I read an article at Internet Retailer.com and it got me
going as to why I believe it's a great time to be the only company in the world
with a PCI 2.x certified PIN Entry Device!
Here's an excerpt, followed by my Top 11 List...
The web outgrew total
revenue and store sales for Gap Inc. in the second quarter. But the most
telling statistic in Q2 about the overall importance of e-commerce to Gap is the
fact that the Internet now accounts for a significantly larger share of total
sales than it did just one year ago.
In the quarter ended Aug. 1,
Gap, No. 25 in the Internet Retailer Top 500 Guide,
Web sales are up
17.3% from $224
million to $191 million in the second quarter of 2008.
Comparable-store sales decreased 8%. The web’s percentage of total
sales for Gap is 25% larger than one year ago
Net income declined 0.4% to $228 million from $229 million.
“Building upon two years of work
improving our economic model, we’re now putting further emphasis on changing the
trajectory of our top line performance,” says Gap CEO Glenn Murphy.
For the first half
of the year:
- E-commerce revenue increased
15% to $491 million from $427 million.
- Total sales declined 7.4% to $6.37
billion from $6.88 billion.
- The web’s percentage of total
sales for Gap is 24% larger than one year ago.
- Net income declined 7.3% to $443 million from $478 million.
Okay...that is what instigated this post. There have
certainly been some interesting developments over the course of the last two
years. Let's take a look at my "Top 11 List" as it relates to an eCommerce
has surpassed credit in both the number of transactions and volume.
- PIN Debit is the preferred of the two debits, online
and offline. (PIN and Signature)
- The "GAP" between eCommerce and Bricks and Mortar is
- Consumers have the fear of god, (I guess I shouldn't
give hackers that much credit) instilled in them to the degree that over half
have serious reservations and one-third won't even risk shopping online.
- Brick and Mortar merchants are clamoring for lower Interchange Fees,
- PCI "certification" and "compliance" are at top of
the news forefront,
- End-to-End Encryption, a term not heard prior to the
Heartland Breach, is fast becoming a buzzword...
- Phishing, Keylogging and Malware are at an all-time high
- "Card NOT Present" Fraud is at an all-time high ...AND GROWING
- Recent reports state that no website is
safe...and, number 11:
- Banks are "worried" for the first
time. (The Password is "2FA E2EE Security")
So when you add it all up what does this all mean?
It means that the Paradigm Shift...feel free to call it the "perfect
storm"...has begun to brew and gain momentum.
Why not make "everybody" happy and solve all 11 problems at once. The main culprit of CNP Fraud is the Web Browser. So why not eliminate the CNP environment by eliminating typing and mandating swiping just as they do in the brick and mortar world?
Therefore, now is a really
good time to offer the world the "only" PCI 2.x end-to-end 3DES DUKPT encrypted Pin
Entry Device in two hemispheres. By the way, our device, it could be argued,
removes Internet Retailers from the scope of PCI
Compliance because the data is neither stored nor handled when the card is
It's also beneficial for
HomeATM to own a globally patented PIN Debit platform which not only lowers risk
and virtually eliminates chargebacks but is preferred by both merchants and
Imagine the demand if that very same platform were to significantly
lower Internet Retailers Interchange Fees...especially if
the cost of the device was so inconsequential that it provided a return on
investment as quickly as the first transaction.
I would be great if that
same platform eliminated the threat of phishing, cloned cards, cloned bank
websites, DNS Hijacking and to a large extent malware. (what would the malware
steal if there wasn't any card holder/financial information data?)
Having removed those threats, I guess the only "threat" to HomeATM's
solution is...the dreaded Software PIN debit :-) I still don't quite
understand, especially in light of the recent exposes' on inherent weaknesses within the browser space, how software PIN debit has
gained the momentum it has, but I will say that Acculynk has done a wonderful
job marketing their solution. (In fairness to HomeATM, they have a lot less
pushback as they don't have to move molecules. (hardware) Then again, I don't
consider that to be an encumbrance...I consider hardware to be an advantage.
For the sake of argument, let's give the software approach the benefit
of the doubt. Let's assume that hackers are too dumbfounded by mouse clicking
technology to figure out how to crack a floating PIN Pad, they aren't handicapped when it comes to stealing credit and debit card numbers...
In my humble opinion, the problem (SNAFU) with software
PIN Debit is that in order for
it to work, consumers must still "type" their Primary Account Number (PAN) into
a box on a merchant checkout and...I think that
hackers have already
proved beyond a shadow of a doubt that they can easily hack the PAN.
The only way to prevent
that from happening is for people stop typing. So the obvious question is: If
typing is eliminated...thus the required first step for a software PIN debit
application is eliminated as well... what initiates the popup...oops,
floating...PIN Pad at the checkout on a merchants website? Hmmmm.....
Let us assume the elimination of typing "isn't in the
stars" (contrary to the picture I have envisioned in my mind and pictured
on the right) for another couple years. That would mean that Internet Retailers
would have to choose between a software and a hardware approach to Internet PIN
Aside from the aforementioned fact that hackers have proven they
can steal credit and debit card numbers at their whim, why do I believe that
HomeATM has the advantage?
One "very big" reason is that we provide the PCI
compliance by removing the merchant from the scope of said compliance. That
fact alone would save Internet Retailers not only a pocketbook of cash, but
eliminate more headaches than 10 cases of Excedrin.
the fact that Internet Merchants would be PCI compliant would potentially save
their business from an involuntary insolvency caused by exorbitant fines levied
by MasterCard or Visa in the event of a non-compliance breach.
Considering that 85% of businesses suffered a breach in the last 12
months (see 2009 Ponemon Report) that
possibility poses a real threat.
Another HomeATM advantage is there is
no arguing the fact that our transaction methodology is immensely more secure.
In fact "security" is why we have the only PCI 2.x Certified PED specifically
designed for eCommerce. (in the world)
But, maybe our biggest
advantage is that when you "swipe" the magnetic stripe, the Track2 data is
captured...which is a requisite for a Card Present environment.
takes it one-step further and immediately encrypts the Track2 data providing
another layer of security. (the fact that our PED does that is now referred to
as an "encryption enabled" Point of Sale Device)
HomeATM Worst Case Scenario - "Card Present" Internet PIN
In my humble opinion, the
"worst" case scenario, is that we
create a Card Present "Internet" PIN
Debit" environment. (although I would argue that we 100% replicate a brick and
mortar PIN Debit transaction...for instance, one conducted at the Gas Pump, or
at a Kiosk.) But we would encourage MasterCard or Visa
to create a Win (V/MC) Win (Internet Retailers) Win (consumers) "Card Present Internet PIN Debit"
classification for Interchange. Card Not Present Fraud has reached epic levels and shows no signs of letting up.
Case Scenario: "Card NOT Present" Internet PIN Debit
On the other hand, Internet Retailers who
decide to risk offering a "type and click" format, which does not capture
the Track2 data could only hope for a "best case scenario" classification of "Card
Not Present" Internet PIN Debit. By definition, (Visa and MasterCard's) if the
magnetic stripe data is never captured, then it creates a "Card Not Present"
environment, thus transaction.
The fact that "CNP Fraud is at it's
all-time high and is expected to continue to grow" bodes well for a Card Present
Solution. But, nevermind that...Simply ask "anyone" in the brick and
mortar space if they prefer "card present" Interchange over "card not present"
Interchange and you'll learn why HomeATM has a distinct advantage over a
software, CNP solution. We replicate a brick and mortar PIN
Debit transaction whereas "software PIN debit" does not exist. (anywhere in the
payments ecosystem). We are simply taking a "conventional approach" to
securing card holder data for web transactions. Software PIN debit is just
another "alternative payment" system.
Oh...last point. HomeATM is EMV
(Smart Card/Chip and PIN) ready. There's no such thing as a software Chip and
PIN. Then again, I guess I could argue that there's no such thing as a software
PIN Debit solution either as both require swiping vs. typing. Add to that fact that our device would also provide secure 2FA 3DES DUKPT E2EE secure online banking log-in and there's a value-added component to the mass distribution of our devices. Especially considering the inherent flaws in online banking authentication. (see related story below)