Payments Strategy Considerations for Retailers Michael English Executive Director of Product Development Heartland Payment Systems
Payments Strategy Considerations for Retailers Michael English Executive Director of Product Development Heartland Payment Systems
Key Discussion Points
Ø How do your customer want to pay and be marketed
Ø Payment is one aspect of the customer value proposi9on and perhaps the least important
Ø Consider an in-‐store and cloud architecture that allows you to assimilate new payment types
Ø Tradi9onal and mobile can complement and are not exclusive
Ø Omni-‐channel enables your customers to shop how and when they want
Opportunities and issues for consideration
Ø Streamlining the customer experience to make acceptance as easy and fast as mag stripe
Ø Training, educa9on and pa9ence are cri9cal for staff and customers
Ø Protec9ng yourself against fraud while being flexible
Ø As mobile and omni-‐channel expand so will concerns about privacy and security
Ø Will POS the center of your customer service universe in the future?
EMV Considerations
Making a decision to implement EMV Ø What increased card fraud levels do I an9cipate aHer the liability shiH begins October 2015?
Ø What will customer percep9ons be of my not offering chip acceptance?
Ø What percentage of my transac9ons are card present versus card not present?
Ø What percentage of my transac9ons are PIN debit versus credit?
Ø What is my cost for upgrading, upda9ng or replacing my acceptance infrastructure for EMV?
Ø Is there a return on my investment? Ø Is TIPs applicable to me?
EMV Store System Considerations
Ø Is my POS system upgradeable to support EMV?
Ø What is the cost of an upgrade versus a new POS system?
Ø What EMVco listed peripherals are suitable for my opera9on?
Ø How will EMV fit with my encryp9on and tokeniza9on systems?
Ø Do I need both EMV contact and contactless?
EMV Operational Considerations
Ø What configura9on best fits my store opera9ons and customer service model?
Ø What customer verifica9on methods are best for me? Ø Are there any changes in batching and seTlement processes?
Ø Will my monthly service or per transac9ons fees be impacted with EMV acceptance?
Ø Is there any reduc9on in transac9on costs with EMV acceptance?
Ø What changes will I see on my statements?
Ø Should you monitor fallback transac9ons at the POS? Ø Mail order, telephone order, and Internet transac9on acceptance differences
Ø Will eCommerce fraud increase?
Store Level Training Considerations
Ø What do chip cards and terminals look like? Ø Managing mul9ple customer verifica9on methods Ø Do I have to check anything else when a card is used and verified with a PIN?
Ø Customer forgeUng their pin and locking their card Ø Fallback procedures if the POS terminal fails to read the chip
Ø Transac9on speed of EMV versus mag stripe Ø How will I know if the chip transac9on has been successful or declined?
The number one EMV deployment expense
was cardholders leaving their contact EMV cards
in the terminal.
EMV and the Consumers
Ø A high probability of consumer confusion Ø Time to acclimate… Ø Inser9ng and keeping the contact card inserted Ø “Hold” 9me for contactless transac9on comple9on Ø ForgeUng inserted cards in readers Ø Consistency from merchant to merchant
Ø Disparate card issuance Ø Contact and/or contactless
EMV Conversion Considerations
Ø Can you convert in the stages?
Ø How many lanes and stores can you convert per day?
Ø What do you need to test when the new hardware / soHware is installed?
Ø How do you ensure customer service and current transac9ons are not impacted during tes9ng and conversion?
NFC
Ø Enables devices in close proximity to communicate
Ø Uses of NFC for payment include: Ø Payment for goods and services at a POS terminal
Ø Transit fare gate payments
Ø Parking payments
Ø NFC technology is also used for non-‐payment applica9ons, such as tags on adver9sing posters, coupons, physical access to secure areas, and boarding passes.
The good… Ø Card present mobile payment Ø Fast transac9on environments Ø Incorporated with EMV Contactless Ø No pairing necessary Ø Low power
The bad… Ø “Tainted” Ø Crowded field raises transac9on cost Ø Management and cost of downloads Ø Proven work “arounds” such as QR Ø Lack of meaningful apps Ø Ques9ons as to Secure Element security
Tablet POS
Ø ROI on mobile POS solu9on was less than six months for Giorgio Ristorante
Ø Answered produc9vity challenge to keep the staff on the floor Ø Entered orders at a worksta9on Ø Ran orders from kitchen to table Ø Returned wrong orders to kitchen Ø Handled other roles during slow periods
Ø Results… Ø Saved 15% of server 9me, equaling almost ten
minutes per hour—two tables per hour, per server
Ø With each server able to handle more tables, payroll was reduced without impac9ng incomes
Ø The average order increased by $2.00 Ø Order errors from the kitchen plummeted
http://www.maitredpos.com/blog/mobile-pos-customer-case-study
Traditional and Mobile Co-existence
Ø Merchant have considerable investment in tradi9onal POS
Ø Need to respond to compe99ve and customer service challenges
Ø Tradi9onal and mobile complement each other and are not exclusive
Ø Small, Portable Footprint
Ø Enhanced Labor Efficiency
Ø Targeted Sales
Ø Lower Investment Threshold
Ø Mobile extends func9onality and value beyond the point-‐of-‐sale
Ø Inventory Maintenance / Inquiry Capabili9es
Ø Inter-‐Employee, On-‐Site Communica9ons
Ø Payment Processing
Merchants Ø Capture history and preferences Ø Manage customer feedback Ø Reward loyalty customers Ø Engage first 9mers or lapsed customers
Consumers Ø Pay when ready Ø Instant rewards Ø Ability to split the tab Ø Send feedback
http://www.tabbedout.com/
2D and 1D Bar Codes
Methods of use in the payments environment for presentment
Ø On a receipt or on the screen of a payment terminal
Ø On the consumer’s smartphone
Ø The consumer’s payment creden9als are stored in the cloud Considera?ons Ø Cost of bar code reader versus other technologies Ø Counter space Ø U9lity and uses versus other technologies Ø Customer ergonomics and transac9on 9me
Ø Pay for purchases Track and redeem rewards
Ø Reload Ø Get direc9ons to the
nearest store, search by ameni9es and store hours
Ø Explore coffees, beverages, food and nutri9onal informa9on
Ø Free Pick of the Week songs Ø Send eGiHs Ø Stay informed by being the first to hear
of special offers
http://www.starbucks.com/coffeehouse/mobile-apps/mystarbucks
Geolocation
Ø Geoloca9on services let users “check in” when they stop at a store, bar, restaurant, park, event place or supermarket.
Ø Smartphones allow companies to leverage customers’ loca9on and contact them with offers that are geographically relevant
Ø Geoloca9on is used by a variety of marketers such as Kiehl’s, Best Buy and Ace Hardware
Considera?on Ø Privacy and Opt-‐out Ø Card not present transac9on costs Ø Security Ø Mobile baTery drain
“The most important benefit of geo-‐targe9ng for the retailer is being able locate an interested customer nearby, in real-‐9me, with the ability to direct them to where they can make a purchase; this can be a key driver of foot traffic for brick and mortar stores.”
Alistair Goodman, CEO of Placecast, San Francisco Source: http://www.mobilecommercedaily.com/the-allure-of-geolocation
6.5% 9.5%
13.5% 16.5%
US Adult Mobile Coupon Users, 2010 – 2013 Millions and % of adult phone users
Source : eMarketer, Aug 2011 / www.emarketer.com
Bluetooth Low Energy
Bluetooth Low Energy (BLE) also known as Bluetooth Smart Ø 2.4 GHz wireless technology,
consumes low power, operates up to 100 meters in range, and is primarily used for data transfer.
Ø Connect consumers to enhanced shopping experiences -‐ ordering at a lunch spot, or geUng personalized service at your favorite store
Considera?ons Ø Security Ø Coverage Ø Collision Ø Consumer u9lity Ø Cost of payment
Ø September 2013 debut
Ø POS support includes Erply, Leaf, Leapset, Micros, NCR, ShopKeep and Vend
Ø Consumers download PayPal app and opted into use for check-‐in and payments
Ø Once ac9vated the technology will trigger to confirm a successful check in with photo appearing on the screen of the merchant’s POS system
https://www.paypal.com/webapps/mpp/beacon
ACH at the POS
Primary advantage of ACH is the generally lower transac?on fee as compared to credit or debit card transac?on fees Considera?ons with using ACH Ø ACH is a batch system and designed for real-‐9me payments Ø Merchants accept the liability for a situa9on in which a transac9on may not clear due to lack of funds in the consumer account Ø Limited fraud or chargeback protec9on for consumers Ø Unauthorized ACH transac9ons result in funds “missing” from the consumer’s account un9l a provisional credit is issued
Ø A de-‐coupled debit network card that carries a fee of 1% + 5 cents to area merchants
Ø The en9re 1% Fee is forwarded to local non-‐profits
Ø Businesses save money on fees and money is re-‐invested locally
Ø Businesses give consumers an opportunity to donate to non-‐profits by shopping local
Remote Ordering
Use merchant’s mobile applica?on, mobile Web site, or tradi?onal Web site to place and pay for orders Ø Increases ways consumers can do business with you Ø increased produc9vity Ø increased customer sa9sfac9on -‐ customers can order at their own convenience Considera?ons Ø Coordina9on with “brick & mortar” Ø Ecommerce card rates Ø Security Ø Consumer expecta9ons Ø Merchants and providers must disclose how they use customer data
http://www.crunchbase.com/company/tapingo
And finally…
Ø No silver bullet Ø Gain knowledge of new payment
types and enabling technologies Ø Know thy customer Ø Liver the customer value proposi9on Ø Tradi9onal and mobile are not
exclusive Ø Omni-‐channel enables your
customers to shop how and when they want
Ø Privacy and Security are core
Smart Card Alliance 191 Clarksville Rd. · Princeton Junction, NJ 08550 · (800) 556-6828 www.smartcardalliance.org
Michael English Executive Director of Product Development Heartland Payment Systems [email protected] www.heartlandpaymentsystems.com