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The Green Sheet Online Edition

March 14, 2016 • Issue 16:03:01

GS Advisory Board:
Taking your business to the next level - Part 1

In recent years, new payment solutions from both industry insiders and outside tech startups, high-profile data breaches, venture capital investment, and unprecedented government oversight have increased public awareness of our industry. These factors, along with stepped up competition and margin compression, have caused numerous payment professionals to re-envision their businesses and seek solutions that help them serve in a broader capacity as trusted consultants rather than primarily as providers of payment processing.   Given these changing conditions, The Green Sheet asked members of our advisory board the following: What do you see as the latest, greatest innovation in payments that can take your business to the next level, and how do you plan to implement it?

Following is the first portion of responses we received. The remaining answers will be published in our March 28 and April 11, 2016, issues. Thank you to the busy payment leaders who took time to share their insights here.

Ben Abel, Bank Associates Merchant Services

For us, one of our big selling points has always been the merchant-facing side of the system we use, IRIS. While cost reduction and those kinds of benefits are, of course, something we offer, we've always tried to position our sale as one coming from the consultative perspective, akin to the SPIN model, selling through questions and solutions.

While the numerical impact to a company's bottom line is important, there is something intangible which can be much tougher to assign a dollar value to, and that's time itself.  If you can give someone another 10 minutes of free time in their day, or enable them to do aspects of their job more efficiently and effectively, then that may be a lot more important than saying they'll save a couple hundred dollars a month, especially if the person in question is a CFO earning in the six-figures.

Irrelevant of the in-house benefits IRIS provided to our sales and operational staff, the merchant facing side of it provides a glut of features which we put on display when positioning the sale. The end of our presentations usually sound something like, "We'll do all that for you and, oh yeah, you'll save some money too." This has allowed us to make the financial part of the sale secondary, thus reducing the margin compression which comes along with a savings-based sale. 

Jared Isaacman, Harbortouch

Mobile payment methods such as Apple Pay and Android Pay represent the biggest evolution the payments industry has seen in many years. As these mobile wallets become more widely used, they are going to impact every area of the payments ecosystem. Not only do mobile payments deliver undeniable benefits in terms of convenience and security, but they can also enable new capabilities at the point of sale.

By turning payments into a platform, mobile transactions can add value to both the merchant and consumer. We are just scraping the surface of the capabilities that these mobile payment methods can offer, but some examples of this added value include automated loyalty functionality, direct marketing opportunities, e-receipts, cross-sell/up-sell opportunities and more.

As a provider of both payment processing and point-of-sale equipment, we are in a unique position to take advantage of these capabilities and layer on our own innovations to deliver an unparalleled business management tool to our merchants.

Allen P. Kopelman, Nationwide Payment Systems Inc.

2016 is going to be the year we are all going to be talking about fraud and chargebacks. EMV is already causing huge problems in restaurants, bars, nightclubs and for retail merchants who have not implemented EMV. The reason these merchants do not have EMV is because they are using POS systems supported by companies that do not have EMV solutions ready, and they are still "working on it." There is also increased fraud in the MO/TO and e-commerce sectors. We spend a lot of time listening to merchants about chargebacks, and we tell them, "You need to move to a side terminal, or this will continue to happen." We have several merchants who have over $10,000 in EMV chargebacks. That is a lot of money.

Changes we need to make as a company – we have made changes that started three years ago:

  1. We started to sell POS, and we have EMV.
  2. We started a mobile app company, and we have sold over 100 apps and counting, and this is bringing in clients to the credit card side, too.
  3. We are introducing a new product this year – not related to credit card processing – that will help bring in more clients as well.
  4. We are looking at a way to have an automated way to board merchants similar to Square and Stripe, etc., and we will get that moving in the next couple of months.

Margins are down in the card-present area, and that started a few years ago. So we have a larger focus on MO/TO and e-commerce, and that has helped increase revenue.

Smaller merchants and new merchants tend to go with tech solutions and go right to the Internet to get merchant services. That is a big pain point for most of us, and that is why we are looking at No. 4 and finding the right partner.

Tipping is also a big issue – pay at the table, which many merchants opted for. Now that tipping after the sale is available on a few machines, more merchants are going to be looking for that solution.

Three things we need to watch out for this year are:

  1. Chip and PIN and what is going to happen is going to be major. Chip and PIN has to happen – in retail, restaurant and especially in MO/TO and e-commerce. Without that, the fraud will just keep shifting. Scammers target merchants who do not have EMV. We see it every day, and the scams will move from card-present to MO/TO and e-commerce, and it will be bigger than ever unless chip and PIN is figured out for that sector.
  2. POS systems. If these POS companies do not get it together, merchants are going to have to bite the bullet: either they will eat chargebacks and live with it, or they will get new POS systems. Many are not happy, as they are in the middle of expensive leases, and they will have to make choices soon – are the losses OK, or will they pay for two leases and get a new POS with EMV? There is going to be a lot of opportunity as merchants get increased chargebacks.
  3. More companies like Square, Stripe, etc., that will have automated boarding. This will continue to take business away from the ISO and agent sector.

We expect 2016 to be a good year! Along with being very interesting - EMV - the moving target.

Greg Leos, Ingenico ePayments

Many merchants are shifting from their traditional brick-and-mortar business models to more of a mix of online (card not present) and card present transactions. The acceleration of e-commerce adoption over the last several years has been remarkable, even within the mid-market and small business space. 

With more robust APIs and a wider array of gateways and connections available than ever before, it's becoming easier for merchants of all shapes and sizes to enter this segment of the market. Consumers want to shop online, and merchants are taking notice.  As a result, it will be increasingly important for payments companies to address this need either by providing a home grown e-commerce solution or partnering with an e-commerce company that can deliver robust, secure online functionality to merchants of all sizes and across many verticals.

Tim Munto, TSYS Acquiring Solutions

It's interesting because the rapid technological advancements (for example, cloud computing, integrated POS, tablets, mobile, loyalty programs) are changing how merchants accept payments, manage their businesses, and interact with consumers, presenting both an opportunity for growth and the potential for disruption in our industry.

This new engagement model between merchants and consumers includes a blend of payments, advertising, loyalty, marketing and data analytics so it's important for TSYS to provide clients with these tools to be successful. Integrated payments and omnicommerce are growing at a double-digit rate so it's vital to our ongoing strategy.

Visa's recent announcement to make their APIs available to developers is another example of this evolution. TSYS will continue to deliver innovative products and solutions, but now our ecosystem also includes mobile wallet providers, integrated software solutions and tablet providers, to name a few. In order to capitalize on these technological advances, we will continue to work with the partners that are going to help us get there faster and allow us to capitalize on our collective strengths bringing innovative products to market. end of article

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