They’re two terms that are heard a lot within the payments industry – integrated and semi-integrated EMV systems. But just what do they mean to you as a merchant? Both refer to the implementation of EMV and the liability shift, that happened on October 1, 2015, and essentially mean that merchants and acquirers, rather than the card issuers, will be responsible for any financial losses as a result of accepting fraudulent, counterfeit, lost and/or stolen payment cards. The only way this burden can be mitigated is through EMV compliance.
Many merchants have already made the switch to payment terminals that accept the EMV cards, which are instantly recognizable by the tiny rectangular chip on the front left side of each card. But the decision to go EMV isn’t the only one merchants have to make; another consideration is whether to choose an integrated or semi-integrated payment system to let them accept EMV cards.
An integrated payment system means just what the name implies – every process is efficiently managed by a single integrated system. It has the payment application as a part of the core POS solution. It is one piece of software that handles every aspect of the transaction, from scanning and reading the bar code to processing the payments and managing inventory and replenishment. All card payment activity is handled by the POS terminal from entering the cardholder data to the close of the sale, all in a matter of seconds. The key is that because the cardholder data travels through the POS terminal it must comply with the PCI DSS standards.
On the other hand, with semi-integrated systems, the terminal or device used to capture customer card data is connected to the POS application, but there is a separation between payments and the back end software - the application used to process the card data is on a separate device. While the POS terminal still initiates the transaction, all cardholder data bypasses the POS system entirely and is transmitted directly from the card reader to the processor or gateway, which tells the POS whether the sale is approved or declined. Because the POS does not come into contact with any sensitive card communication, it requires less development and a reduced PCI scope. Because it can work with a merchant’s existing software, it can be significantly less costly to merchants, as well. Semi-integrated systems further benefit the merchant by not requiring their independent software vendor (ISV) to go through a full certification of their own, allowing EMV implementation to happen much quicker and at a substantially lower cost.
So which should you choose? Most merchants will likely choose a semi-integrated solution. It gives them the benefits of POS software without directly integrating the payments module into that software, a process that could take months. For that reason alone, semi-integrated solutions are far more cost effective but they also keep customer data secure. Semi-integrated solutions are not new, but they are becoming more popular and are seeing more frequent implementation, as they can easily add new payment methods and greatly reduce the scope of the PCI compliance obligations, speed up EMV certifications and reduce costs in the future.