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EMVSpellsHolidayTroubleForRetailers

By pymnts ! "

Posted onNovember 17, 2015

This week, EMV remained

center stage in retail

security news, as the battle

between banks and

retailers over fees and

adoption of new security

measures continued to play

out on a very public stage.

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Meanwhile, a number of

other security issues, some

surrounding EMV, also

come into sharper focus as

the busy holiday retail

season gets ready to kick

into high gear.

Here are some of the

security stories that are

important for retailers right

now.

Walmart CEO Says EMV

Will “Wreak Havoc” On

Holiday Shopping

In a recent Retail

Dive article, Walmart

Senior Director of Payment

Services John Drechny,

who was involved in

transitioning the company

to new EMV protocols,

stated that EMV could slow

down checkout lines and

lead to a loss of sales during

the important holiday

season.

However, some experts

believe there may be a

silver lining should EMV

readers prove to be a

clunky experience for

shoppers: More may be

driven to adopt mobile

payments.

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“As long as new mobile

systems meet or exceed the

security of the cards that

they might replace,” Nicko

van Someren, CTO of Good

Technology, told Retail

Dive, “the barrier to

adoption is always going to

be whether using your

mobile device can be made

easier than grabbing your

‘top of wallet’ card.”

New Reason For Retailers

To Dislike EMV: Long Lines

A recent New York Times

article articulated some of

the ongoing controversy

around the shift in EMV-

enabled payments for

retailers. The shift in

security measures and

liability has pitted the retail

industry against the

banking industry in a battle

that only continues to

intensify and remain front

and center in payments

news.

The dispute focuses around

interchange fees, which

merchants pay to banks in

order to process credit and

debit transactions. Last

year the banking industry

collected $61 billion in

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interchange fees from

merchants, while fraud only

accounted for $30 billion in

losses.

“The real savings is not

about fraud; the real

savings is about

interchange,” David

Robertson of The Nilson

Report told

an NYT reporter. While the

banking industry maintains

that the shift to EMV was

driven by the weak security

infrastructures of retailers,

merchants are upset that

they’ve had to foot the bill

for updating their systems

to read chip-enabled cards,

which they say does not go

far enough in protecting

them and their customers

against fraud.

In recent months, the fight

has been taken to Capitol

Hill and in front of several

states’ attorneys general. In

October the Georgia

attorney general, along

with the attorney general

for Connecticut, sent a

letter to their colleagues

warning that chip

technology was not

enough; credit cards

needed a PIN, too. Earlier

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this week, eight more

attorneys general added

their voices to the rallying

cry in a letter to Visa,

MasterCard, JPMorgan

Chase, Bank of America

and other institutions

urging them to adopt the

PIN technology. However,

they stopped short of

suggesting that they were

petitioning for a change to

the law that would make

such safeguards

mandatory.

The finger-pointing just

continues with each side

accusing the other of

dragging their heels in

adopting security measures

fast enough; by some

estimates, nearly half of

retailers have yet to turn on

their chip-reading devices

in store, while others claim

only 19 percent of cards

issued by banks were chip-

enabled as of the EMV

deadline.

“We think the focus should

be for retailers to turn on

their chip readers and use

the technology that’s

available to them,” said

James Chessen, executive

vice president and chief

economist at the American

Bankers Association.

As the battle rages on,

stakeholders on both sides

will be keen to see how it

unfolds, although they may

have to wait awhile as both

sides seem to have dug in

their heels with no signs of

relenting.

POS Malware Could

Create A Holiday

Hangover

This past week, Tech Times

reported on two separate

pieces of malware detected

by analysts. The programs,

which have been operating

in stealth mode for as long

as several years on the

networks of some retailers,

go by the names

AbaddonPOS and Cherry

Picker and represent some

of the savviest malware

detected in POS networks

to date.

Cherry Picker, which may

have started running

malicious actions as early

as 2011, originally targeted

retail stores, but digital

security analysts say it has

evolved. The malware now

features updated card-

ripping capability,

persistence mechanisms

and anti-analysis decoys,

which allow it to operate

undetected on security

networks. The most recent

victims of cybertheft at the

hands of this malware are

food industry clients who

use POSs for their

purchases.

Eric Merritt, a security

researcher at Trustwave,

points out that the malware

deceitfully erases evidence

of its own existence after

completing its work. By

overwriting the files again

and again, the malware

goes undetected and

removes evidence of itself

in the system’s data logs.

The malware mostly

impacts those systems

using Windows 7 and

Windows XP by running

remote admin services.

Experts from Proofpoint, a

payments security

company, also blew the

whistle on the

AbaddonPOS malware and

released several

statements describing in

detail exactly how it works.

RELATEDITEMS: CYBERSECURITY, EMV,

“Point-of-sale malware has

been implicated in some of

the biggest recent data

breaches, striking retailers,

restaurants, hospitality and

organizations from a

variety of industries and

often targeting consumers

in the United States,”

Proofpoint said in

a statement.

The malware uses

Microsoft Office

documents, which can then

download a program called

TinyLoader, which in turn

results in the POS device

being infected by

AbaddonPOS.

Proofpoint warns that the

holiday shopping season

may lead to an increase in

the number of

vulnerabilities in the retail

sector. What’s more, with

the adoption and

deployment of EMV credit

card technologies, POS

malware danger is likely to

increase in the United

States as attackers look for

new ways to breach

retailers’ payments

infrastructures.

RETAIL, WALMART, WHAT'STRENDING

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NEWS

StoreFrontBusinessIndex:It’s AllGood InTheHood

By pymnts ! "

Posted on

November 17, 2015

capital andbusiness risk. And,it looks like theSouthwest andMountain Regionshave reason tosmile.

Store front businesses are

the heartbeat of the local

economy – but do they all

behave the same way? Are

the business risks for the

hair salon and local

watering hole in the same

city similar? Do they all hire

for growth? And, do store

front proprietors face the

same ups and downs as

their larger business

counterparts? This

quarter’s PYMNTS Store

Front Business IndexTM,

powered by CAN Capital,

measures where these

businesses are strong and

where they need help. We

also went to one of these

store front communities to

get their perspectives, from

the front lines, so to speak.

OVERVIEW

The store front business is

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the heartbeat of the local

community. And, the more

vibrant these businesses

are, the more vibrant the

communities in which they

operate are. Store front

businesses represent

approximately 37 percent

of all small business

establishments in the U.S.,

roughly 3.4 million. The

Index measures their well-

being. And, so far, in 2015,

this subset of the small

business community

continues to do well,

outperforming the GDP,

which grew by 0.6 percent

in the first quarter of 2015.

We found that after a slight

slowdown in the first

quarter of 2015, the

growth of store front

businesses is moving along

at a pretty decent pace. We

track growth as measured

by the number of

establishments, wages and

employment. This quarter,

our Index reflects a modest

growth in the number of

establishments compared

to wages and employment.

For example, the number of

employees saw steady

growth throughout the

country at an average rate

of 3.2 percent for the first

quarter of 2015 compared

to the growth in

establishments, which

stands at 2.4 percent. That

tells us that store front

businesses are adding to

their rosters – and growing

their businesses. That’s

good for the local

economies in which they

operate, in addition to

signaling the health of their

own businesses.

METHODOLOGY

The Store Front Business

Index measures the

performance of local

businesses, both retail and

services. We track these

businesses across all

regions of the country and

8 business segments:

eating establishments,

professional and personal

services, construction,

remodeling and repair

services, fitness clubs, and a

wide variety of retailers.

The Index is a quarterly

assessment of how well

these businesses are

performing based on three

criteria: growth in new

establishments, wages and

employment.

FINDINGS FROM THEFRONT LINES

“Businessenvironmentis thriving. Ihaveseen tremendousgrowth inmy ownindustry.”

There’s no better way to

understand how relevant

our Index findings are than

to talk to store front

businesses themselves. So,

the PYMNTS team

interviewed seven small

merchants in a local

community in the

Northeast to get their

firsthand perspectives on a

range of topics spanning

financing, expansion plans,

growth, employment and

general business sentiment

in their area.

We picked Warwick, Rhode

Island, for our first series of

interviews, a community

that is sort of middle of the

road — not experiencing

extreme growth nor

RELATED ITEMS: CAN CAPITAL,CAN CAPITAL STORE FRONTBUSINESS INDEX, MAINFEATURE, SMALL BUSINESSADMINISTRATOIN, SMALLBUSINESS BANKING, WHAT'SHAPPENING NOW

significant struggles.

Excerpts from the

interviews and the owners’

perspectives are

highlighted and contrasted

to the findings in the

different sections of this

Index.

“Business environment is

thriving. I have

seen tremendous growth in

my own industry. After 24

years of renting, it made

sense to start my own

business four years ago and

within a week, I had three

employees and within a

year, I had eight and within

two, I had twelve,” said a

salon owner.

The full Index and

explanation of its findings

can be found here.

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