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Interviews

Merchant investments – from real-time payments to security: where should the money go?

Monday 25 June 2018 | 09:22 AM CET

Andy McDonald, Vice President Merchant Payments Europe at ACI Worldwide, discusses what`s keeping the merchant payments ecosystem busy and what the payments roadmap looks like

In the last decade, the merchant landscape has transformed significantly – with huge changes in operating environments, shifting consumer channels and purchasing preferences, complex compliance issues and major advances in payments technology.

Are merchants investing in payments in 2018 and what initiatives are taking priority?

The cost of payment operations has increased for most merchants over the last few years as a result of rapid investment in new technologies, so many are now looking to simplify their systems to reduce cost and complexity.

Our recent research study with Ovum indicates that half of merchants globally - across retail, digital goods, travel, hospitality and telco sectors - are planning to increase their investment in payments technology in 2018. These investment plans are strongly centred on initiatives that will deliver operational efficiencies – such as the integration of solutions and streamlining middleware.

With so many merchants looking to cut costs, how can they ensure the customer experience isn’t adversely affected?

Innovation is still high on the agenda for merchants – and over a third are prioritising enhancements to their payments acceptance capabilities this year as part of their efforts to improve the customer experience. There is also a strong level of interest in emerging channels such as social media, chat apps and smart home devices, but merchants understand that legacy systems are not going to give them the support they need to make a success of these innovations.

Payment systems modernisation will allow merchants both to cut costs and to unlock the opportunity for service enhancements – by giving them greater agility to respond quickly and cost-effectively to future technology developments and new customer trends.

Better systems integration can also help unite channels and improve data aggregation, which can improve cross-channel customer profiling and service personalisation – all contributing to a better customer experience.

There’s a lot of discussion around real-time payments and the challenges and benefits they can bring. What are merchants’ current attitudes to real time payments (RTP)?

I think many merchants initially saw RTP as just a functional chore – yet another change they needed to adapt to and configure their systems for at some point. We’re seeing a huge turnaround in this view now as merchants begin to understand the benefits that RTP can deliver.

For example, in 2017, 57% of merchants believed that RTP could enhance customer service, particularly around refunds and disbursements. This year that figure has risen to 78% - and the same percentage feel that RTP can help them lower costs. Of course, the potential for merchants to improve cash flow management, reduce card acceptance costs, and particularly chargebacks in e-commerce, is already widely discussed and certainly gives good grounds for merchants to make the leap to RTP.

Data security and fraud prevention continue to top the bill for regulatory bodies – how are merchants viewing this issue and what challenges are they facing?

Data security is also high on the agenda for merchants - and not just because of the regulatory drive. Data theft is still rife and 61% of merchants believe they are at greater risk of a data security breach than a year ago.

Despite this, the industry is split when it comes to managing the trade-off between implementing security solutions and the impact on customer experience. Around half of merchants are reluctant to invest in fraud solutions in case they add friction for customers, with the other half holding back on service innovations because of the worry about fraud risk.

It is clear from this that the biggest challenge for merchants in this area is still about finding a way to prevent fraud while delivering a positive customer experience for genuine shoppers. The key lies in the fraud strategy itself and merchants need to invest in sophisticated authentication and monitoring technology to improve the balance between fraud risk and a friction-free user experience.

What are the key factors merchants need to consider when planning their payments roadmap for 2018 and beyond?

The pace of change in the payments industry is rapid, and merchants must continue to develop their core payments infrastructure to remain competitive and position themselves for growth. Modernising the middle- and back-office is certainly important, but this modernisation process must also extend to fraud solutions and real-time payments infrastructure.

Some will need to update their development roadmaps, while others will need their banking and payments partners to provide assistance. It’s worth noting that, in our research, merchants who have seen their payments operating costs fall, run fewer in-house systems and more vendor applications than those who have seen costs rise. This does suggest that merchants modernising their payments infrastructure through external expertise are seeing benefits - and there are lessons that others can learn from these successes.

Join our webinar on the 2018 Ovum findings: “Investing in Innovation, Real-Time Payments and Security: What Merchants Need to Know”

Register today for this exclusive webinar as Kieran Hines (Head of Industries, Ovum) and Mike Braatz (Chief Solutions Officer, ACI) reveal today’s trends in merchant payments and what you should do to begin preparing for tomorrow.

Date/Time: July 12 at 11:00 AM EDT/4:00 PM BST/ 5:00 PM CEST.

About Andy McDonald

Andy McDonald is Vice President of Merchant Payments for ACI Worldwide, running both direct and indirect channels to market. He works closely with the product and marketing teams to take ACI’s integrated UP payments solutions to merchants in the retail, gaming, telecoms and travel sector as well as payment companies. Andy has 20 year experience in helping companies grow in line with long-term strategic plans; his current focus is to grow ACI’s eCommerce payments business across Europe and the UK.

About ACI Worldwide

ACI Worldwide, the Universal Payments (UP) company, powers electronic payments for more than 5,100 organizations around the world. More than 1,000 of the largest financial institutions and intermediaries, as well as thousands of global merchants, rely on ACI to execute $14 trillion each day in payments and securities. In addition, myriad organizations utilize our electronic bill presentment and payment services. Through our comprehensive suite of software solutions delivered on customers’ premises or through ACI’s private cloud, we provide real-time, immediate payments capabilities and enable the industry’s most complete omni-channel payments experience. To learn more about ACI, please visit www.aciworldwide.com. You can also find us on Twitter @ACI_Worldwide.

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