Heartland Payment Systems

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2 Heartland Payment Systems Publicly traded on the NYSE: HPY FORTUNE 1000 company Processes more than 11 million transactions a day Serves over 250,000 business locations nationwide Over 3,000 employees

3 EMV Preparation Summary Understanding EMV A Decision to Support EMV Acceptance Planning Implementation Operational Considerations Training Conversion Future Proofing

4 Understanding EMV Knowledge is power! Become your own subject matter expert Don t rely on one resource Industry resources are plentiful EMVco website Smart Card Alliance website and events CARTES NA Your Acquirer, Processor or ISO Visa, MasterCard, American Express & Discover Larger merchants may want to consider a consultant Please see Appendix for resource list.

5 A Decision to Support EMV Retailers regardless of size need to make a decision about implementing EMV What are my chargebacks associated with card fraud? What increased card fraud levels do I anticipate after the liability shift begins on October 2015? What will customer perceptions be of my not offering chip acceptance? What percentage of my transactions are card present? What percentage of my transactions are PIN debit versus credit? What is my cost for upgrading, updating or replacing my acceptance infrastructure for EMV? Will my transaction costs be reduced as a result of reduced risk? Is TIPs applicable to me?

6 EMV Acceptance Planning Merchants need to take a holistic approach Corporate commitment from the top down SWAT team for EMV planning and migration Determine store level scope of change Assess supplier chain readiness acquirer, hardware, software, gateways, and card manufacturers Determine enterprise level scope of change Changes to backoffice procedures Chargeback management processes Supplier interface assessments

7 Acquirer/Processor Partnership A major component of a successful implementation Timeframes for certification, testing, and rollout Availability of specifications for you or your third party providers POS system or third party system certification timeframes and processes Education resources for corporate and store training Marketing materials to educate and assist customers Understand available services and support from your acquirer or processor Certification and testing costs Test cards and scripts when applicable

8 Merchants with Terminals Terminal and peripheral considerations Is my current terminal EMVco listed? Is my next logical next step a new terminal or a PIN pad? What hardware configuration best fits my operational and customer service model? When will my provider have the terminal application updated? Do I need to upgrade my communications to IP? Do I need both EMV contact and contactless? Is it time to step up to a POS system? When should I purchase and install my new terminal?

9 Merchants with Terminals Operational and business considerations What customer verification methods are best for me? Should I consider a mobile or portable option? What store level training and signage is available? Are there any changes in batching and settlement processes? What changes will I see on my statements? Will my monthly service or per transactions fees be reduced with EMV acceptance? Do I need to be concerned about offline authorization?

10 Merchants with POS System and EMV peripheral considerations What is the EMV upgrade status of my POS system? What is the cost of the upgrade versus moving to a new POS system? What EMVco listed peripherals are integrated with the EMV enabled POS system that are suitable for my operation? How will EMV fit with the encryption or tokenization systems that I have implemented? Do I need both EMV contact and contactless? When should I purchase and install my new or upgraded system?

11 Merchants with POS Operational considerations What configuration best fits my operation and customer service model? What customer verification methods are best for me? What store level training and signage are available? Are there any changes in closing batch and settlement processes? Will my monthly service or per transactions fees be impacted with EMV acceptance? Is there any reduction in transaction costs with EMV acceptance? What changes will I see on my statements?

12 Planning for EMV Payment Security Planning for EMV Payment Security From Mar 2012 By Richard Mader Preparation So how does a retailer prepare to meet this mandate? ARTS recommends five steps: Gain an understanding of the various implementation options for EMV and chip-and-pin. Learn best practices from those who have already implemented in Canada, Europe and elsewhere. Participate in retailer-led associations and groups like NRF and the Merchant Advisory Group, which are organizing to collect and share knowledge and influence the payment industry to implement EVM processes conforming to retailer requirements and fair fees. Evaluate EMV conversion costs compared with the added expense of potential chargebacks minus the reduction in PCI audit costs offered for implementation. Based on this analysis, a retailer might decide not to convert or to convert by store or region, depending on the volume of chargebacks. Develop an implementation plan that considers current and future payment alternatives for cards, mobile and biometrics from multiple payment processors, with a bias toward open standards-based solutions like the payment standard being developed by ARTS.

13 The Customer A high probability of consumer confusion CVM Magnetic Stripe Chip Credit Debit EBT Prepaid Credit Debit PIN N/A Signature N/A No CVM N/A Time to acclimate Inserting and keeping the contact card inserted Hold time for contactless transaction completion Forgetting inserted cards in readers Consistency from merchant to merchant Card issuance Contact and/or contactless

14 Store Level Training Transaction acceptance and customer service Managing multiple CVMs What to do when a customer forgets their pin or locks their card What will the fallback procedures be if the POS terminal fails to read the chip? What about mail order, telephone order, and Internet transactions? Will it be faster to verify than traditional cards? What do chip terminals look like? How will I know if the chip transaction has been successful or declined? Do I have to check anything else when a card is used and verified with a PIN?

15 Conversion Can you convert in the stages? How many lanes and stores can you convert per day? What do you need to test when the new hardware / software is installed? How do you ensure customer service and current transactions are not impacted during testing and conversion?

16 Future Proofing You can help to future proof your EMV POS investment by considering the following: ƒmobile payment considerations NFC marketing ƒƒoffline transactions Hybrid Readers

17 Appendix EMVco Smart Card Alliance EMV Connection Visa ep=v_sym_cisp MasterCard Discover c=204177&p=rsslanding&cat=news&id= American Express emv_roadmap.aspx ACT Canada

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