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The Timing of Credit Card Change Over Benefits Digital Commerce

by Bill

Brick and mortar retailers are up in arms over the slow rollout of new credit and debit cards with a security chip to prevent consumer fraud. The October 1st terminal deadline is already creating a backlog of orders, uncertainty if merchants will be ready in time for the Holiday crush and has the potential to make long lines even longer at cash registers nationwide, creating downward pressure on the most important time of the year for many merchants.

“If they couldn’t get it done before 10/1, I doubt many are going to have the appetite to turn it on between now and the end of the year,” Mark Horwedel, chief executive of the Merchant Advisory Group told The New York Times on behalf of retailers. “This is make-it-or-break-it sales season for the merchant community.”

The new cards are being issued as part of an ongoing battle over who should bear responsibility for fraudulent transactions, and while the battle rages between card associations and financial companies, it’s brick and mortar businesses that are being caught in their monetary crossfire.

Some have rightly pointed out that there are even bigger dollars at stake over interchange rates than in fraud prevention itself. “That is the crux of the matter,” according to David Robertson, publisher of The Nilson Report. “The real savings is not about fraud, the real savings is about interchange.” Last year, merchants paid about $61 billion in interchange fees, claimed Mr. Robertson, as compared with about $30 billion in fraud losses.

What most of the media seems to be missing is the potential windfall this slow progression may yield for online merchants who market their services correctly.  “We are already seeing significant numbers of ads online, aimed at avoiding long Holiday lines, and REI famously announced they will be closed on Black Friday to get more people outside enjoying the holidays” said Stewart Klein of DigitalApex.com “What we haven’t seen yet are ads pointing out the problems new credit card terminals will cause at a physical point of sale, and the fact that doing all your Holiday shopping online frees you of any of those delays automatically. I’d expect to see plenty of that in the run up to Black Friday.”

Online commerce has always benefited from being the most convenient way to complete transactions, and in the holiday season of 2015 that appears to be a selling point worth mentioning for any merchant seeking a bigger slice of the holiday commerce pie

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