Retail Payments 101: Expert Advice For SMBsTrending by Angela Diffly
Perfect Payments Storm
When it comes to in-store technology, today’s retailers have it made. Tangible, cool (and affordable!) solutions like digital signage and location-based marketing allow SMBs to compete with big-box stores and online retailers to elevate their customer experience. Everyone agrees that the checkout process should integrate seamlessly into the shopping experience, creating a smooth, convenient transaction so the customer can pay without thinking about paying. But in-store payment technologies are shattering every notion of what payments used to be, and are transforming the way we transact. When it comes to getting paid, retailers just want technology to work the way it should, safely and securely, without costing them an arm and a leg in transaction fees.
From mobile wallet and line busting to payment security and chip cards, today’s payment technologies muddy the transaction waters, and shoppers – along with many cashiers – no longer have a clear and easy path to process transactions. Everyone is asking: Do I swipe or stick my card into the slot? Does my card even have a chip? Can I tap and go with Apple Pay? Who takes Apple Pay vs. Android Pay vs. Samsung Pay? To top it all off, consumer expectations are sky high. If you don’t offer the preferred way to pay, you risk losing business.
As the perfect payments storm continues its destructive path throughout the U.S., the wreckage falls squarely into the retailer’s lap. What to do with it all is the question. We’ve reached out to a few of the industry’s most reputable payments players to find out what to expect for 2016 payment trends, and what you should be doing to make sense of it all.
What SMBs Need Now
“In 2016, in order to grow, thrive and compete with larger merchants, SMBs need more than payments acceptance, they need to unify different services (i.e., payments, accounting, banking, etc.),” Sage Payment Solutions CEO Paul Bridgewater told us. To do this, they need to work with payments software developers that can deliver on what he called “The Golden Triangle” – accounting, payments and payroll.
According to president of iPayment, Inc. Greg Cohen, “SMBs want – actually they should demand – more than just payments. It needs to be easy to set-up and manage, frictionless with current systems and impactful. The retail value chain needs to evolve and align with the digitally engaged customer. Today’s consumers are searching, discovering and engaging with retailers around the globe, every second of every day, most often from mobile devices. Reaching this digitally-engaged consumer is paramount.”
When evaluating EMV (chip card payments) technologies, Verifone’s Shan Ethridge, vice president and general manager of the North American Financial Services Group, advised that new systems should provide the flexibility to support mobile payments as well. “This ‘measure twice, cut once’ approach will help ensure SMBs have the resources in place to address their customers’ mobile payments demands in 2016 and beyond,” he said.
Mobile Wallet Is A Must
Director of online and adjacent products for Moneris, Michael Eckler, pointed out that mobile payment spend is projected at $27.1 billion, doubling every year leading up to 2019 to reach an estimated $210 billion spend. “North Americans are attached to their smart phones and for this reason, that ability to accept this payment method is crucial for small businesses. The more consumers grow familiar and accustomed to these methods of payment, the more retailers will need to support them with their POS,” he said.
Many in the industry are suggesting the U.S. market will leapfrog EMV in favor of mobile wallet, or NFC (near field communications) technology. Last October at Money20/20, I heard venture capitalist Vinod Khosla predict that in three to five years, chip card payments will be irrelevant. “NFC will take over. It’s better for consumers, and it does everything EMV can do,” he asserted. Moneris’ Eckler agrees that mobile payment acceptance provides faster transactions (over chip card payments), while creating a better overall customer experience, another reason to adopt mobile wallet payments.
Today’s predominant mobile payment solutions are Apple Pay, Android Pay and Samsung Pay. Ingenico Group expects the mobile wallet arena to become even more crowded in 2016. “Merchants should accept as many wallet types as possible to ensure they are meeting all of their customers’ needs and specific payment preferences,” commented Greg Burch, VP of strategic initiatives for Ingenico Group’s U.S. market. “If they are choosing new payment terminals for EMV compliance anyway – and they should be – SMB merchants should check with their service provider to ensure that the new terminals are both EMV and NFC enabled. This will allow merchants to handle just about any new mobile wallet technology that comes their way, including NFC contactless cards, which will start to hit the US in 2016.”
Verifone’s Shan Ethridge, vice president and general manager of North American Financial Services Group for the company told us, “As awareness of what is ultimately a faster, secure and more convenient payment method grows amongst consumers, SMBs will want to have the technology in place to support it. And, they’ll need the technology to be able to accept multiple types of mobile wallets, including Apple Pay, Google Wallet and Samsung Pay, considering the growing diversity of operating systems and smart phones.”
Clearent’s VP of product management Jeff Zimmerman pointed out that “We live in an ‘always-on’ society, so even just a few additional seconds makes a difference to hurried consumers and might make them more likely to try mobile wallets such as Apple Pay and Samsung Pay. Mobile wallets may not be faster than swiping a card, but they are faster than dipping a chip card. Because of this, retailers need to make sure they are prepared to support contactless NFC transactions. This can easily be done at the same time retailers upgrade to EMV by making sure that their new terminal or POS system includes a contactless card reader.”
According to Vantiv Integrated Payments product manager for mobile Tony Rose, terminal choice – and knowing how to use it – is essential to making EMV and NFC work the way they should. “Merchants must not only upgrade their terminals to support EMV, but they must also be aware the same terminal should support NFC payments. Once a merchant has the right equipment it is critical to train staff and make customers aware that the merchant supports NFC by placing mobile payment stickers and logos in the store.”
Security, Security, Security
Vantiv’s Rose believes that as EMV cards and NFC payments reduce the risk of fraud in-store, fraudsters will turn their attention to easier online targets. “SMB merchants with ecommerce capabilities must ensure that their ecommerce provider limits the liability of the merchant for online fraudulent activities,” he noted.
“As mobile payments evolve, technology providers and financial institutions are developing ways to enhance security, which should boost customer trust,” Heartland Payment Systems VP of product development, Michael English told us. “Precautions include adding multiple layers of fraud protection, such as tokenization, which replaces card data with tokens that can be used for returns and repeat purchases, but are unusable by outsiders because they have no value, and end-to-end encryption, which immediately encrypts card data as it is entered so that no one else can read it,” he explained.
Ingenico agrees that security should be top priority for SMBs. “One really important feature that SMB retailers should ask about when choosing an mPOS (mobile POS) system – make sure the system encrypts sensitive card data at the point of the swipe or dip,” cautioned Ingenico’s Burch. “You don’t want that card data entered or saved anywhere on the store’s tablet or mobile device, where it’s potentially accessible to employees or hackers.”
“As consumers increasingly use their phones, tablets and computers to shop anytime, anywhere, merchants need to keep track of individual consumers across channels – online, mobile, proximity – to ensure a consistent consumer experience,” pointed out Sage’s Bridgewater. He suggests that as digital devices become more integrated into our daily lives, simple point-of-sale systems (that don’t provide seamless, connected experiences) no longer fit the bill.
Heartland’s English agrees that in 2016, retailers are expected to take loyalty programs to the next level by using predictive analytics to further customize offers. “Some of the best coupons, deals, discounts and loyalty-point programs will appear in mobile wallets as marketers embrace this new and convenient way to engage customers,” he told us.
First Data believes the emerging mobile technologies available today are flattening the playing field. “In 2016, retailers should embrace connected mobile POS devices as they create great optionality through apps that engage directly with customers on their mobile device,” commented Dom Morea, SVP of business development for First Data. “With our Clover App Market, for example, business owners can provide delivery capabilities directly on their customers’ smart phones through the Uber RUSH app. With just a tap of a button, businesses can seamlessly provide a delivery option to their customers where the payment is invisible – offering a simple commerce experience that builds loyalty.”
What To Do Now
Since the payments storm doesn’t seem to be letting up anytime soon, here are some quick-hit takeaways from the experts. Hopefully, their advice will help you navigate through rough waters, and keep your customers happy through it all.
- Replace Your Payment Terminal. When you do, make sure it offers NFC (contactless payments / mobile wallet) and EMV (chip card reading) functionality. This will allow you to accept mobile wallet with a tap-and-go approach while you also comply with federal regulations to accept chip cards, keeping transactions more secure.
- Keep Security Top Of Mind. Ask for multiple layers of fraud protection, such as tokenization and end-to-end encryption. These methods secure sensitive card information, protecting you and your customer. Card data should never enter a mobile device, where it could be accessible to employees or hackers.
- Tie Rewards To Transactions. With the advent of so many ways to pay, you have time to steer your customer to your preferred way to pay via an app, or some other incentive. This allows you to get to know customer preferences and drive loyalty around the transaction – in the way it serves you and your customer best.
- Accept Any Payment Your Customer Wants To Use. Whether your customer wants to pay with cash or Apple Pay, make sure you have an easy and seamless way to accept it. This will keep your lines moving, and keep your customers happy.
- Make Sure Your Staff Is Ready. Educate and train your staff on all the ways a customer may offer to pay (even if you don’t offer those payment methods yet). If your cashiers understand what shoppers are asking for, and help them complete a transaction quickly, you have an opportunity to gain trust – and loyalty – at a time when no one else seems to know what’s going on.
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