A Two-Part Primer on Payment Devices (Part 2)
What’s the difference between fully integrated and semi-integrated PIN pads; and which is better for me? Last week we discussed the basic benefits of integrating your PIN pad device to your POS system. This week, we’ll talk about the two basic types of integrated PIN pads: fully integrated and semi-integrated.
Fully Integrated or Semi-Integrated? That is the Second Question.
A fully integrated payment device, or PIN pad, is connected directly to your POS system via a USB cable or some other type of direct communication cable. The software that manages the connection to the bank’s processor, and requests authorization for the card data provided by the PIN pad, resides on the POS system. As a result, the PIN pad is a relatively “dumb” device that is only used for reading credit/debit cards and enabling your customers to type in their PIN (Personal Identification Number). If the POS system fails, the PIN pad is also rendered useless. Furthermore, as a result of the payment software being loaded on the POS system, you introduce a significant amount of complexity to the process of performing annual PCI DSS compliance audits and self-audits. That’s because the POS system hardware, software and network devices need to conform to a litany of stringent security specifications, designed to protect your customers’ card data. If any of these specifications are not met 100%, you will be found to be non-compliant. And this can seriously affect your transaction fees as well as incur monthly non-compliance penalty fees from your merchant services provider.
On the other hand, a semi-integrated payment terminal doesn’t need to have a physical connection to your POS system. Instead, it’s connected to your store’s Local Area Network via an ethernet drop (network outlet); or to an available port on your network router. Your POS system identifies the PIN pad by its network address, which is a unique ID code that can’t be duplicated by any other device on your network. When using semi-integrated PIN pads, the software that handles the payment processing function actually resides on the PIN pad, not the POS system. Semi-integrated PIN pads are much “smarter” than fully integrated PIN pads because they handle the entire process of connecting to the host processor, accepting the card information from the customer, providing that card information to the processor for approval and returning the authorization code to your POS system. All your POS system needs to do is send an amount to be authorized to the PIN pad; then wait for the PIN pad to send back the transaction results.
Semi-integrated PIN pads offer many benefits over fully integrated PIN pads. First is the ability to switch to the stand-alone mode in the event that your POS system fails, thus enabling you to continue processing customer card payments. Since semi-integrated PIN pads come configured with a thermal printer, you can even print customer receipts and generate your end-of-day payment summary.
Many semi-integrated PIN pads also have an automatic dial-up feature that automatically kicks in whenever you lose your high-speed connection to the internet. This feature re-routes the connection to the host processor using an external phone line so you can continue to process card payments.
Finally, since the entire payment processing task is handled by the PIN pad and no payment card data is ever passed to the POS system, you effectively eliminate the need to include your POS system in PCI compliance audits or self-audits. This makes the process of performing an annual audit significantly easier and less expensive. Some merchant services providers don’t even require you to do an annual audit if you are using a semi-integrated PIN pad provided by them.
It’s true that semi-integrated PIN pads can be a bit more costly than fully integrated PIN pads. However, over the life of your system, the few additional bucks you’ll spend on equipment will translate to significantly lower merchant services fees. Plus, you’ll never disappoint your customers or risk losing business because you can’t process credit and debit card payments.
So there you have it; a two-part primer on why you should use integrated PIN pads and why the retail industry is quickly moving to semi-integrated payment devices. If you don’t have an integrated PIN pad; or you are still using a fully integrated PIN pad, call us toll-free at (877) 877-4767. We can confirm the type of PIN pad you’re using and what options are available from your merchant services provider.
