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Card present goes Ecommerce

In the card acceptance business a big change is happening. More and more transactions that should be card present transactions are processed as ecommerce transactions, or better: card-not-present-transactions. Though, why is this and why does this not violate rules and regulations.

I just give you a sample of an awesome experience I had recently. I registered at Uber-Taxi Service. Uber is a very good taxi service with an exceptional service quality. I can recommend everybody to give it a try and make their own experience. Anyway, you have to subscribe and register your credit card with Uber. Then you download the Uber-App and you are ready to order a taxi. Once the taxi arrives, they welcome you by your name, they even offer you a drink. They drive you to your desired location. They give you a warm good bye and that’s it. No payment, no bills, no cards, no coins. You just get out of the car and that’s it. Fantastic. Now your Uber-App tells you that they just charge amount x on your card. They send you a receipt by email containing a map with your journey plus all payment details. I love this, since I can use this receipt easily for my business expenses.

But why do I tell you this long story, and what has it to do with credit card business? Usually this transaction would have been Chip and Pin transaction (card present at EFTPOS Terminal). But since I am a registered user it was converted into an ecommerce transaction, without 3D Secure or Chip and Pin or any other security issues.

The same example happens thousands of times every day and a lot of card present transactions are converted into ecommerce or distance payments. Other examples are cinema tickets that are purchased through the internet and printed at home. Some days ago you would have to pick up the tickets and pay at cash register. Now it is all mobile and therefore a “card not present” transaction. There are a lot of business cases you can think off where you could easily improve the customer experience by converting card present transactions into card not present transactions.

Impact to the card business

What does this mean for the card business. Is the security getting weaker at card transactions? Will fraud rise on these transactions since there is almost no security?

The answer of the card industry to this phenomena is “MasterPass” and “v.me”. These are centralized wallets that hold your card information and allow you to pay anywhere, anytime, even hands free. If you think a little bit into the future, you might get to the result, that EFTPOS Terminal are not necessary anymore since everything will be payed out of your MasterPass or v.me wallet. Is this the death of the terminal industry? Or do you have to enter the PIN into the terminals to access the MasterPass or v.me wallet? Or is this all useless since payment is already enough convenient these days?

A lot of questions. Please feel free to leave your comment and share your thought.

Thanks for reading until here. If you want to try Uber here is your gift: if you register with the code “8uxq6“, you and I receive a US$ 10.00 discount on the next ride. Have fun.

Daniel Eckstein

Daniel is the CEO and Founder of Abrantix, a visionary, lateral thinker and the driving force behind Abrantix. With his other partners he has developed the company into a leader in payment software engineering.

Comment by Conor Flanagan |

I would assume that the Merchant is paying a higher MSC/MDR for this type of transaction as the interchange on these types of transactions would be higher than if processed as a Card Present Transaction, or does “MasterPass” attract a preferential rate of interchange?

Thanks.

Comment by Dimoco |

i like new idea for the ecommerce.
br

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