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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 michael.english@e-hps.com www.heartlandpaymentsystems.com
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