Woes at Target Continue – and other security breaches revealed

The trouble at Target continues post-Christmas as the details of the theft of data for 40 million credit and debit cards are shared.

Yesterday news agency Reuters began reporting that the PIN data was stolen.

“(Reuters) – The hackers who attacked Target Corp and compromised up to 40 million credit cards and debit cards also managed to steal encrypted personal identification numbers (PINs), according to a senior payments executive familiar with the situation.”

Target responded by saying that there was no evidence that unencrypted PIN data had been compromised, and no evidence that PIN data had been compromised.

But, how hard could it be for determined hackers to unencrypt a 4 digit PIN that is purely numerical? There are only 10,000 possible combinations. If a hacker was smart enough to have run his/her own card through the system and maybe one or two others, and could then see a few known PINs in encrypted form, it would seem a relatively straightforward exercise to create a software program and use brute force to reverse engineer the encryption.

Another method to acquire that data could have been to hack into an in-store video surveillance system and record customers as they use their cards and enter their PINs. Or even to have worked as a cashier and simply watched enough customers to learn some PINs and matched them to card numbers. Acquiring enough data to break the system seems not all that hard to do. So, no surprise that banks have lowered credit card limits and ATM withdrawal limits.

Meanwhile, as a regular and even enthusiastic credit card user (I do love those airline and hotel miles…) , and now, one who is much more concerned – as I suppose I should have been all along, I am going to see if I can change the settings on my credit cards to email me after every use of my card. That’s probably the earliest warning system possible.

“Chip and pin” (EMV) – credit cards with chips on them that require a PIN for each use – is due to arrive in 2015 in the United States. I, for one, would welcome it now. Even if it took retailers a full year to roll out the needed equipment, I would start using the card with a chip on it immediately and preferentially.

Memo to Master, Visa, Amex  – how about taking the initiative here and offering chipped cards to US consumers AS AN OPTION… voluntary , right now?? I’ll bite. And I’ll pull that card out first, at every store I go to!

As for Target, they have my sympathies… there is a Super Target about five miles from me and I shop there occasionally – it’s a great store. Hope you get it all under control soon.

Article by Craig Aberle

Losing Sales at the Point-of-Sale

I am fortunate to live in a Southern California beach town. I have surfed most of my life because of my close proximity to the ocean. Unlike how it is portrayed in the movies, California beaches get cold in the winter, requiring surfers to wear wetsuits this time of the year.

I needed a new wetsuit this year and my shopping experience at the local surf shops left much to be desired because of their point-of-sale systems. They have the technology to provide outstanding customer service, so why aren’t they using it?

The town I grew up in has a small main street with over ten surf shops selling the same merchandise. This makes it very convenient for me to run down during my lunch hour and grab whatever I may need very quickly. On this occasion I needed a specific size of wetsuit so I made a few phone calls to make sure they had my size. I found two stores right across the street from one another that had my size. The first store couldn’t tell me the color of the wetsuit. The other store told me they had one in black after they put me on hold and physically checked. When I asked each of them if their other store locations had any in stock, rather than looking up stock balances on their point-of-sale systems, they gave me the phone numbers to the other stores and told me to call myself.

Feeling confident, I headed down during my lunch hour to buy my new wetsuit. When I walked into the first store, they had my size, as they told me they did on the phone, but the only color they had was red! Their point-of-sale software couldn’t give them that important information and so they couldn’t relay it to me. I shot the sales person an unhappy look, and he simply said, “I know”. So I left that store with my $400.00 and walked across the street to the second store that had my size and in the standard black color that I wanted.

I found the wetsuit in the second store right away. The time limit on my parking meter and lunch hour were expiring so I was in a hurry. I took the wetsuit to the first counter and the clerk told me the system was down; and then asked if I could move to another checkout counter. At the next one, the girl said the receipt printer was out of paper and she didn’t know how to replace it. At the third counter, the clerk could ring me up but only if I were paying cash because they were trying to fix a credit card machine batch error. Each of their checkout counters are in different places throughout the store, so at that point I was done. They also lost a $400.00 purchase due to their point-of-sale system.

Walking back to my car, I decided to quickly check a smaller store on the same street. Rather than searching myself, I simply walked up to the counter and asked them if they had the black wetsuit I wanted in my size. The clerk looked it up on the screen and then brought it back to me while I never left the counter. That’s service! Their point-of-sale system was quick and efficient. Since I’m in the point-of-sale industry, I also noticed that they had up-to-date hardware, software, and credit card processing. The efficiency of their point-of-sale system made it easy for me to buy and earned them the $400.00 sale.

Driving back to the office, I wondered how many times sales simply walk out of stores because of their point-of-sale systems. The products most retailers sell aren’t unique so the emphasis should be on customer service and making it easy for a customer to buy. Otherwise, a customer can simply walk to another retailer and buy the same item. Follow these tips to insure your point-of-sale system isn’t costing you sales.

Training – Training your front line employees on the proper use of the point-of-sale system should be a top priority. This training should include all aspects of the system that allow them to serve the customer more efficiently. Most clerks seem to know just the basics, and any anomaly forces them to stop production (sales) and wait for help. Just think about how many times you’ve been in a line and are forced to wait while a customer pulls out a coupon, is exchanging merchandise, or is trying to buy an item without a bar code.  And these are just the basics.

Cashier training should also include advanced functions such as checking stock levels for in-store customers as well as call-in customers, checking stock levels at other stores, initiating a store transfer, searching for merchandise in the system, ringing items with missing bar code tags, and any simple hardware malfunctions that may occur (these would include changing receipt paper, rebooting a computer, and so on).

Accurate Inventory – The accuracy of the point-of-sale information is only reliable when the users are reliable and disciplined. Unreliable information is an indication of an undisciplined user. How many times have you heard store employees say “the system shows we have one, but I’d call first to verify.”? Or worse, a store tells you the system confirms they have several, and you make the trip, only to find they have none.

To insure accurate and reliable on-hand inventory levels within the point-of-sale software, the user must:

  1. Perform a regular physical inventory. These should be performed quarterly as part of the auditing process when preparing quarterly financial statements.
  2. Cycle Counts – If a quarterly inventory process is too much of a challenge, perform cycle counts within the best selling departments or vendors lines.
  3. Do not allow employees to sell goods classified with a miscellaneous SKU (Stock Keeping Unit). Inventory levels will never be adjusted properly.
  4. Scan the bar code of every item sold. Entering an item number manually into the system will never account for size and color based items. An item UPC (Universal Product Code) bar code is different for each size and color.
  5. Insure the store locations are communicating with each other flawlessly. Whether your system is a real-time configuration or a polling configuration; proper communications will either make or break the reliability of the point-of-sale information. Sales, returns, receiving, adjustments, and transfers all affect stock levels. A store location can never know if an item is in inventory or has sold out unless it is communicated to them.

Modern Hardware – You should pay attention to the aesthetics of the point-of-sale hardware just as you would to any other store fixture. You will interact with customers more at the cash wrap than any other area in the store; so make sure to make it a pleasant experience.

Most name brand hardware today is a bargain compared to a few years ago. It also gives your store an updated appearance. Although it will cost slightly more than “cheap” hardware, it will more than pay for itself with the reliability it offers. Modern hardware also requires less real-estate at the cash wrap; touch screens and flat screens don’t require a mouse and take up less space. An all-in-one type of unit offers all of the components, including the computer, built into the monitor.

The best part of name brand point-of-sale hardware is that it works reliably. POS hardware companies have industrialized their computers and peripherals to meet the rigorous demands of the retail environment. These types of computers and printers will cost more, but their duty cycles vastly outperform any comparable consumer level device. Consumer level computers are not designed to operate non-stop for 12-24 hours per day.

Integrated Credit Card Processing – Save yourself and your customers the frustration of those little grey boxes. Anytime you can minimize devices or suppliers, your quality will always improve. Most point-of-sale systems today offer a credit card processing feature within the application. Using the software versus dedicated hardware allows you to speed transaction times, reduce costs for paper and dedicated phone lines, decrease training confusion, reduce theft, and free up valuable counter space. It’s a winner on all levels.

Easy To Load Receipt Printers – The days of 2-ply and 3-ply receipt paper are long gone. Most point-of-sale software today allows you to recall a receipt onto the screen for reprints. If your software has this feature, dump the slow dot-matrix printer and get one of the faster thermal printers on the market today. In addition to being fast and quiet, they also offer lower paper costs and can be loaded with the press of a button. When the paper runs out, cashiers simply press the open button and drop in a new roll. Anyone can learn this within seconds, and they will no longer have to wait for a manager to perform the old task of threading multi-part paper through the maze of spools.

Having a point-of-sale system and using it strategically are two very different things. Rather than using the point-of-sale system as a glorified cash register; use it to provide superior customer service. The difference will earn you the sales that are walking out of your competitor’s doors.

Mobile Payment System or Full POS? Which is Best?

Mobile Point of Sale (POS) systems have rocked the retail world and the trending topic when it comes to POS is all about the mobile kind. In fact, when one searches the term POS, nearly every article that comes up is all about mobile, and many seem to believe it will change the retail industry as we know it. Is traditional POS on its way out?

According to a recent white paper published by NCR, while mobile POS is indeed a hot topic, it is likely to be an enhancement, rather than a replacement, to traditional POS.

Nonetheless, there is definitely a need, and a place, for both. Not too long ago everyone was certain that dot.coms would eradicate brick-and-mortar stores; they are still alive and well. And, traditional brick-and-mortar stores have, like traditional POS, embraced the Internet and allowed it to serve them in the capacity of extension.

Retailers everywhere have incorporated the Internet into their business model by creating multi-channel sales strategies, such as e-commerce, digital marketing, social media marketing, online product information, specifications, reviews and online customer service.

In addition to their online presence, these same retailers have started to bring the Internet in-house by integrating such services as customer centric promotions at point of sale, introducing loyalty programs and member registration, facilitating digital signage, offering e-receipts via email, and self check out centers; all at the traditional POS kiosk. In fact, 95% of all sales transactions are conducted via traditional POS terminals.

So, why bother with mobile POS anyway?

While it is true that traditional POS systems won’t be going anywhere soon, and with good reason, mobile POS systems have allowed retailers to make great strides when it comes to efficiency and customer service, as well as customer satisfaction.

Since the advent of Mobile POS, companies like Nordstrom, Apple and Home Depot have made big changes in the way they handle customer transactions in-store, thus affording faster checkout, waiting line reduction, consultative selling, and more. For example, in Home Depot, mobile POS has enabled on the spot checkout processing and shipping of large, bulky or heavy items that cannot be lugged up to the checkout counter.  When Nordstrom went mobile in 2011, the Seattle based retail chain saw a significant 15.3% increase in sales.

The list of mobile POS benefits goes on and on:

Storewide Promotion Opportunities: Mobile POS has allowed retailers to drive sales in various sections of the store by holding demonstrations or promotions in different departments to tout products or services. Customers can be marketed, and sold to, on the spot.

Inventory Return Stations: There is always a certain volume of returns, but that volume increases for retailers particularly after the holidays. The implementation of mobile POS allows for retailers to set up additional return stations in order to avoid long lines and customer frustrations.

Email Receipts: Better for the environment, more convenient for customers and faster to process, a digital purchase receipts sent via email tells the customer that you care about the earth and about them.

Optional Seasonal Subscription: The great thing about mobile POS is that you needn’t pay for a POS system year round if you’re not using it year around. Seasonal spikes in retail sales warrant the additional cost of extra POS licensing and hardware, but the rest of the year your budget shouldn’t need to encompass more than what is needed. Mobile lets you better manage your overall POS investment.

Expanded Reach: With mobile POS, your sales are no longer confined within the four walls of your brick and mortar store. Sidewalk sales, seasonal mall kiosks, and special sponsorship events are just a few examples of all the places you can take your retail sales to, with a POS in hand.

Mobile POS goes Mobile: Your investment in your company POS system doesn’t need to be one size fits all, regardless of store traffic volume in one location or another. Retailers may opt to have a blow out sale in one location, thus require additional checkout power for that location for a specific period of time. With mobile POS, devises and licensing can be utilized throughout different store locations on an as needed basis.

Inventory and Price Search: When customers can be assisted with finding an item color, size or availability on the spot, rather than having to wait in line to do so, it makes them happier. The same can be said for pricing. POS in the hands of store reps can go a long way toward customer satisfaction.

The growing industry of mobile payments doesn’t stop at in-store mobile POS. Digital wallets like Google Wallet and Apple Passbook, mobile-to-mobile cell phone transfers, Near Field Communication (NFC) payments, mobile device credit card swipe and other emerging technologies are quickly changing our cash and credit card world.

But what about traditional POS?

Mobile payment systems are indeed terrific. So, when should you consider going with traditional POS? The reality is,  in addition to the aforementioned benefits of traditional checkout kiosk functions, there times when mobile POS simply will not suffice.

Mobile POS is great when a customer wants to choose and pay for one item while on the sales room floor, but what about when the customer has a multitude of items? Ringing up and bagging groceries, removing anti-theft mechanisms, neatly folding and bagging clothing items and managing the sales of numerous agents, stations or departments are just a few examples of situations that often require the traditional POS checkout station.

By combining traditional POS strategies with mobile POS flexibility, retailers can leverage the command of a complex, and multi-dimensional, marketing and retail sales management system.

Starbucks Customers Bring POS Hardware to Retail

In a twist on BYOD , (Bring Your Own Device) for Point of Sale, customers have been bringing their own device to Starbucks for years now.   Since I use the app at least 15 times a month, and sometimes 30x a month, it seemed natural to discuss the other side of the retail counter for POS hardware.

The Starbucks app, for those of you who are not familiar with it, is a combination of a loyalty program, payment technology, store locator, reward generator and a “stay real close to the customer” technology.

It works well and gives customers a free drink for every fifteen they buy.   To use it, customers simply open the app and tap “Pay”.  A 2D barcode appears.  I would have included a picture of mine, but some jokers would be running down to Starbucks this morning, opening their smartphones to this article, and charging their latte’s on my account.  Since I have the automatic refill option turned on, which charges my credit card and fills the Starbucks card whenever a low balance is reached, this could become quite expensive, so, you’ll have to download the free app to see what the barcode looks like.  You can get the app at the Google Play store of course, and the iPhone equivalent.

The app includes a store locator – which is fast and easy to use.

The Starbucks app can manage multiple cards by the way, so if you have given a card to your teenager, or significant other, you can keep tabs on the activity and refill when you get that urgent text (Dad, can you please refill my card) – not the worst way in the world to make sure you hear from your college kids occasionally.

Rewards!!

For every fifteen drinks I buy, I get a free one.  This is not an insignificant thing.  My usual drink is a “short Pike” – which is about $1.70 or so, and I try to keep the caffeine to a minimum.  But for my rewards drink, Starbucks lets me order almost any size, so I will usually save the freebie for a day when I’m out on a long bike ride and then order a large Valencia or other refreshing flavored drink that costs around $4.00.  I feel like I am getting a great deal.  (Kudos to Starbucks for a great program by the way.)

starbucks-rewards-point-of-sale-news

The only drawback to the program is that I don’t ever use cash anymore, and consequently don’t throw my change in the tip jar.  The employees, who turnover quite regularly, have said they don’t mind.  I hope that’s true.  Starbucks has made a big deal out of taking care of their vendors in other countries, I hope their “fair-trade” practices extend to offering a competitive salary and benefits (including a health care option or option to co-pay) in the United States as well.   Charity begins at home, some say.

Summarizing – Starbucks has a great program that keeps customers coming back.  Other retailers would do well do match this program and soon.  There is a limit to how many of these apps I am willing to carry in my smartphone – and actually use on a regular basis, and I would guess that number is around ten or less.  Right now I only use Starbucks – and keep a few loyalty cards in my car for those businesses that stamp or hole-punch them and mentally, I can only keep track of a few.  So the next few that come along are likely to get some of my mindshare.

Small retailers would do well to make sure that any point of sale system has an option to add a mobile loyalty program – including ones like App Card, that supports many small businesses at a time.