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Smarter and Safer Payment Systems

Many hoteliers may be reading or hearing about EMV (Europay, MasterCard and Visa) and NFC (Near Field Communication) and wondering what effect these new payment technologies will have on the lodging industry. NFC is all about smartphones and mobile marketing, while EMV is the smartcard standard for secure payments. The twin technologies of NFC and EMV are especially important to hoteliers as they plan for new products and payment acceptance systems in a world where guests travel between regions and expect a consistent consumer experience.

Overall, the hospitality industry continues to be a target of today’s sophisticated cybercriminal, and payments innovators are continually responding with new ways to mitigate these threats. Hoteliers should take note and ensure that any investments in software/hardware include increased security and ability to process emerging card payment technologies such as EMV.

What is EMV?
EMV is the smartcard standard for secure payments that is widely adopted around the globe, with the U.S. starting to come aboard. Most major card brands have rolled out roadmaps and incentive programs for merchants and processors to prepare for the technology shift of bringing EMV to the U.S.

EMV will enable hoteliers to shift away from hackers’ crosshairs, which is crucial since lodging is one of the most breached industries. EMV adds dynamic data to the transaction stream that, unlike standard, static magstripe card data, renders replay of payment transactions impossible. This greatly increases data security and revenue management within hotels. More important, because every card contains its own microprocessor chip, EMV cards are impossible to counterfeit economically.

A way to further reduce security risks while securing payment transactions is to combine EMV with end-to-end encryption and tokenization. With EMV protection on the front end, end-to-end encryption scrambles sensitive data after the card is swiped and protects card data in transit or at rest in the processor’s network. On the back end, tokenization then replaces sensitive transaction data with a marker and secures information for storage. Comprised of non-mutually exclusive technologies, this multi-faceted security approach provides optimal payment protection and can knock out card fraud.

To accommodate EMV, every PMS and ATM card acceptance sub-system will need to be assessed by hoteliers. This will present an opportunity to determine how EMV and/or NFC fit within their respective organization’s payment ecosystem. To prepare for EMV and the future of payments, hoteliers should:

- Future-proof technology investments. If hoteliers are in the market for a new PMS or card processing terminals, make sure they are EMV capable. Investing the extra money now is a small price to pay for making sure systems are ready to accept smartcard payments.

- Contemplate contact and contactless EMV. To prepare for today’s contactless card payments and tomorrow’s NFC-based mobile payments, look for terminals that support both contact and contactless EMV. To keep costs down, look for terminals that have built-in contactless capability, not an add-on card or external device.

- Leverage bargaining power. PMS providers are always hungry for business, and the changing technology requirements will only increase supplier competition. Take advantage of these market conditions and negotiate.

NFC Mobilization
As mobile commerce continues to evolve, NFC provides numerous opportunities for hotels to enhance the guest experience. NFC can play a role in the elimination of physical hotel room keys while spurring the movement to e-wallets, which enable guests to pay for a variety of hotel services (check-in and checkout, amenities, etc.) using their phones. With e-wallets, consumers can simply wave their phones near a POS device to initiate a payment instead of using plastic magnetic stripe cards or cash. NFC-enabled e-wallets also provide hotels with opportunities to offer guests targeted discounts, promotions, and mobile gift cards based on purchasing behavior.

The Future of Payments
As hoteliers — and all card-accepting merchants — ready themselves for the widespread adoption of EMV smartcards and the arrival of NFC-equipped smartphones, they should address their systems’ compatibility today. Incorporating enhanced security with the hotel’s PMS is essential because if guest payment data is breached, it can devastate a hotel’s reputation, and, thus, financial stability. As cybercriminals continue to target payment card data from the hospitality industry, payments-oriented data security upgrades are imperative. Hoteliers can stay further ahead of cybercriminals, while meeting or exceeding guest expectations and demands, by strategically and proactively investing now in secure technologies like EMV.

David Hogan is the Executive Director of Major Accounts at Heartland Payment Systems, leading the company’s major accounts sales team focused on driving significant business growth among mid-to-large level businesses in the retail and hospitality industries. Heartland is the nation’s sixth largest payments processor and the endorsed provider of card processing, loyalty marketing and payroll services for the American Hotel & Lodging Association and 43 state lodging associations.

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