MAG Insights

Announcements from the MAG & Featured Articles

Also in This Issue: Key Takeaways from the 2018 MAG Merchant Poll (MAG Quarterly- Volume Six, Issue Four)

By Samuel Schieber, W. Capra Consulting Group

December 6, 2018

Merchants share their attention to mobile, security, and EMV in annual MAG Merchant Poll.

The annual MAG conference is an opportunity for merchants, vendors, and others in the payment industry to re-connect, learn about changes and emerging development in the payments space, and share stories of challenges and triumphs from the previous year. It is unique in that it allows merchants to directly interact with one another to troubleshoot common issues, find creative solutions to shared challenges, and check the pulse of how other merchants are managing payments. 

 In order to better identify and gauge trends and find opportunities for education in the payments space, the MAG issues a survey to its merchant members. This year, 52 members representing verticals from eCommerce to retail petroleum responded to the survey. The following are key takeaways from the 2018 survey. 

Focus on Mobile
Improving the consumer experience and level of engagement with customers is a key area for merchants in 2019. Nearly three quarters of the respondents surveyed identified that mobile app/mobile payment development is planned for 2019. The smartphone continues to play a key role in a consumer’s life; and merchants now recognize the opportunities that mobile applications present in streamlining the consumer experience and allowing for a more direct and customized shopping experience. This is a trend that will continue for the foreseeable future. The rollout of new mobile applications is not without challenges, however. Merchants must ensure that new applications are properly secured to limit fraud. 

Security is Top of Mind
As the EMV acceptance enters maturity (minus petroleum), merchants have seen a sizeable decrease in card present (CP) fraud. This is a testament to the security that EMV introduces to the transaction. Unfortunately, fraudsters have focused their attention on the card not present (CNP) space due to the lack of opportunity in the CP space. The majority of merchants polled saw an increase in card not present fraud in 2018, with 35% seeing an increase of up to 10%, and 17% over 10% versus the prior year. The news is not all bad, however, as 15% of merchants reported a decrease in CNP fraud. Those merchants that reported a decrease in fraud implemented an average of 3.7 monitoring tools/solutions and saw the greatest benefit. We believe that the market for 3rd party fraud tools will continue to grow over the coming years. 

It is important to note that the implementation of a fraud tool is not a “silver bullet” for fighting fraud. Merchants who recently implemented a fraud solution saw a modest decrease in card not present fraud – fraud solutions require “tuning” to a merchant’s specific use cases and business requirements. We have found that those who have utilized a fraud solution over a longer timeframe have seen the effectiveness of the tool increase over time. 

EMV is Still in Play
With initial EMV implementations mostly complete, we are starting to see merchants expand upon their EMV functionality by adding support for additional AIDs, implementing Quick Chip, eliminating signature collection, and deploying EMV contactless. We expect this activity to continue in 2019, especially the interest in EMV contactless deployment as dual interface card issuance increases. 

A notable exception to the EMV enablement puzzle is retail petroleum. The liability shift for automated fuel dispenser transactions is not until 2020, which has given petroleum merchants additional time to address the complexities inherent in deploying EMV at the pump. There is optimism, however. Of the petroleum retailers surveyed, 46% believe that at least 51% of their sites will be EMV enabled by 2020. Although 2020 may seem distant, we strongly advise petroleum retailers to start planning for their EMV rollout at the pump. 

The MAG continues to grow and evolve. We are excited to see how things progress for members and for the conference as a whole in the coming years.