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Unique Insights into the Top Payment Trends - TNS Webinar

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TNS' most recent webinar gave an insight into the top payment market trends facing merchants in 2014. The topics covered were: …

TNS' most recent webinar gave an insight into the top payment market trends facing merchants in 2014. The topics covered were:

* Focus on security and risk management
* The acceleration of change in the payments ecosystem
* Sea change taking place at the POS
* Impact of BIG Data on payments
* Insourcing vs. outsourcing

Published in: Economy & Finance

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  • “We are not a payments company. We are a commerce company. Payment is just one tiny little piece of that.” - Jack DorseyMobile Commerce is not about Payments!While payments will be a necessary part of this customer experience, it will not be the primary feature of the mobile experienceMobile commerce will be driven providers ability to provide significant customer value, such as rich, relevant offersThe current ecosystem of merchants, card issuers, card networks and new wallet providers are vying to understand the new realities of a mobile-driven retail experienceWho “owns” the customer?Who makes the offer? From whose data?Who funds the offer?Electronification of incentives. Coupons and offers are moving from paper-based to electronically presented, both out of store and in-store.Card-linked offer plays abound. A number of service providers performing consumer card-based spend behavior analysis, offer presentment and statement redemption have emerged, vying to establish relationships with issuers, publishers and merchants. The newly formed CardLinx Association may accelerate this method.The POS is a key challenge. Statement credits are a poor substitute for real time offers and redemptions, which is hampered by the traditional POS infrastructure… and the need to migrate to a more flexible (and so far non-standard) alternative. CardLinx Association seeks to establish this standard in order to grow the pie.Data is a key. It’s all about providing relevant and timely offers to consumers. This is what will deliver customers to certain wallet and technology drivers, and those volumes will determine who wins and loses in the wallet wars.Business tensions on show. A practical fact is that merchants have been loathe to fund rewards and offer programs through higher interchange fees (basis points) but will happily pay full percentage points to attract new customers and encourage new top-line spend. How consumer incentives migration and adoption in the electronic world will challenge traditional and new stakeholders:
  • “We are not a payments company. We are a commerce company. Payment is just one tiny little piece of that.” - Jack DorseyMobile Commerce is not about Payments!While payments will be a necessary part of this customer experience, it will not be the primary feature of the mobile experienceMobile commerce will be driven providers ability to provide significant customer value, such as rich, relevant offersThe current ecosystem of merchants, card issuers, card networks and new wallet providers are vying to understand the new realities of a mobile-driven retail experienceWho “owns” the customer?Who makes the offer? From whose data?Who funds the offer?Electronification of incentives. Coupons and offers are moving from paper-based to electronically presented, both out of store and in-store.Card-linked offer plays abound. A number of service providers performing consumer card-based spend behavior analysis, offer presentment and statement redemption have emerged, vying to establish relationships with issuers, publishers and merchants. The newly formed CardLinx Association may accelerate this method.The POS is a key challenge. Statement credits are a poor substitute for real time offers and redemptions, which is hampered by the traditional POS infrastructure… and the need to migrate to a more flexible (and so far non-standard) alternative. CardLinx Association seeks to establish this standard in order to grow the pie.Data is a key. It’s all about providing relevant and timely offers to consumers. This is what will deliver customers to certain wallet and technology drivers, and those volumes will determine who wins and loses in the wallet wars.Business tensions on show. A practical fact is that merchants have been loathe to fund rewards and offer programs through higher interchange fees (basis points) but will happily pay full percentage points to attract new customers and encourage new top-line spend. How consumer incentives migration and adoption in the electronic world will challenge traditional and new stakeholders:
  • “We are not a payments company. We are a commerce company. Payment is just one tiny little piece of that.” - Jack DorseyMobile Commerce is not about Payments!While payments will be a necessary part of this customer experience, it will not be the primary feature of the mobile experienceMobile commerce will be driven providers ability to provide significant customer value, such as rich, relevant offersThe current ecosystem of merchants, card issuers, card networks and new wallet providers are vying to understand the new realities of a mobile-driven retail experienceWho “owns” the customer?Who makes the offer? From whose data?Who funds the offer?Electronification of incentives. Coupons and offers are moving from paper-based to electronically presented, both out of store and in-store.Card-linked offer plays abound. A number of service providers performing consumer card-based spend behavior analysis, offer presentment and statement redemption have emerged, vying to establish relationships with issuers, publishers and merchants. The newly formed CardLinx Association may accelerate this method.The POS is a key challenge. Statement credits are a poor substitute for real time offers and redemptions, which is hampered by the traditional POS infrastructure… and the need to migrate to a more flexible (and so far non-standard) alternative. CardLinx Association seeks to establish this standard in order to grow the pie.Data is a key. It’s all about providing relevant and timely offers to consumers. This is what will deliver customers to certain wallet and technology drivers, and those volumes will determine who wins and loses in the wallet wars.Business tensions on show. A practical fact is that merchants have been loathe to fund rewards and offer programs through higher interchange fees (basis points) but will happily pay full percentage points to attract new customers and encourage new top-line spend. How consumer incentives migration and adoption in the electronic world will challenge traditional and new stakeholders:
  • “We are not a payments company. We are a commerce company. Payment is just one tiny little piece of that.” - Jack DorseyMobile Commerce is not about Payments!While payments will be a necessary part of this customer experience, it will not be the primary feature of the mobile experienceMobile commerce will be driven providers ability to provide significant customer value, such as rich, relevant offersThe current ecosystem of merchants, card issuers, card networks and new wallet providers are vying to understand the new realities of a mobile-driven retail experienceWho “owns” the customer?Who makes the offer? From whose data?Who funds the offer?Electronification of incentives. Coupons and offers are moving from paper-based to electronically presented, both out of store and in-store.Card-linked offer plays abound. A number of service providers performing consumer card-based spend behavior analysis, offer presentment and statement redemption have emerged, vying to establish relationships with issuers, publishers and merchants. The newly formed CardLinx Association may accelerate this method.The POS is a key challenge. Statement credits are a poor substitute for real time offers and redemptions, which is hampered by the traditional POS infrastructure… and the need to migrate to a more flexible (and so far non-standard) alternative. CardLinx Association seeks to establish this standard in order to grow the pie.Data is a key. It’s all about providing relevant and timely offers to consumers. This is what will deliver customers to certain wallet and technology drivers, and those volumes will determine who wins and loses in the wallet wars.Business tensions on show. A practical fact is that merchants have been loathe to fund rewards and offer programs through higher interchange fees (basis points) but will happily pay full percentage points to attract new customers and encourage new top-line spend. How consumer incentives migration and adoption in the electronic world will challenge traditional and new stakeholders:
  • Loyalty, coupons/offers, customer personalization, wallets, tablets, QR codes, bar codes, NFC
  • Merchants are asking:Who is my customer? How do I connect with my customer? Where are they and how can I encourage, influence, improve their visit?Mobility – associate interaction and customer interaction (payment, offers, information…)A recent survey revealed that more than half of in-store shoppers accessed their mobile device to check product reviews, browse alternatives, price match and check stock availability while on the shop floor. Proximity – iBeaconA recent survey* revealed that more than half of in-store shoppers accessed their mobile device to check product reviews, browse alternatives, price match and check stock availability while on the shop floor.
  • Mobility – associate interaction and customer interaction (payment, offers, information…)A recent survey revealed that more than half of in-store shoppers accessed their mobile device to check product reviews, browse alternatives, price match and check stock availability while on the shop floor. Proximity – iBeaconA recent survey* revealed that more than half of in-store shoppers accessed their mobile device to check product reviews, browse alternatives, price match and check stock availability while on the shop floor.
  • Mobility – associate interaction and customer interaction (payment, offers, information…)A recent survey revealed that more than half of in-store shoppers accessed their mobile device to check product reviews, browse alternatives, price match and check stock availability while on the shop floor. Proximity – iBeaconA recent survey* revealed that more than half of in-store shoppers accessed their mobile device to check product reviews, browse alternatives, price match and check stock availability while on the shop floor.
  • More in Play than Ever Before. In the payments and commerce spaces, there are more parts in motion than ever before. We will be in a very different place in 5 years and may barely recognize how commerce is conducted in 10. Everyone knows it. The Land Grab is on with incumbents expanding their territories and new entrants vying, with varying levels of success, for their own niches.Climate Change at the POS. Adoption of POS-based tablets across merchant tiers over next 12 – 24 months, will impact deployment, communications, and transaction flows. Acquiring side is especially vulnerable. Bluetooth LE/Smart and cloud-connected mobile wallets will further shift the POS environment.It’s About the Data. Value shifts from payment processing to commerce services. With payments a “dive to the bottom” business, it is already table stakes and could become a loss leader for processors and merchants to drive advertising, incentives, customer analytics, and other behavior shaping approaches. Data is generated through mobile, social media, sensors, and location technologies to create the Age of Context where “always connected” meets Big Data to link individual activity with geospatial accuracy. Yesterday’s environment was only about cards. Today’s environment is about cards and cards on file. Tomorrow’s ties the “instrumented individual” to cloud-based wallets and transaction services.Great Infrastructure Required. For all of this to work, secure cloud services, rock solid mobile broadband access, Bluetooth LE and sensor node management, and more will be needed.
  • Do I do this inhouse or seek expertise from a payments service provider that can provide flexibility, security and a roadmap that is diffficult to fundSeeking focus. Merchants are demonstrating an appetite to outsource some of their payments-related functions, in order to focus on “just selling stuff.”Avoiding complexity and liability. Merchant interest in outsourcing was significantly driven by the establishment of the PCI-DSS standards, which created challenges for merchants to comply with complex standards and avoid liability for card information data breaches.Tokenization comes of age. Several years ago, few merchants were tokenizing card data, and those that did so did it in-house. Now, most major acquirers are offering (or teaming to offer) these services and merchants are beginning to adopt this practice.eCommerce risk drives outsourcing. Since eCommerce merchants are on the hook for fraud, they seek to risk score transactions and a robust outsourced environment has developed. Cost is a common concern.Gateway services across retail environments. eCommerce merchants routinely employ network gateway services for connectivity; POS merchants see value in using network switches for access and flexibility with networks, and emerging multi-channel requirements will drive consolidation of single threaded processes into payments hubs.Complex POS environments. POS estate management services could tip either way in terms of growth, depending on what the “new POS” ends up looking like
  • More in Play than Ever Before. In the payments and commerce spaces, there are more parts in motion than ever before. We will be in a very different place in 5 years and may barely recognize how commerce is conducted in 10. Everyone knows it. The Land Grab is on with incumbents expanding their territories and new entrants vying, with varying levels of success, for their own niches.Climate Change at the POS. Adoption of POS-based tablets across merchant tiers over next 12 – 24 months, will impact deployment, communications, and transaction flows. Acquiring side is especially vulnerable. Bluetooth LE/Smart and cloud-connected mobile wallets will further shift the POS environment.It’s About the Data. Value shifts from payment processing to commerce services. With payments a “dive to the bottom” business, it is already table stakes and could become a loss leader for processors and merchants to drive advertising, incentives, customer analytics, and other behavior shaping approaches. Data is generated through mobile, social media, sensors, and location technologies to create the Age of Context where “always connected” meets Big Data to link individual activity with geospatial accuracy. Yesterday’s environment was only about cards. Today’s environment is about cards and cards on file. Tomorrow’s ties the “instrumented individual” to cloud-based wallets and transaction services.Great Infrastructure Required. For all of this to work, secure cloud services, rock solid mobile broadband access, Bluetooth LE and sensor node management, and more will be needed.
  • Transcript

    • 1. #tnspaymenttrends Unique insights into top payments market trends facing merchants in 2014 Travis Lee, Director, Product Marketing February 20, 2014
    • 2. 2014 Payments Ecosystem Trends Pace of change is accelerating customer focus and risk management are the driving actions A shift from the Point of Sale transaction to the Point of Interaction with the customer More in Play than Ever Before Payments acceleration and risk concerns cause merchants to question their focus and their scope of management Great Infrastructure Required Sea Change at the POS It’s About the Data TNS Confidential Information Yesterday’s environment was about card data. Tomorrow’s environment ties device driven personal data to cloud-based services 2
    • 3. More in Play Than Ever Before What commerce will look like in 5 years is difficult to say, but it will be drastically different than what it was in 2013? What we can say is that in 2014 … Channels are blurring – no longer multi or omni channel – it is the integration of channels into “One-Channel” and it is about commerce and the customer. NRF Report – the word on everyone’s lips: omni channel. ECommerce and mCommerce took their places next to traditional brick-and-mortar in New York as panelist after panelist acknowledged the importance of bringing products to customers in exactly the ways they want. Cardnotpresent.com TNS Confidential Information 3
    • 4. More in Play Than Ever Before What commerce will look like in 5 years is difficult to say, but it will be drastically different than what it was in 2013? What we can say is that in 2014 … Security is paramount – your payment systems (networks, databases, POS) need to be locked down and cleansed of card data. Previously it was about compliance management, now it is about risk management. FBI Jan 17th Report – discovered 20 more hacking cases involving the same RAM scraping malware technology used against Target. “We believe POS malware crime will continue to grow over the near term.” TNS Confidential Information 4
    • 5. More in Play Than Ever Before What commerce will look like in 5 years is difficult to say, but it will be drastically different than what it was in 2013? What we can say is that in 2014 … Mobile is happening – it needs to be a critical part of how you create and maintain loyal customers as well as enable intelligent merchant associates. Adyen 3rd Mobile Payments Index – mobile payments accounted for 19.5% of online transactions, up 55% over 2012. Smartphone payments proved the highest volume, but tablets showed the highest average transaction value. TNS Confidential Information 5
    • 6. More in Play Than Ever Before What commerce will look like in 5 years is difficult to say, but it will be drastically different than what it was in 2013? What we can say is that in 2014 … Tender types are increasing – forever it was cash, check or a handful of credit cards; then Paypal and a couple alternatives came along, now we are seeing a flood of options and some that are changing the paradigm for merchants, customers and banks. WorldPay January 2014 report “Global Guide to Alternative Payments” – within three years alternative payments will eclipse card payments as the dominant way to pay online. Paypal is the current alternative payment leader with 57% market share. Alipay is second with 20%. TNS Confidential Information 6
    • 7. Sea Change at the POS • POS terminals attached to tablets will be transitional implementation • Reduce number of aisles to free up floor space • In aisle customer service, including payments • Line busting • Inventory lookup • Payments Smartphones • Tied to PC-based systems Tablets Traditional POS We are moving to a Point of Interaction with the convergence of channels that are not solely focused on transactions • Line busting payments acceptance • Restaurant order entry and payments • Curbside • Delivery • Loyalty • Know Your Best Customer (KYBC) Source – Glenbrook Partners TNS Confidential Information 7
    • 8. Sea Change at the POS – Mobile Revolution A recent survey revealed that more than one third of instore shoppers accessed their mobile device to check product reviews, browse alternatives, price match and check stock availability while on the shop floor. TNS Confidential Information 8
    • 9. Sea Change at the POS – Merchant Readiness TNS Confidential Information : RIS News, 2013 9
    • 10. Sea Change at the POS – Merchant Readiness TNS Confidential Information 10
    • 11. Sea Change at the POS – Merchant Mobile Priorities TNS Confidential Information : RIS News, 2013 11
    • 12. Sea Change at the POS – Mobile Strategy TNS Confidential Information : RIS News, 2013 12
    • 13. It’s About the Data Tomorrow’s environment ties device driven personal data to cloud-based services. Age of Big Data • Many channels of data from “Always Connected” devices mobile, social media, sensors, and location technologies will need to be connected to analyze, communicate, and act Beyond Card Data • In the past, only card data was examined. Now, these additional channels of data, requires the merchant to manage multiple data providers Data to Drive Behavior • Advertising, incentives, customer analytics, and other behavior shaping approaches Risk Management Mandate Global Big Data Spend *Glenbrook Partners • Increased data requires greater security • Will grow from $31B in 2013 toward $114B in 2019* TNS Confidential Information 13
    • 14. Great Infrastructure Required Payments acceleration and risk concerns cause merchants to question …  Are we Payments experts or Retail experts?  Should I do this in house or securely managed outside of my scope?  How can I access services in the cloud that will allow me to add new functionality, increase security and decrease operations and capital costs? Ensure focus Avoid complexity, cost and liability TNS Confidential Information Enhance payments roadmap flexibility 14
    • 15. 2014 Payments Ecosystem Changes • The traditional payments landscape is under pressure • Advancements in payments technology will continue at a faster pace • Security and risk management must be a roadmap driver • Flexible platforms will be required to deliver a “Customer” focused experience • Cloud-based payments provide flexibility, security and control TNS Confidential Information 15
    • 16. Questions and Follow Up Q&A If you have any further questions or would like to discuss any of the items mentioned in more detail please contact Travis Lee at 703-453-8352 or email tlee@tnsi.com www.tnsi.com TNS Confidential Information 16