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The Green Sheet Online Edition

February 14, 2022 • Issue 22:02:01

The very point of sale: A transformative time in payments

By Dale S. Laszig
DSL Direct LLC

Judging from an array of mergers and acquisitions, new product entries and the National Retail Federation's report of record-shattering holiday spend in 2021, it would be fair to say January 2022 was a transformative month in payments that appears to have set the tone for a productive, profitable year.

As people returned from vacations and holidays, a flurry of announcements kept The Green Sheet's news desk busy. We wrote of growing cryptocurrency and BNPL adoption, ETA policy priorities for 2022, and post-pandemic funding options for struggling SMBs. Throughout the 2021 holiday season, we reported retail analyst and payments expert predictions of an 8.5 percent uplift in spending across online, in-store and mobile app channels. Then came the hotly awaited news from the NRF that 2021 sales outperformed all forecasts.

Matthew Shay, NRF president and CEO, disclosed the final 2021 tally: $886.7 spent during the November-through-December period, a 14.1 percent increase over the previous year. "Despite supply chain problems, rising inflation, labor shortages and the omicron variant, retailers delivered a positive holiday experience to pandemic-fatigued consumers and their families," Shay said. "Consumers were backed by strong wages and record savings and began their shopping earlier this year than ever before."

Strong economic indicators

NRF Chief Economist Jack Kleinhenz agreed. Remarking that the 2021 holiday season "was the strongest November and December we've ever seen," he said he expects 2022 to follow suit with continued retail momentum. Worries about inflation and COVID-19 put pressure on consumer attitudes but did not dampen spending, and sales remained strong, he stated.

Kleinhenz further noted that consumer demand is driving the economy, and retailers are already proactively preparing for the 2022 holiday season amid ongoing uncertainties. The NRF anticipates that year-over-year growth across multiple retail categories will continue far into the year, with clothing, sporting goods, general merchandise and furniture among top sellers, he added.

While the NRF congratulated retailers for planning ahead and keeping shelves stocked, it's clear that payments service providers also played a pivotal role by delivering seamless checkouts and processing transactions at scale. Mastercard SpendingPulse, published in December 2021, charted in-store and online retail sales across all payment types. It indicated that consumers returned to stores in record numbers, increasing on-site shopping by 16.5 percent over the 2020 holiday season.

Positioned for growth

Payments analysts are discussing two notable acquisitions, both occurring on Jan. 18, 2022: NMI acquired IRIS CRM and Celero Commerce acquired Omega Technology. Both transactions appear to have broadened capabilities and positioned participants for growth in the year ahead, according to company representatives. Vijay Sondhi, CEO at NMI, called the IRIS CRM acquisition "the coming together of two great companies."

Kevin Jones, founder and CEO at Celero Commerce, viewed OMEGA's focus on small and midsize banks as complementary to Celero, which he said will enable the newly formed company to continue building its "premier technology-focused, commerce solutions offering for small and medium-sized businesses and financial institution partners."

As news of these mergers circulated on social media, payments professionals joined in the discussions, congratulating colleagues and friends. Some recalled seeing Dimitri Akhrin, founder and CEO at IRIS CRM, win first place at the Catapult 2016 Innovation Award at the annual Northeast Acquirers Association conference. Like many other technology innovators, Akhrin developed his ISO-focused CRM program as an in-house tool and later realized its broad potential to help others.

Commenting on the positive impact these transactions may have on the small business community, Nikki Estes, digital marketing specialist at iCheckGateway.com, stated that these mergers can inspire a new generation of tech-driven entrepreneurs helping local business owners achieve sustainable growth. "What a profitable venture for all involved," she said. "Cheers to the teams that serve their communities and make this kind of effort happen."

Pillars of progress

As Kleinhenz noted, consumer attitudes are driving robust spending, which shows no signs of slowing down. And as others in our industry have noted, ever-changing consumer expectations have inspired financial institutions and third-party service providers to up their game by making commerce more secure, intelligent, agile and transparent.

I explored this theme in "Digital Commerce in 2022," a two-part series in The Green Sheet, published in January 2022, sharing perspectives from industry experts on how these foundational concepts are shaping present and future commerce methods.

Today's innovations bear little resemblance to payment technologies from 30 years ago, but their foundational principles have remained consistent from the start. Some payments industry veterans may recall a time when merchants took paper receipts to the bank. Back then, this was an agile alternative to 30-day house account billing cycles. Imagine how merchants would have reacted in those days if you'd told them about instant payments.

Jed Rice, CEO at Aliaswire, pointed out that ACH rails supported 30 billion payment transactions in 2020, with a predicted rise to 33 billion in 2021. "ACH transactions are popular because they are both cost efficient and secure," he said. "The only thing holding ACH back these days is a lack of speed due to its time-intensive account validation process."

Buy now, pay later

Rice said he expects ACH transactions to become as seamless and fast as credit card transactions, giving consumers more payment choices at checkout. He also stated that popular buy now, pay (BNPL) later schemes provide consumers with short-term access to funding and may soon deliver benefits to SMBs.

"To date, the focus has been on consumer-facing businesses, and it has not done anything to help SMBs establish a credit history for their long-term health," Rice said. He also said he expects BNPL solution providers to expand to the B2B sector in 2022 while continuing to eliminate lending risk and predatory rates found at the B2C level.

To Rice's point, global receptivity of BNPL reflects how far consumers and merchants have evolved from layaway plans and revolving credit. I'd even go as far as to say that BNPL is neither a trend nor a logical next step but an inevitability, like real-time payments, instant account on-boarding and secure authentication. I'd say BNPL is the next iteration of credit card processing. end of article

Dale S. Laszig, senior staff writer at The Green Sheet and managing director at DSL Direct LLC, is a payments industry journalist and content strategist. Connect via email dale@dsldirectllc.com,">href="mailto:dale@dsldirectllc.com">dale@dsldirectllc.com, LinkedIn www.linkedin.com/in/dalelaszig/ and Twitter @DSLdirect.

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