The major credit card companies are pushing a new card technology designed to reduce fraud. This technology will also accelerate the adoption of mobile payments starting this fall, which will usher in a revolution in the way
consumers pay for their purchases, and the way resorts structure their loyalty programs.

The technology, called EMV, which stands for EuroPay, MasterCard, and Visa, uses credit cards with chips embedded in them. This chip-based EMV technology has been widely adopted throughout the rest of world. Now, chips will replace magnetic strips on cards in the U.S. over the next few years. Card companies have already begun introducing chipped cards as older cards have expired.

The push by credit card companies for EMV integration is due to escalating incidents of fraud, with the catalyst being the United States’ continued reliance on magnetic-stripe cards, which are less secure. It’s a huge problem: 47 percent of all card fraud happens in the United States, according to The Nilson report on global card fraud from November 2011. That percentage has probably increased in the past three and a half years, with the major security breeches that have been reported. Resorts are not immune: This past winter, some Colorado ski towns reported a rise in card fraud, believed to be caused by credit cards infected with a malware that allowed criminals to obtain card information.

One thing’s for sure: The new chip-based cards will cut down on fraud. Unlike those with magnetic stripes, chip-based cards are encrypted, and each time an EMV card is used for payment, the card chip creates a unique transaction code that cannot be used again. In contrast, the data on a magnetic strip doesn’t change, so that data can be replicated over and over—making it very lucrative for criminals.

For an interim period, the new chip-based cards will also have a magnetic strip. These cards will be phased in over time, starting with consumers whose cards will expire within the next year. The card companies know it will be a few years before the magnetic strip can be completely eliminated, as very few U.S. merchants have updated their POS systems, and the vast majority of these systems are not yet close to being EMV compatible. Full adoption of EMV will take many years.

That means fraud will be with us for awhile. For the new EMV standard to achieve its desired security objectives, the magnetic strips will eventually have to be eliminated, which means resort operators, along with other merchants, will need to upgrade their POS systems to meet the EMV requirements.


Accelerating the Change
So the question becomes, how quickly will the changeover occur? The credit card companies, as you might expect, are pushing merchants to change sooner rather than later. And they are delivering a powerful push. In October 2015, new legislation and requirements by the major card brands will kick in. At that time, liability for fraudulent card activity will begin to shift from the credit card companies to merchants. Merchants who have not adopted EMV chip technology by that time will be liable for losses linked to card fraud, if chip technology could have prevented the fraud.

It will be up to each resort to decide if it will spend the money to upgrade to EMV-compatible terminals for this season, or if it will hold off and assume a potentially very expensive risk. That risk, by itself, will encourage faster adoption of the new technology.

Card companies are also promoting the new technology to their customers. Here’s their pitch, from a Chase letter accompanying a new card: “New chip cards provide an extra layer of security when used in a chip card reader. Chip technology has made a positive impact around the world, and now as U.S. merchants begin the transition, you can use your chip-enabled card with even more confidence while enjoying all the great benefits Chase has to offer.”

Merchants will have a third reason to adopt the new technology: Mobile payments use the same technology as EMV.That could help tip more merchants toward early adoption, too.

So, What do merchants need to do? Upgrade to new POS systems that accept contact-less payments via Near Field Communications, or NFC, the technology used in both the new chip cards and many smartphones. The iPhone 6 is one smartphone that comes equipped with an NFC-capable EMV chip. The same is true of many Windows phones. It is a safe bet that as companies roll out new phones, these will incorporate NFC technology, too.

The key aspect to accepting mobile and EMV payments will be to upgrade to a POS terminal that has a dual interface, one which will allow for accepting both contact and contactless payments. Dual interface terminals can process transactions from various payment products, including chip contact cards, contactless cards, mobile devices, and magnetic-stripe cards. The terminals are more expensive, but will be worth the cost.

Having these systems and the software to accept mobile payments will definitely be a convenience for customers, who are quick to embrace the use of mobile wallets on their smartphones, and could evolve into a more efficient way for you to do business.

There are many players involved in the integration of EMV and the growth of mobile payments. Most obviously, EMV is being driven by the major card brands—Visa, Mastercard, Discover, and American Express—to cut down on credit card fraud. Then there are the card-issuing banks, which will need to get chip-based cards into the hands of their cardholders. Merchant processors will have to upgrade their internal processing systems. And merchants will need to install POS terminals to accept these chip-based cards. Finally, consumers will have to learn how to use chip-based cards and smartphones to make purchases.


Marketing Opportunity
There could be some marketing advantages for resorts in this process—loyalty programs will become easier to administer, and easier for guests to use. One popular program might be free or discounted lift tickets after a certain number of visits. Other possibilities include beginner packages, food and retail discounts, rental deals, season pass offers, and multi-mountain offers. The sky is the limit for the marketing teams.

Such marketing opportunities are the real added value to resort operators for accepting mobile payments, and for encouraging guests to make the move. Convenience may not be enough to attain mass adoption by consumers, but a well-marketed loyalty program should help tip the scales.

Softcard—created by AT&T Mobility, T-Mobile USA, and Verizon Wireless—as well as Apple Pay’s Passbook application make the process easy to integrate with your loyalty program. These apps allow smartphone users to digitalize credit cards, loyalty cards, coupons, etc., on their phones and add your loyalty card or coupon. The bottom line is, the growth of mobile payment systems could well lead to wider use of loyalty programs.

Since more and more of our guests have smartphones and mobile devices and take them everywhere they go, resorts will potentially have a high success rate in reaching their customers with their loyalty offers. Setting up a program to track, identify, and reward these customers will go far toward increasing the bottom line.

That, anyway, is what the future looks like. To get there will take an initial investment in the necessary upgrades to existing POS systems and rolling out loyalty programs. But resort operators who have the foresight to see the potential benefits in more secure transactions, along with combining mobile payments and mobile loyalty programs, will be the real winners.