Does Card Present Make Sense Any More? What Should It Look Like In A Year?
Written by Evan SchumanWhen a payments vendor last week touted a Webcam-based E-Commerce method that would be considered card present, it raised questions over whether the very concept of card present in a late-2011 retail world needs to be updated.
The vendor itself, Jumio, seems to be back-peddling on its claims, saying that its reference to card present (“Netswipe is the first and only solution that enables online card-present transactions”) had nothing to do with interchange rates and was never intended to suggest that.
“We call it card-present transaction because you need the actual card to make a transaction. Not just a piece of paper with some written details,” Jumio’s Markus Rumler said in an E-mail. “We never stated that we support card-present interchange rates, at no point.” For the record, the same news release that spoke of card present also said the technology was Patented, when it isn’t. The patent claim “was our fault in wording, but it was fixed immediately after it was recognized. We apologize for that.”
It’s hard to envision a retail meaning of “card present” other than interchange, but that’s beside the point. With mobile-payment trials in the wings from Google, PayPal, ISIS and Visa, among others, what should card present mean? Does it have to mean the actual card? Can it mean all the data—including Track 1 and 2—from such a card? As payment form factors evolve, does the interchange definition need to grow with them?
Let’s start with what card present means today. As a practical matter, it’s quite far removed from what a merchant pays when a customer presents a card in-person. First off, it excludes hotels, airlines and car-rental agencies. It then excludes reward cards and some business cards, among other things. MasterCard defines it as face-to-face, with the card in hand. A more specific definition is that the retailer needs to be able to access full Track 1 or 2 data.
One of the industry’s largest processors, ChasePaymentech, says it’s a “true face-to-face transaction, not a self-service terminal, where the consumer is standing in front of the merchant,” said Robert Nadeau, the processor’s group executive for enterprise products.
But do these definitions adequately address the retail realities of today and, much more critically, next year? What about Square Card Case? Its approach has consumers walking up to a POS associate with their phones, but the phones contain no payment-card data. They merely reflect a number, which the Square retailer uses to tell Square to place the charge. That’s a face-to-face transaction, but it’s clearly not what the card brands ever envisioned.
Come to think of it, what’s the point of an in-person transaction? (PCI Columnist Walt Conway gives his QSA take on card present this week.) This is all about risk limitation.
Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code.
-Marc
