I think the US likes to think of themselves as a fairly tech savvy country. They might not be right at the forefront like some Asian countries, but technology is rather prevalent in the USA.
According to US Census, in 2012 nearly 75% of households had internet access at home and almost 80% had a computer at home. These are higher rates than any other country in the world and I’m sure it’s just kept increasing since then.
Once in a while I drive from Vancouver down to Seattle and the surrounding area. You’d think that with the border only half an hour, everything should be pretty much the same as in Canada. For the most part that is true, but there are some differences, one of them being payment processing.
Anytime I pay for anything down there I am baffled at how behind the times the retail stores are. Since my credit card has no foreign exchange fee and I get cashback, I use it everywhere in the US. My automatic reaction is to use my secure chip card and pin code. Instead I get a flashback to the 90s as they slide a receipt and a pen across the counter. Apparently asking me to sign the receipt and never comparing the signature to what is on the card is some kind of effective security.
The part that really makes me laugh is how many people in the US still pay for purchases with a check. Like, paying for your coffee with a check?!? Are you serious??? Most of the checks I’ve ever written were for rent and I probably wrote less than a dozen beyond that.
Meanwhile when I use my credit card in Canada it is extremely rare for a store to not have POS system that uses chip card technology. You only have to sign a credit card receipt if their system is having technical problems and that is rare. A lot of stores are even further ahead and support RFID (radio frequency identification) which only requires you to tap your credit card.
So Why Is The US Payment Processing So Antiquated?
It’s not that they just don’t have the technology. The simple answer is that it is just too damn expensive. When you consider how many US stores, restaurants, cafes, etc accept credit card payment, it’s easy to realize how much it would add up to get new POS systems in place everywhere.
Sure the government could possibly put legislation in place where the credit card companies have to foot the bill on all of the new hardware. The obvious conclusion there is just increased processing fees to recoup that money and more.
The government is likely wary about putting any pressure on small businesses and risk any effects it might have on the economy. Even to be the government to increase the cost of doing business, they might lose the votes of many business owners. My guess is that the government would be inclined to throw money at the problem to reduce the effects.
Change May Be Coming
There’s no question that the issue needs to be resolved eventually. More and more Americans are realizing that their system is broken. Sure businesses are getting paid for most transactions, but things are getting riskier.
The major problem is that hackers from all over the world love to target US credit cardholders. The low level technology is putting a bullseye on Americans. It’s just far too easy to use stolen US credit card info successfully.
This is why we’re hearing about major data breaches at big companies such as eBay or Target. In one swoop organized crime is compromising countless credit cards. They know they won’t have a problem using the majority of them for fraudulent purchases down the road.
The scale may be tipping with the pressure the credit card companies must be putting on the government. Soon cardholders will start demanding more protection too. The government might have no choice but to open up the checkbook before the problem spirals out of control.
In the meantime, small businesses may want to consider protecting themselves by upgrading to a computer based POS system such as this one from Vend. By taking this approach businesses could turn to the more advanced security measures available online. This way you won’t face costly credit card chargebacks and risk your merchant account. Plus computer based systems like this offer all kinds of other functionality.
It is about time the US enters the 21st century when it comes to payment processing.