Evan Schuman's StorefrontBacktalk

That's definitely not the kind of problem any retailer wants when it comes to payments processing. You expect that a startup will have to build a customer base, service infrastructure and even technology from the ground up. None of which is easy. But Square's story turns out to be one that mixes friendship, betrayal, electronics, glass blowing, legal shenanigans and Rashomon-like conflicting stories. In short, way more drama than retailers want from a vendor, even one with interesting technology and the promise of cutting the cost of payment-card processing. When it comes to payments, boring would definitely be better.Read more...

Let's not overlook the tons of wonderful capabilities native NFC on popular handsets could offer retail by getting fixated on one—mobile payment—that has quite a few other challenges.Read more...

Groupon just launched a New Year's holiday food program in Japan. The launch went so poorly—and by that we mean that it sold so really well—that Mason had to lose face with a positively painful YouTube video for customers. He opened with an admission that "we featured a deal in Tokyo recently that we really messed up," because its supplier couldn't handle the volume of orders.Read more...

This sort of retro attack (it's like the Pong of computer break-ins) would be charming, except that it's growing rapidly. A year ago, almost no attackers used Telnet. But by the third quarter of 2010 (the last period for which Akamai has released data), Telnet attacks had jumped to one out of every six attacks.Read more...

The chains made the original price appear to be a lot higher than it really was? Isn't like accusing Nike of making shoes that encourage people to run too fast? Read more...

The Cisco survey was comprehensive, with over 500 responses from IT executives across a wide range of vertical industries. Respondents included large Level 1 merchants and smaller, Level 2 and 3 merchants. The survey has a lot of good news. Respondents were familiar with PCI requirements, and 70 percent said their organizations were more secure because of PCI compliance than they would have been otherwise. Meanwhile, the NRF/First Data survey of small to midsize retailers revealed that the overwhelming majority of businesses (86 percent) care about protecting their customers' card data and feel payment card security is important to their business. That certainly is great news, but what followed left Walt scratching his head.Read more...

When RadioShack announced Monday (Jan. 24) that its board had chosen CFO Jim Gooch as its new CEO, it went out of its way to mention Gooch’s background in supply chain management and IT. This is just the latest example of retail boards showing new found respect for IT experience when sizing up folk for the big CEO corner office, including Home Depot, which is watching its own CFO’s IT chops when evaluating her for the CEO gig plus related IT respect demonstrations from Sears, Macy’s and Borders.

This IT love-fest is consistent with a move—started about 5 to 10 years ago—of assigning the CFO to oversee IT. Before that, it was more common for CIOs to report into COOs or often CEOs. The shift to having CIOs report into the financial group is an acknowledgement that IT is becoming more strategic and that it’s an area that CFOs must master if they want to run the whole ship.…

Google's financials for 2009 starkly point out that 97 percent of revenues come from advertising. Everything else makes up 3 percent. Now, if you were Google, would you consider how to further develop the services that make you the most money, or would you decide to dabble in a highly competitive legacy industry where the constituents fight for scraps of interchange and transaction fees? Read more...

PCI conundrum of the week: How does a retailer that happens to not be using any wireless deal with the wireless requirements of PCI 2.0? We explore this issue in this week’s StorefrontBacktalk security podcast.

Aaron Reynolds, a Verizon business security consultant, summed up the apparent contradiction: “Let’s say you’re a retailer with 5,000 locations and you have no authorized wireless within that environment. And I have this PCI requirement in front of me and I’m going to address this requirement through a wireless solution. I’m actually introducing wireless into an environment that previously had no wireless. I’m also spending several hundred thousand dollars—if not millions of dollars—to address one requirement that, in my opinion, has a much smaller risk/reward in the event that somebody might plug in a rogue wireless device.” To hear the podcast, please click here.…

Let's set all of that aside for the moment and assume that the results are actually going to happen. (Even IHL President Greg Buzek said the results were about twice as high as what he expected.) Are retailers ready for a flood of these devices in the hands of associates?Read more...

Citigroup has long been considered the most influential technology tracker on Wall Street, so these annual lists are not to be dismissed. IT used to be a backstage corporate function in Wall Street's eyes, but there are more indicators lately that the money folk are carefully watching the tech folk.Read more...

When the PCI 2.0 details started pouring out this summer, one of the more commented-on areas was a distinct increase in the number of support documents referenced. More background documents are fine. The concern, however, is that the Council is pointing to multiple standards for retailers to rely on. Variety is nice, but consistency is even better.

In the StorefrontBacktalk podcast this week, one QSA discusses a frightening question: How many retailers—or even their QSAs—truly do read the documents they are relying on? How many are relying on the summaries of others? How many chains are changing policies based on what amounts to Cliffs Notes research? The opening topic is the much beloved key change rotation discussion and how it impacted a three-part NIST standard, which runs more than 300 pages.…

Burger King hoped to get quick legal leverage by canceling its franchise agreement with Al Cabrera, one of several franchisees who Burger King sued last year over the tardy IT upgrades. But Burger King's franchise agreement wasn't really written with IT in mind. The contract requirements for replacing obsolete equipment were written for broilers and refrigerators, not POS units. That leaves open the question of whether Cabrera's old POS units even qualify as "obsolete" under the franchise agreement—and whether Burger King can shut down the franchisee.Read more...

Another lesson is that the use of sophisticated personal technology is increasing, and with it comes further risk of a data leak. Many employees are returning to work in this new year with all manner of shiny new laptops, tablet computers, smartphones and other personal devices that Santa dropped off. Many of these devices will connect to your corporate network in some fashion and then to the Internet, where they will send, receive and process E-mail and other files. From a PCI point of view, pens PCI Columnist Walt Conway, these devices increase your risk, and that is why they are already included in PCI 2.0. Read more...

The tale unfolds from a Wal-Mart in Glendora, where police said that Cloyd Plumonef was trying to steal a computer. The scam involved an unidentified accomplice of Plumonef, who walked into the Wal-Mart and purchased an e-Machines computer with cash.Read more...

Publicly held companies have to wrestle with a delightfully subjective concept known as material information. Its essence is, "would this information be something that would likely impact how an investor makes decisions?" On Monday (Jan. 3), Borders filed an 8-K form to the U.S. Securities and Exchange Commission, notifying the investing public that the chain's CIO—D. Scott Laverty—had left Borders after about 20 months. And it said that he had resigned that same day. But in early November 2010, when Sears parted ways with its CIO—Timothy Kasbe—it felt the need to say nothing. No SEC filing, no news release or statement whatsoever. What does that say about how much the two chains value IT? Is Sears saying that the loss of its IT chief wouldn't make a difference to any investor? Does Borders see its technology as more strategic?Read more...

When PCI was created, it was given a massive burden: to come up with a comprehensive set of security guidelines for any business that accepts payment cards, from Wal-Mart down to the two-store Phil’s Bait Shop chain. Today, that burden is at the center of a key PCI debate: clarity versus flexibility. Is it better to have concrete requirements, so everyone knows what to expect, or to have more options, so PCI rules can be more easily adopted to a wide range of merchants? It’s the topic debated in this week’s PCI podcast.

The changes in PCI 2.0 that add flexibility will definitely open the door for more debate and potential conflict, says Aaron Reynolds of Verizon Business. “Most of the clients are really frustrated,” he adds. “What most organizations are looking for is really, ‘how do I get there, and how can I get there with assurances that I’m not doing all of this for naught and the rug’s going to be ripped out from under me?'” Reynolds drills into the benefits and downsides to the new rules in the latest StorefrontBacktalk podcast on security. To listen to the podcast, please click here.…

This question also applies to other end of the transaction. Should a retailer feel more secure if it uses a card processor that suffered a data breach in the past but has fully remediated and is now validated (or revalidated) as PCI compliant today? Conversely, should a processor feel increased confidence in signing a merchant that has emerged from a data breach and has now validated its PCI compliance? PCI Columnist Walt Conway ponders this philosophical issue this week. Read more...

The chief anti-fraudster at the $50 billion chain, Paul Stone, wasn't even accused of anything (well, not until he walked into court, at least). He showed up in court to ask the judge to give a harsh sentence to some Best Buy contractors—who were convicted of overcharging Best Buy to the tune of almost $33 million—along with a former Best Buy manager who supposedly let the fraud happen, for kickbacks. But in the eyes of Michael Davis, who is the chief federal judge for Minnesota, the lackluster mechanisms and processes that Stone's LP group put in place allowed the crime to happen and Stone should have been punished.Read more...

Timothy Kasbe, a celebrated IT exec who arrived at the chain in February 2009 after having served as the CIO of India's largest retail chain, quietly left the company early last month. Very quietly.Read more...

Walt's first request is for the PCI Council to publish a full, one-year schedule of training sessions. The Council's training programs are excellent. Because of that, they are very popular and fill up quickly. As of this writing, the Council has not yet posted future training classes on its Web site. When that list is posted, Walt's wish is that it be a complete schedule for all 2011 courses. Read more...

A key takeaway from these attacks is that retailers are becoming increasingly at risk for data losses from systems they can't control. This goes beyond E-mail campaigns and includes a wide range of mobile programs, in addition to social site campaigns.Read more...

Right around this time, Amazon was very publicly hit with a DDoS attack by programmers retaliating against the E-tailer having cut off the hosting for WikiLeaks. But unlike fellow WikiLeaks targeted sites at MasterCard, Visa and PayPal—which all were crashed for brief periods—the extra capacity of Amazon's servers sustained the attack and didn't skip an HREF.Read more...

Why little pain? A $399,000 settlement is not a huge deterrent for a $50 billion chain, but it might become more annoying if it spreads to many other states. The actions required—the halting of the deceptive kiosk program—are also trivial, as that program had basically run its course and mobile devices pretty much make it irrelevant.Read more...

Also, retailers are creating not-so-small teams to deal with social interactions, teams they plan on paying for by cutting back on call center group staffing. That is a sound plan, but few are giving it enough time. By late 2012 or so, such staff re-allocations may start making sense. But certainly for 2011, double-staffing (adding to social teams without significantly taking away from still-popular call centers) will be necessary. Have you budgeted for that?Read more...