By Dale S. Laszig
DSL Direct LLC
Disruptive events are similar to earthquakes. They can trigger alarms and aftershocks that are felt for miles around. Seismic waves of emerging technologies, legislative actions and ongoing security concerns have shaken the payments ecosystem. Some say this phenomenon is healthy for the industry.
Payments industry executive Jeff Fortney is a contributing writer and former Street SmartsSM columnist for The Green Sheet. He has held senior sales positions at Payment Alliance International, Chase Paymentech Solutions, and First USA/Bank One. He joined Clearent LLC in November 2006, where he serves as Vice President of ISO Channel Management.
Fortney's comments on Square in a January 2013 issue of The Green Sheet remain relevant today. "If [merchants] like Square, tell them it is a good solution and move on," he said. "The goal is to improve the merchant ability to accept payments. Merchants aren't stupid. They know that 2.75 is not a great price. Square gets to compete with us; we don't need to compete with them."
Reflecting on his comments of more than a year ago, Fortney said that Square can still be considered a gateway drug to payment processing, because of its potential to open doors and help merchants become more comfortable accepting payments. Down the road, some of these merchants may want to control costs by reviewing other processing options.
"You want to be the second person they sign with – at the point where they have grown their businesses and gotten most of the complaints out of the way," Fortney said. He added that he isn't receiving as many inquiries from merchants about Square and that he's seeing few, if any, Square readers at merchant locations.
The ISO community has been surprisingly quiet on the subject of virtual currency. Perhaps payment professionals who have seen what legislation can do to a thriving enterprise are waiting for the other shoe to drop on the unregulated newcomer.
In her May 21, 2013 article titled "Why won't Bitcoin die?" and published on The Verge website, journalist Adrianne Jeffries wrote, "Actually, it's astonishing that Bitcoin is still around at all. The currency has had several near-death experiences in its short life and received a number of premature obituaries. It has survived massive cyber attacks, scams, technical panics, and extreme price fluctuations.
"In July 2010, a bug was discovered that allowed anyone to spend anyone else's Bitcoins. It was fixed. In the summer of 2011, when the mainstream media first discovered Bitcoin, the currency spiked to $31.91; four months later, it crashed below $2. Then it started climbing again."
A controversial new pricing strategy may help Bitcoin reach its enrollment goal of 1 million merchants by the end of 2016. "Basic payment processing will cost merchants nothing, no matter how many transactions they handle," wrote Eric Calouro of newsBTC. He added that this won't be a one- or limited-time promotion either.
"BitPay says it's the model they're going with from now on," he wrote. "'We have set a goal to enroll one million merchants by the end of 2016,' [BitPay Executive Chairman Tony] Gallippi remarked. 'When we started BitPay in 2011, we saw an opportunity to finally give merchants around the world relief from interchange fees. By offering a basic plan that's free and unlimited, forever, we give merchants yet another reason to be excited about bitcoin.'"
The article went on to say that premium, fee-based BitPay services are also available. Coinbase, a U.S. competitor, charges no fee for the first million in bitcoin processing and a 1 percent currency conversion fee after the merchant has processed $1 million in bitcoin revenue.
Nancy Austin, Senior Sales Executive at VeriFone Inc. has seen her fair share of disruption in her 28-year acquiring industry career. For the last 12 of those years, Austin has worked in VeriFone's North American Financial Group, where she helped launch many of the company's mobile and gateway solutions. She is also Vice President and Treasurer of the Northeast Acquirers Association.
Austin said, "I certainly have seen disruptions of many types that have affected the sales rep, the acquirer, the vendor and the merchant, moving from paper to electronic processing, from leasing equipment with large payouts to giving away free equipment, from countertop to gateway and mobile acceptance, from mag stripe to new methods of acceptance like EMV and NFC, from no security to PCI and a host of security technologies, and the entry of nontraditional acquiring partners like Apple, Square and PayPal. All of these have been major events that have required a new way of doing business for all."
As many industry veterans have learned, dealing with change is a crucial skill not only for merchant level salespeople, but also for everyone in the payments value chain. "One has to be ready to embrace change and to see the emerging technologies and changing methods, whether they be in sales, support, engineering, manufacturing, processing or social milieus, as a test of one's own ability to successfully move ahead with the times," Austin said. "'Disruptor' is a negative term. I prefer to think of major changes as crossroads and opportunities."
Ken Elderts, Vice President of Sales at Dejavoo Systems, has been in the payments industry since 1992, serving in various sales, management and leadership roles for companies such as CyberCash, Lipman, Warner Bros., VeriFone, and TASQ. Elderts also served as the Western States Acquirer Association's Vice President and President from 2004 to 2009.
Elderts believes that people, not machines, are the movers and shakers in the evolving payments sphere. No matter how sophisticated our devices become, the decisions, interactions and engagement that drive innovation will be directed and managed by humans. Speaking of the human side of electronic transactions, Elderts said, "Knowledge, communication, execution – I truly believe [the payments industry] is still a very personable business. And while these strategies seem old fashioned, all are common denominators our partners and their merchants associate with and trust. Disruptors have massive databases and launch daily marketing campaigns. However, the skill set required to sell in today's market is beyond a banner click and has never been more technically and regulatory challenging. This is where my value begins."
Payment veterans who have weathered significant change can remind us of the industry's resilience and sustainability. As they reflect upon some of the monumental changes witnessed over decades of credit card processing, they will tell you that change is necessary, and good, and an integral part of transaction technology. They will tell you to meet change with an open mind and an open heart.
"No one virtual company can replace you, your industry knowledge and commitment to service," Elderts said. "Have a value proposition that includes services (portal, text marketing, loyalty, donation) directed toward helping your merchant generate new, loyal and recurring sales revenue."
Nancy Austin urges incoming recruits to see a glass half full. "Stay positive, stay excited and understand that you have chosen an industry that is ever changing," she said. "Embrace the disruptions and create some of your own for the improvement of all."
Dale S. Laszig manages business development and strategic initiatives at DSL Direct LLC, a payments consulting company that helps clients promote, design, and deliver secure, leading-edge technology solutions. Her clients include software integrators, manufacturers, retailers, and value-added service providers. She can be reached at 973-930-0331 or firstname.lastname@example.org.
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