Benefits of WORM technology in POS and Europe Fiscal Law
Many people are increasingly using credit, debit cards, or gift cards to purchase goods and services. In Europe, different sellers and online shops complete payment transactions online. However, local retailers and many businesspersons use point of sale (POS) machines.
The point of sale system is very efficient to retailers but poses a threat to the country’s revenue collection system. Therefore, every country has come up with fiscal laws governing the use of POS machines in business transactions. The very first country to implement Fiscal laws was Italy. It was in 1983 that the country recommended the use of specific fiscal devices. Other European countries followed suit.
What data must be generated by the POS machines according to the fiscal laws?
The type of data that every point of sale system must generate to be permitted for use depend on the country and regions where such systems are used. The EU fiscal laws are discussed in detail in the previous article (Link to the Fiscal law article). POS machines must generate and record:
- All movement data including financial reports, journal data, product groups, etc.
- Revenue and expenditure
- Proven tamper-proof means of data storage.
- Data storage and availability of up to 10 years
- Data required by the tax office for auditing
- Organization’s operating and programming instructions, etc.
Problems with the use of POS machines in Europe
All POS machines run software that controls all the operations such as updating of cash registers and printing of the receipts. Most of these POS software permit retailers to modify the transactions or even delete them altogether. This is one of the tax frauds that are against tax laws according to the EU. Tax authorities cannot trace these transactions once deleted from the Point of Sale system. This leads to the loss of billions of revenues.
Governments are increasingly enacting fiscal laws that obligate taxpayers to use certified cash registers to record sales. Different EU member states have complied with these tax laws to improve their tax collection. In France, businesspersons only use POS systems from certified hardware vendors. A hefty fine is charged to anyone who goes against this rule. Infocert tests the software to ascertain that it meets the standards.
German government adopted the kassensicherungsverordnung which requires all the POS machine manufacturers to have verified technical security devices (storage media). This adjustment will allow such systems to report sales without tampering or manipulation by the end of 2019. Also, the POS machines in use should be fitted with these tamper-proof storage devices by the end of 2022. The French government also implemented these laws in January 2018 to reduce VAT fraud. All these laws require that all the business transactions recorded are tamper-proof and verifiable.
Part of the solution implemented so far
Fiscal laws still make it difficult for POS hardware vendors to operate. POS machine manufacturers have to design for every country to comply with tax laws. As part of the solution, these devices directly record the sales data into the electronic cash register. The data is then automatically transmitted to the tax office wirelessly over the internet or GPRS/GSM network. This has been fruitful in some countries but limits the use of POS machines to a particular brand.
Use of fiscal memory devices
Many countries worldwide use fiscal memory devices to control tax collection. It is a group of devices comprising:
- electronic cash registers/fiscal cash registers
- printers, fiscal printers
- Electronic signature devices/ E-Signs
All these devices have encrypted memory modules that can only be read from with a special fiscal device, not even a personal computer or any other card reader. Once the data is read, the electronic fiscal memory cards are assigned unique serial numbers, which render them unreadable by any other fiscal device.
The second generation of fiscal devices was born to solve the problems of data manipulation and lack of end-to-end verification. These devices had a direct internet connection to the tax office’s server. However, these POS terminal machines also had loopholes. Taxpayers faked the receipts and manipulated the data before data is transmitted to the tax office.
This led to the rise of the third generation point of sale systems, which printed digitally-signed receipts for authentication. The receipts had the following information:
- Each transaction’s number
- VAT identification number of the buyer
- The total amount of tax chargeable
- Description of all goods sold. Each description had to contain the quantity, tax rate, unit price, and tax charged
- Name, address, and VAT of the seller/supplier
These measures reduced tax avoidance considerably but were inconvenient. Some POS machines still allow data manipulation, and this is what different revenue collection authorities in Europe are fighting against. WORM technology offers a better solution that is convenient and secure. There is no data manipulation of any sort that can be permitted.
WORM technology solution
Receipt printing is more time-consuming and resource-intensive as opposed to recording data in a secure WORM Card. The fiscal memory cards can only be read by specific fiscal devices, and only the device used in the initial reading can read it again. This can lead to permanent data loss if the device is destroyed or lost.
The time is quickly running out for the POS machine manufacturers and users to comply with these new fiscal laws. To be part of the team that seeks to bring a lasting solution, we introduce Flexxon WORM memory cards are ‘write once read anywhere’ devices. Once the data is written into the card, any standard digital card reader can access the data. WORM is also extensively used in law enforcement applications.
The recorded data is unalterable. Flexxon SD WORM card has a self-lock feature. It automatically locks itself if data modification is attempted. Tested and certified, Flexxon WORM SD and microSD cards are the tamper-proof storage solution for POS machines. Buy a card with the right capacity (4GB-32GB) from Flexxon official website to keep every bit of data.
These cards offer a WORM compliant storage system. Store all your business data as required by the fiscal law of your country. No additional software is required to write into the Flexxon WORM memory card. With the WORM storage solution, you will always be on the safe side.