The year 2014 will be here sooner than everyone expects. In the field of credit card processing, there are a big batch of changes expected, some of which hit people on the processing side of the equation and some of which affect the consumers. Some more seasoned merchants may chalk up all the talk of change as “more of the same” but even the most cynical merchant services watcher will acknowledge that the payment services industry is steadily evolving into a much more technological entity, with tendrils that reach into more of the consumer’s everyday life.
A few trends to watch for in 2014 include:
- Rulings on Interchange Fees. A recent court ruling stated that the interchange fees charged for debit card transactions may have been twice as high as they should have been. If the ruling stands, this could potentially result in a refund to merchants or at least an even lower interchange rate. While the original hope for the Durbin Amendment was that cheaper processing would result in lower prices, the upshot is that merchants can see even more of an incentive to push debit card use.
- Increased TIN Validation. The IRS is expected to tighten the noose on merchants that don’t match and validate Taxpayer Identification (TIN) numbers. Some people have already noticed 28% backup withholding penalties on their merchant accounts, and more companies could fall afoul of these judgments.
- Novel Payment Alternatives. Every year, new ways to pay for purchases are tested and released into the marketplace. Some of these become popular, while others wane. While Google Wallet and NFC payments may not have made it into the forefront, a sudden trend could force merchants to buy new peripherals.
- More Prepaid Cards. For years, government benefits and direct deposits have increasingly been EFT’d to prepaid debit cards that aren’t tied to a bank account. This has created a whole new group of consumers who may have never swiped a card before, and are now conditioned to use one in lieu of cash. An amendment to the Affordable Care Act makes it possible to pay for insurance with cards, including the prepaid variety, so there is going to be an even bigger adoption of plastic in general.
- End Of Life Notices – More terminals are slated to be sunset in 2014. This is because they are no longer secure enough to meet tougher PCI-DSS requirements, or because they are functionally obsolete and can’t be upgraded to take newer PIN pads. Merchants are going to need newer models, as older machines will no longer be supported with firmware upgrades, downloads, and patches.
- Security Breaches – Despite all of the efforts to keep out hackers and data crooks, someone is going to manage to breach a large retailer or payments network, but the unreported news is that many small businesses will also see issues with POS systems, older terminals, networks, and peripherals. Your best defense is to make sure you complete the PCI self-audit and keep your credit card numbers secure, through tokenization or by using systems that don’t hold information that could readily be used by thieves.
How can merchants prepare for the unpredictability of 2014? In the same way that 2013 brought surprises while some anticipated trends (like EMV, NFC, and Digital Wallets) fizzled, there are going to be some unknowns throughout the year. At the heart of the merchant services equation, store owners still need a competitive contract, terminals that have built-in flexibility, and a dedicated support line in case something unusual happens. At Capital Processing Network, we have strategies designed to take customers through 2014, 2015, and beyond, so no matter what happens in the marketplace it will still be easy to take payments affordably, while maintaining the highest customer service standards.