Evan Schuman's StorefrontBacktalk

Consider the latest E-Commerce stats released Monday (Aug. 8) by E-Commerce tracking firm ComScore. It reported some $37.5 billion worth of E-Commerce spending in Q2 2011, a 14 percent increase from a year ago. Even setting aside for the moment what the best definition for E-Commerce should be today, does merely thinking of rigid E-Commerce figures separately from in-store, isolated from mobile and apart from call center undermine retail merged-channel thinking? Anything purchased on Wal-Mart's mobile site is certainly M-Commerce, but what if a customer is accessing Wal-Mart's full Web site through a BlackBerry, iPhone or Android? And what if it's happening in-store and the search in question was activated by a barcode scan? The bard himself could barely have written the bonus plan that adequately covers that situation.Read more...

In the past, when the card brands wanted merchants to introduce new technology, they offered incentive (i.e., lower) interchange rates. This time, Visa is offering no interchange fee discount. Instead, the incentive is the opportunity for Level 1 and some Level 2 merchants (those with more than one million Visa transactions a year) to reduce the cost of their outside assessments. Bottom line: the Technology Innovation Program (TIP) doesn't cost Visa or its issuers a penny. Before, issuers paid for merchants to implement new technology (e.g., TIIF and TIIF2 incentive interchange rates). Now they are saying, "Hey, we'll keep the interchange but save you having to pay QSAs. But if you get breached, the same fines apply." Neat. They're transferring who pays.Read more...

If you thought only phone makers, payment-card brands, mobile carriers or startups believe they can do mobile payments—well, add card processors to that list. On Tuesday (Aug. 9), Heartland Payment Systems announced Mobuyle, its own app and $75 hardware plug-in for Android phones to let its merchant customers take card payments via mobile. Like Square, the plug-in card swiper attaches to the phone’s audio port; unlike Square, the Heartland hardware encrypts the card data before it’s sent to the phone. (Heartland has been big on end-to-end encryption ever since its headline-making $129 million data breach in 2008.)

Heartland is pitching Mobuyle only to its own customers, so it dodges some complications—Mobuyle just has to mimic a Heartland PIN pad. But plenty of so-far-unresolved mobile-payment issues still come into play. If a retailer enters a card number manually, could it be captured by malware before it’s encrypted? What if an OS update breaks the security? Will retailers even have the legal right to send that type of data from their phones? How well Heartland deals with such questions could determine whether it will end up in the headlines all over again.…

The "Main Street Fairness Act" introduced on July 29 would require conventional online retailers—including Amazon, which supports the bill—to collect sales taxes for states that meet the law's requirements (24 states currently do). But exactly how the law would apply to non-traditional retailers like eBay isn't so clear. That means Amazon could find itself no longer appealing a lawsuit in New York, launching a ballot measure in California and fighting "Amazon law" brushfires in other states—while eBay could face an IT nightmare.Read more...

The combination makes absolutely practical a science-fiction-like scenario of customers being identified as they walk into a store by virtue of their face alone. Cameras at POS could match faces with names from a payment card, thereby enabling the customer to be subsequently identified and tracked without a loyalty card. The CMU experiments suggest an even more powerful privacy-smashing scenario, with consumers walking into a store identified by any site that has ever posted their pictures. Imagine a loyalty program with 90 percent participation, requiring no effort—nor, for that matter, intent or consent—from any customers. An absence of laws will make the ethics of retail senior executives the only boundary. (Uh-oh.)Read more...

For the U.S. retailer, this news may further erode any movement toward Chip-and-PIN, an effort that had already effectively been stalled by retailer apathy. Despite a push last year by Wal-Mart, retailers have shown almost no interest in making the change. The move in the U.S. toward mobile payment, which is unlikely to be easily compatible with current-day EMV efforts, is the latest Chip-and-PIN roadblock.Read more...

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 of the data—including Track 1 and 2—from such a card? As payment form factors evolve, does the interchange definition need to grow with it?Read more...

If increased risk is not enough, using video to capture payment-card information means that retailers would have to absorb all the cost of complying with every PCI requirement without the benefit of lower interchange fees. One also has to wonder if using video cameras to validate cards means retailers will need to search for rogue video devices the same way they must test for the presence of rogue wireless access points today. Speaking of videos, another bad-guy trick could be harvesting legitimate cardholders' videos and selling them like stolen PANs. This technology could result in an entirely new secondary carders market.Read more...

Visa's response comes in the context of increasing efforts on the part of taxing authorities trying to deal with E-Commerce that stretches beyond their borders. In the case of Australia, any overseas transaction less than $1,000 has been exempt from the GST. Although local brick-and-mortar retail chains are pushing to end that exemption, Australian tax bureaucrats have already concluded it's impractical to collect the GST on small purchases—it would cost more to collect than the tax would bring in.Read more...

The latest stats from Web performance tracker Gomez show some of the faster sites (including QVC and Amazon) sometimes delivering speeds 13 times faster than what their slower counterparts (including Target, HSN and Netflix) are delivering. In April, for example, QVC had an average response time of 2.2 seconds, while Netflix delivered 28.6 seconds. In May, QVC scored 1.5 seconds to Netflix's 11.3 seconds and Office Depot's 8.5 seconds. In June, QVC was clocked at 2.3 seconds and Amazon at 4.6 seconds, compared with Wal-Mart at 9.7 seconds, Target at 9.6 seconds and HSN at 10.8 seconds.Read more...

The trial, which was launched in mid-March at one New Hampshire store and is slated to expand to a second store "in the fall," has "gotten off to a better start than we expected. We found that [customers] shopped the whole store. That surprised us a bit," said Mike Norton, a spokesman for the five-state regional chain, with stores in Maine, New Hampshire, Vermont, Massachusetts and New York.Read more...

Visa’s latest PCI compliance stats report Level 3 compliance for the first time, and it opened at a discomforting 60 percent. The 3,024 retailers in Level 3—which reflects those processing 20,000 to 1 million Visa E-Commerce transactions annually—had before only had their compliance level marked as “moderate.” The 377 Level 1 merchants (processing more than 6 million Visa transactions annually) saw their compliance inch up from 96 percent six months earlier to 97 percent as of June 30.

The 881 Level 2 merchants (1 million to 6 million Visa transactions annually) maintained their exact compliance level from the end of 2010, holding at 96 percent. The compliance level of the more than 5 million Level 4 merchants—those retailers processing fewer than 20,000 Visa E-Commerce transactions annually, along with retailers processing as many as 1 million Visa transactions of any type annually—is still secret, with Visa continuing to identify it as “moderate.” It’s hard to read too much into that moderate designation, but it’s not too far-fetched to assume that Visa wanted to wait until Level 3 compliance was high enough to announce. If so, that would suggest that Level 4s are now well south of 60 percent, a suggestion that should surprise absolutely no one. …

Regardless of how you personally feel about search engine optimization (SEO) strategies, there’s no denying this game of outsmarting the Google/Bing crowd is complex. SEO specialists are constantly one-half step behind their search engine counterparts, trying to combat the Google anti-SEO functionality with their own anti-anti-SEO functions. Could this dance of the nerds-versus-the nerdiers get any geekier? Apparently, yes. The folks at Search Engine Land have come up with a way.

Their approach brings to the E-Commerce programming circles that much beloved and memorized geek heartthrob from the chemistry world: the periodic table. The resultant SEO table is a work of art, at least for the SEO pocket-protector crowd. An accurate and meaningful guide of the point-counterpoint that is SEO strategy, it is presented in the old familiar format. As someone who always struggled to pass chemistry exams and who today avoids SEO discussions with a passion, this useful chart is nightmare-fodder on so very many levels.…

If that doesn't sound like a template for your worst security nightmares, just substitute "shopping mall" for campus and "payment-card transactions" for documents. True insiders may be the source of most security problems—such as a fired Gucci network administrator—but when network wiring is unprotected, any thief can become an instant insider. What makes Swartz's success even more chilling is that MIT's network security team had spotted and blocked his access a month before. But once Swartz connected directly to the switch, because he was attacking from an unexpected direction, network security didn't notice for months.Read more...

Card present? That's certainly the right buzzword to get the attention of big retailers, who know it means lower interchange fees. But what exactly does it mean to have a card-present transaction where the card is only present at the far end of an Internet connection? Answer: Not much.Read more...

Miller was able to force the batteries to overcharge, and he considered the possibility of making them catch fire or explode—but decided he didn't want to destroy his home. Miller also told interviewers it might be possible to create malware that could be hidden in a laptop's battery, so it would return no matter how many times the attack code was removed from other components. But he didn't try to make that happen, either.Read more...

The legislation, which has more holes than a chuck of Swiss cheese, would place these burdens on retailers while ignoring a lengthy list of other people in the retail environment who have access to the identical data. The key problem, pens Legal Columnist Mark Rasch: The writers of the legislation didn't think much about how retailers do their magic.Read more...

It's been said that there is no such thing as bad publicity as long as the brand is spelled correctly. Domino's may be about to undermine that adage. The problem is, Domino's is pledging full openness—which is hard to do.Read more...

Cross-channel retailing doesn’t display its weird moments any more clearly than this: Last week, Sears Canada offered a group-coupon deal ($25 for a coupon good for any merchandise worth $50) through Canadian Groupon competitor Buytopia.ca. All 5,000 vouchers sold by the first afternoon of the three-day deal, so the promotion was clearly a success. But Sears wants the coupons to pull customers into its stores now, during the lull before back-to-school shopping starts. As such, the coupons specifically exclude online sales—they’re good in-store only. Unfortunately for Sears, and as usual with such deals, the coupons are good for 90 days—long past Sears’ target shopping window.

That means the promotion could be a sell-out success and a complete failure if coupon buyers decide to just wait a month until they would have hit the stores anyway. The in-store-only requirement could also irritate the online-oriented customers Sears was targeting. And even if a group-coupon promotion works for the first time with a big retailer that is not a discount apparel chain, sorting out why it worked may be impossible. There may just be too many built-in contradictions for Sears to be able to work out whether this is a case of highly tuned cross-channel retailing—or just dumb luck.…

Nowhere is that distinction more critical than with item-level RFID. Suppliers will resist—if they resisted the early Wal-Mart edicts and risked the wrath of Bentonville, they'll resist Macy's—and they'll only sign on either when they see concrete benefits or when the percentage of retailers making the move is so high that they have no option but to comply.Read more...

It's not that the Hispanic segment is not a critically important one for retail. It absolutely is. But the reality is that there are far better ways to reach that audience than a Spanish Web site—and that such site creations come with massive downsides. It's not a trivial investment to create a full version of a chain's site in another language, which means that the benefits have to overcome that. And that's where the math comes in.Read more...

The vendor, Card Activation Technologies (CAT), has sued quite a few major chains over the last years, including RadioShack, 7-Eleven, Nordstrom, Macy's, Starbucks, JCPenney, Sears, OfficeMax, TJX, McDonald's, Walgreens, Barnes & Noble, Aeropostale, Lane Bryant, Blockbuster, Fashion Bug, Cabela's, Guess, Panera Bread, Giorgio Armani, Caché, Denny's, Sunglass Hut Trading and the Brown Group Retail (doing business as Famous Footwear). But CAT's position began to implode earlier this month when a federal judge invalidated all but three of its claims against the retailers. That move followed a preliminary report from the U.S. Patent Office that it was also about to invalidate all of CAT's claims. CAT then surrendered its last claims, pending an appeal.Read more...

We’ve written before that Starbucks is arguably the most effective mobile-payment app that really isn’t mobile payment at all. That’s because it simply mimics the barcode of the Starbucks stored-value card. But now that the app can have dollars added to the card online (and, of course, via mobile), an unexpected side benefit is that it can be used to transfer funds between consumers for free.

Tim Dickey, a retail specialist at POS vendor NCR, recently found himself being owed $100 by a friend who lived a long distance from him. (He had done some technology cleanup for her and had purchased a $100 application in the process.) The friend was going to use PayPal, but that would have incurred a charge, and they explored bank wires, which can also cost money through bank fees. Then Dickey, who is a frequent Starbucker, realized that she could simply populate his Starbucks card with $100. No charge, no delay, no risk. It was likely never considered a primary feature of the mobile program, but I doubt Starbucks would object if it became popular.…

Sears has at least learned to share the pain, as the Sears third party that glitched the pricing—GSM Onsale—found its site down within hours. GSM said the pricing error was "due to a software maintenance error." What happened to its site is more of a mystery. GSMonsale.com went down shortly after the Sears glitch, with a note that said "our online site is currently closed for maintenance. Please visit us again soon." Six days later, the site is still down. Also, the message had something that we've never seen before with a site that expects to be back up anytime soon: a large red "Closed" icon in the middle of the page.Read more...