

With this much uncertainty and these expenses without a return on investment we don't expect Chip and Pin to take over the US soon.

SMALL BUSINESS TAX RELIEF BILL

The Small Business Jobs Tax Relief Act of 2010 will provide tax cuts for small businesses to help them grow and create new jobs. The Small Business Jobs and Credit Act will enhance lending opportunities for small businesses. This legislation is offset by closing some existing tax loopholes.


This bill represents a continuation to spur job creation and improve the quality of life in communities. Small businesses need capital to create jobs and lead economic recovery. The Small Business Jobs Tax Relief Act contains important tax cuts and lending opportunities that will help give small business owners the resources and flexibility they need to help their businesses grow.

The bill will increase the capital gains exclusion on investments in small business stock to 100 percent (from 75 percent in the American Recovery and Reinvestment Act) for qualifying stock acquired after March 15, 2010 and before January 1, 2012.

The bill will also alleviate certain onerous tax penalties on small businesses. Under current law, Section 6707A of the Tax Code imposes a penalty on the failure to disclose a “reportable transaction” on any tax return or information statement. There are six categories of reportable transactions, one of which is a “listed transaction,” a type of transaction identified by the IRS through guidance as a tax avoidance transaction. The penalty for failure to disclose a reportable transaction (other than a listed transaction) on a return is $10,000 in the case of individuals and $50,000 in any other case. For listed transactions, the penalty is $100,000 in the case of individuals and $200,000 in any other case. The bill generally would make the penalty for failing to disclose reportable transactions (including listed transactions) proportionate to the underlying tax savings.

In addition the bill will allow small businesses to deduct up to $20,000 in small business start-up expenses not related to capital or equipment. The bill will also allow non-recourse Small Business Administration loans to qualify for certain exceptions to the at-risk loan rules, allowing business expenditures made under those loans to be deductible against related business income.

Is Your POS Ready for Summer?

After Memorial Day weekend it’s the unofficial start of the summer season. Most people will take some time away from work for vacation to enjoy time with their families. Before the temperature hits the summer time high, you may want to take a few moments to go over this POS system maintenance checklist to make sure your POS system is ready to handle the summer holiday rushes and the summer heat.


UPS
Checking your UPS, Uninterrupted Power Supply, especially the battery backup side is critical to keep your POS system running smoothly. During summer seasons power consumption is at its highest. This increases the chance of power interruption in the form of blackouts or brownouts. A blackout is easier to detect but a brownout may not be easily felt. Power fluctuation could also cause a power surge. Any one of these power outage scenarios could damage your POS system or any electronic devices that are not protected by a surge protector or UPS. All of your POS system devices should be plugged into a UPS. If you have a UPS and do not remember when it was installed or replaced, you should replace them to ensure your store runs smoothly.

Backup
Your POS system is equipped with backup devices and media. There may be an automatic file backup in place but there is always a removable backup device and media in the form of a DVD-RW drive and discs. Your daily or weekly routine should be making sure your system is backed up to the removable media. This is the quickest way to restore your system after a hard drive replacement. Removable backup should be part of your operational routine, just like counting cashiers and running reports.

Venting/Cooling
Take a moment to inspect the surroundings of your POS equipment. All electronic equipment has vents for cooling. Be sure your POS equipment has room for cooling by looking at the vents to be sure they are clear of dust and are not blocked. Although your IBM POS system is designed to withstand the toughest conditions in the retail environment, periodic cleaning is still a good practice to help your system run at peak performance.

These are just some of the regular maintenance practices that you should do to help prevent any system down time. Other maintenance practices include keeping your scanner/scale glass clean and clear of debris to ensure accurate scanning and weighing.

Your POS system is the mission critical part of your operation. It pays to practice simple maintenance measures to ensure you and your POS systems have a great summer.

Protect your Customer Data

We live in an age of cyber crime. The incident rates of reported cyber crimes are exploding. One segment of this growing criminal industry is the organized effort to steal customer account data to be sold for fraudulent purposes. The level of sophistication and adaptability of these illicit enterprises is nothing less than astonishing. The cycle of innovation in attack methodologies as the criminals reengineer their processes and develop new tools, keeps the full time security analysts in a constant game of cat and mouse.

As a merchant whose business depends heavily on electronic fund transfers to transact every day (roughly two-thirds of all retail transactions), the security of your POS system needs to be a primary concern. Who is accessing the system? What do they have access to? Are they able to do anything that could potentially compromise your customers’ account data, such as getting on the internet and checking email? These types of activity in a POS environment expose your system to potential malware attacks that can lead to an account data breach. To protect their consumers the Payment Card Industry (PCI) got together and developed a Data Security Standard (DSS) mandating all merchants secure their networks and protect cardholder data. If compromised card data is traced back to a specific merchant’s business, they are responsible to comply and pay for the forensic investigation and remediation to address the breach. Heavy fines can be levied and in a worst case the merchant is kicked off the debit networks: no more electronic fund transfers. Assuming the business survives an investigation with EFT processing intact, the bad public relations and loss of customer confidence itself can be costly to restore.

As a business relying greatly on the ability to process electronic fund transfers, you don’t want to be at risk of having your POS system compromised. All merchants are expected to be in compliance with the PCI DSS. Some of the first steps to accomplishing compliance is protecting your system from intrusions and restricting access to only authorized personnel performing only business operations. Find out who is accessing your systems. What are they doing? Remember, your business may depend on it. To find out more about PCI DSS visit http://www.pcisecuritystandards.org/.

20th ANNUAL RETAIL TECHNOLOGY STUDY

Gartner Research worked with RIS to conduct a retail study in the first two months of 2010. RIS has been conducting this survey for the last two decades. Some of the highlights of the 2010 study are that customers are in charge. With so much new technology the customers are sharing their retail experience world wide and can be more informed than store associates. With this knowledge 34% of retailers surveyed said they will be focusing on customer satisfaction in the next 18 months.


Another top priority of retailers for the coming year is IT initiatives. 43.8% of retailers surveyed said they will spend more on IT this year than in previous years. The reason for this change is that IT initiatives can help retailers achieve market advantages against competitors while producing measurable gains for cost-containment initiatives. The study shows that 62.8% of retailer’s budgets will be spent on IT and 38% of that on hardware and software.

While only 12% of the retailers in the study showed they were leading edge in their approach to adopting IT, 30% said they were quick adopters. The study shows that 45% of retailers are looking for IT consulting. For the top category, IT

Consulting, where do retailers go for more strategic and broad-based IT services? Among our respondents IBM is the first choice for 53%.

Two different technologies appeared in 1974 that changed the way retailers do business. The first was bar codes; the second was the point of sale system, POS played a much larger role by revolutionizing the ability to automate management and control. The heartbeat of a store today is found in the POS hardware and software. Right now 42% of retailers have up-to-date POS hardware and 36% have up-to-date POS software or they are currently finishing projects already begun. You can read the full study by going to: http://support.stcr.com/Newsletter/RIS_RetailTechStudy_040710.pdf

What is FACTA?

The Fair and Accurate Credit Transactions Act of 2003 is an amendment to the Fair Credit Reporting Act which allows consumers to request and obtain a free credit report once every twelve months from each of the three nationwide consumer credit reporting companies and also contains provisions to help reduce identity theft.


The FACT Act contains seven major titles: Identity Theft Prevention and Credit History Restoration, Improvements in Use of and Consumer Access to Credit Information, Enhancing the Accuracy of Consumer Report Information, Limiting the Use and Sharing of Medical Information in the Financial System, Financial Literacy and Education Improvement, Protecting Employee Misconduct Investigations, and Relation to State Laws.

Under the title of Identity Theft Prevention and Credit History Restoration is a section requiring the truncation of credit and debit card numbers. This act prohibits businesses from printing more than 5 digits of any customer's card number or the card expiration date on any receipt provided to the cardholder at the point of sale or transaction. The act did not become effective for three years after its enactment for any cash register manufactured before January 1, 2005 and did not become effective for one year after its enactment for any cash register manufactured after January 1, 2005.

If you are unsure if your system meets any of these guidelines please contact STCR Business Systems at 607-757-0181.

GS1 Databar

By now most of the retailers are aware of the term GS1 DataBar. However, not everyone is ready to implement this technology.


What is GS1 DataBar? According to GS1.org, GS1 DataBar is a symbology where the symbols can carry more information and identify small items than the current EAN/UPC bar code. GS1 DataBar enables GTIN identification for fresh variable measure and hard-to-mark products like loose produce, jewelry and cosmetics. Additionally, GS1 DataBar can carry GS1 Application Identifiers such as serial numbers, lot numbers and expiration dates, creating solutions to support product authentication and traceability for fresh food products and couponing.

GS1 DataBar is available on many products with the specific focus on fresh products scanned at POS. Retailers who implement this technology can benefit in their fresh food departments with better food safety, quality and shrink control with the available data such as sell-by-date, lot number, country of origin (COO), weight of the product and price over $99.99.

While awareness of the upcoming GS1 DataBar sunrise date for coupons is high among independent retailers, 38% said they will not be ready by the January 2011 date according to an online member survey conducted last month by the National Grocers Association. This January 2011 sunrise date is just for manufacturer coupons. What it means is that starting January 2011, manufacturer coupons will only have GS1 DataBar. The benefits of GS1 DataBar include increased flexibility of coupon face values and purchase requirements, reduced cashier intervention and the opportunity to validate complex offers making it a promotional vehicle.

In the coming months and years, GS1 Member Organizations will continue to work with their retailer communities to determine when GS1 DataBar will be used in open trade on any items between 2010 and 2014. At this point, 2014 is the date when GS1 DataBar can be used globally in any open trade on any product.

To be ready for GS1 DataBar, your POS system needs to have the scanning equipment and the POS software, including your back office application, that maintain the POS item files capable of reading and processing this format. If you need to know if your POS system is ready, please contact your STCR sales representative at (607) 757-0181.