The Green Sheet Online Edition
August 13, 2018 • Issue 18:08:01
Partners: payments industry's DNA – Part 1
Every handshake between a merchant level salesperson (MLS) and a customer reflects a heritage of payments industry partnerships. Card brands and issuers, acquirers and merchants, technology companies and third-party service providers collectively form a complex network of partners driving today's fast, secure electronic transactions.
The Green Sheet asked leaders from various industry sectors how they choose partners and create profitable, long-term relationships. Most agreed that partnerships, whether between merchants and MLSs or tier-one retailers and global acquirers, are built on similar principles. Developing healthy, sustainable partnerships is the focus of a two-part series. This first article explores how partnerships address today's merchants' top concerns. The second will explore attributes of successful payment partnerships.
"The payments industry is modeled on partnership because there are so many aspects to it: technology, hardware, services, software, POS systems and myriad third-party service providers," said Ruston Miles, co-founder and chief strategy officer at Bluefin Payment Systems LLC, a payment security company. "POS systems and all the vendors surrounding the industry provide a single, continuous merchant experience. The companies that offer these services are frequently in league with other partners."
When comparing old and new service models, executives observed that processing continuity remains a top concern among large and small merchants. They said merchants want assurance that service partners can meet their needs today and tomorrow. Merchants choose partners who confidently convey their ability to keep systems secure, compliant and up-to-date, they noted.
Ben Goretsky, CEO at USAePay, a payment gateway service provider, said MLSs need to know their products and have a better set of product offerings. "Merchants leave because their current solution doesn't have certain features or an up-to-date shopping cart that does more than their current cart," he said. "What happens is they start to look for other solutions. Let them know you have a portfolio of product offerings." They may not need the solutions now, but they will know you have them and will think of you at their time of need, he pointed out.
When service providers had to make all their revenue upfront, they sold vanilla, out-of-box models that were expensive to install, maintain and replace, Miles noted. He recalled a friend was quoted $25,000 for a single restaurant POS system several years ago. Today, that friend could choose from an array of secure, affordable POS platforms that are easy to change, upgrade and customize, he noted, adding, "There has never been a better time to be a small merchant."
Lynn Holland, vice president, merchant solutions at ACI Worldwide, a global payment services company, said large merchants don't want to be locked into closed ecosystems; they partner with companies that help them tailor and control their enterprises. They want to leverage their inventory of devices and infrastructure while also gaining access to new services, keeping private card data out of their centers and migrating from on-premise options to deliver more services through the cloud.
"No one wants to do a rip and replace," Holland said. "They can use our agnostic platform to support a variety of hardware and switch processors without touching their stores."
Redundant, agile systems
Worldwide growth in real-time payments underscores the need for redundant systems with built-in fail-over capability. Cloud-based platforms, communications networks and multiservice hubs utilizing multiple communications protocols enable service providers and network operators to securely transact across regional networks and the Internet of Things (IoT).
Lisa Shipley, general manager, fintech solutions, Americas at Transaction Network Services Inc., a managed services provider, described redundant systems as a safe alternative to having a single point of failure. "We sit behind the largest acquirers and banks across the globe and have seen companies overlook the need for redundancy on every connection," she said. "POS devices frequently use two forms of connection; global carriers risk nationwide outages when they rely on a single line. Always, always back up."
Todd Linden, CEO of payment processing, North America at Paysafe Group, said the key to competing in the current landscape is being able to move fluidly to new products and services. He mentioned that Paysafe's ability to dynamically direct traffic and devices to different networks has improved efficiencies and eliminated many certification processes. "With our platform-agnostic model, we can point transactions to major networks," he said. "We obsolete the historic processing landscape and have more of an agnostic approach to products, services and social media apps."
Goretsky said USAePay has partnered with thousands of banks and ISOs, as well as other gateways. The company's cloud-based, over-the-air terminals can be controlled remotely from anywhere. "Data is all cloud-based; you never lose anything," he added. "If something needs to be updated or downsized, the data is always available." This data, which may include customer profiles, orders, inventory, reporting, POS or new terminals, is always there and never gets lost, he said.
Robert Lutz is vice president, marketing and business development at Systech Corp., a technology company specializing in connectivity solutions. "Retail has been a key focus," he said. "Our hardware and software solutions facilitate connectivity, communications, gateways, transport, cloud-based solutions and graphical user interfaces." Lutz observed the IoT is re-shaping numerous industries; interactive machines perform a variety of functions, leaving merchants free to focus on core competencies. "Our partnerships enable us to be agile enough to create relationships at a business level and technical level," he said.
Continuous merchant experience
Another aspect of processing continuity is creating a seamless merchant journey. Today’s consumers confidently transact across in-store, in-app, mobile and online channels. Previously, little attention was given to creating a continuous merchant experience. Now device manufacturers offer product families designed to grow proportionally with merchants, while offering a consistent brand experience.
"We help merchants start, run and grow their businesses," said Joe Mach, president, North America at Verifone. "Our partners and their customers want complete solutions. Best of breed doesn't scale in the SMB space. Small business owners are not accountants or IT shops; they need a simple, elegant, out-of-box experience."
Merchants want great support and a single point of contact, as opposed to separate contacts for hardware, software and processor, Mach noted, adding that entry-level products with analytics, inventory management and advanced technologies enable small and midsize merchants to compete like major chains; the only difference is scale. "Selling complete solutions, not pieces and parts, is a better competitive strategy," he said. "We deliver complete solutions to channel partners who deliver complete solutions to their customers. Couple that with great support and you'll have a partner for life."
Marc Gardner, founder, president and CEO of North American Bancard Holdings LLC, said his family of companies drives partnership value by creating a superior merchant experience. Invest time, research and resources to deliver solutions that will help merchants attract, retain and expand their customer base, he advised.
From this perspective, managers and employees constantly evaluate the latest technology solutions while adding new elements of security to ensure compliance, he noted. "Our approach to our merchants is one of growth – together," he stated. "If we can help our merchants be poised to attain, or even surpass, their growth aspirations, then we are doing our job."
Mark Schulze, co-founder, Clover at First Data Corp., described Clover as an all-in-one POS and payments system with tools designed to simplify running a business. "When we started Clover, we weren't building a POS; we were developing apps that leverage smartphone and geofencing technologies to enhance the customer experience," he recalled.
Shulze's team of engineers and developers approached the project by asking what other developers would want. They designed a platform that is easy to plug into, with APIs and flexible Android architecture. Salespeople identified opportunities that are now among the company's leading solutions, he noted, adding, "When you sell apps, KPIs [key performance indicators] go up and churn goes down."
While subscription-based services have changed revenue models and produced cost-effective entry-level solutions, several executives pointed out that price is not always the biggest barrier to entry. Merchants who previously vetoed a $25,000 processing system may be just as hesitant to enroll in a monthly subscription for a full-featured POS if they have any doubt the system will remain secure, compliant, connected and up-to-date. By demonstrating knowledge of security, regulations, and technology, MLSs can establish credibility, they stated.
Matthew Katz, CEO at Verifi Inc., a risk mitigation company, said his company works with the entire processing community, communicating with card issuers, merchants and solution providers. The goal is to prevent chargebacks and reclaim lost revenue when they occur. "We bring more than a decade of experience of reducing operational costs and maximizing win rates," he said. "Our reseller partners provide curated knowledge to help merchants reduce costs and risks and react quickly to fraud and chargebacks to ensure the health of their card processing."
Jennifer Miles, executive vice president of North America at Ingenico Group, said her teams work hand in hand with partners to ensure they have the necessary documentation and APIs to get to market quickly. "Because we view our partners' sales teams as an extension of our own, we work closely with them to ensure they have the information they need to not only be educated in the solutions they're selling, but also have the marketing materials needed to put their best foot forward," she said.
Bradford Giles, senior vice president, marketing and sales enablement at Ingenico Group, North America, stressed the need for educational tools and resources. "Old school was bringing a bag with card brand decals to put on a window," he said. "Now, with tech exploding and the pace and number of technologies accelerating, MLSs need the resources to keep up with everything."
ACI's Holland concurred, adding, "Today's MLSs walk in to a prospective merchant with more of a pick list than 'take my box the way it is' today. Besides the box, you may offer a mobile SDK, collection service or alternative payment acceptance; many acquirers don't offer those services."
Dale S. Laszig, Senior Staff Writer at The Green Sheet, is a payments industry journalist and content provider. She can be reached at firstname.lastname@example.org and on Twitter at @DSLdirect.
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