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The best choice for in-store payments - cost saving alternative to payment gateways

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NRF 2019: Retail's Big Show
Michael Carrick, US Business Development, Payment Solutions, ACCEO Tender Retail

Published in: Retail
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The best choice for in-store payments - cost saving alternative to payment gateways

  1. 1. Is a Payment Gateway or a Direct-to-Processor Solution the best choice for your in-store payments?
  2. 2. • What is a payment gateway and do you need one? • You have many choices, what are the pros and cons? • Do the math…determine if a direct to processor solution can save your hard earned money. Actionable Takeaways from this session: BOOTH 4365
  3. 3. 1985 Payment solution established 2007 First deployment of integrated EMV & contactless solution in North America 2010 First end-to-end acquirer encryption solution 2012 Tender Retail acquired by ACCEO Solutions 2018 ACCEO Solutions acquired by Harris Constellation Software Tender Retail EMV has been installed in thousands of merchant locations in a variety of verticals: retail, restaurant, QSR, hospitality, etc. $2b+ annual revenue ACCEO Tender Retail History
  4. 4. A few ACCEO Tender Retail Clients
  5. 5. More similarities than differences… • In simple terms we are talking about accepting plastic at the cash register. • A payment gateway or a direct to processor solution both connect the point of sale to the credit card processing service. • The primary difference is the architecture. A payment gateway takes an additional hop to a data center. Whereas direct to the processor is exactly that …direct to your processor. The difference could make a big impact on the bottom line! Payment Gateway vs. Direct-to-Processor
  6. 6. Payment Gateway Architecture Direct-to-Processor Payment Architecture
  7. 7. More similarities than differences… • Partnering with a payments expert is always a good idea. • Provide an API for integration. • Compliant with PCI DSS requirements and PCI PA-DSS certified. • Reduced PCI scope. • Stay up to date on payment changes and enhancements. The difference could make a big impact on the bottom line! Payment Gateway vs. Direct-to-Processor
  8. 8. More similarities than differences… The difference could make a big impact on the bottom line! Payment Gateway vs. Direct-to-Processor • EMV Credit / Debit • Contactless • Mobile POS • Mobile Payment o Apple Pay® o Samsung Pay® o Mobile wallets • End-to-end Encryption (E2EE) • Tokenization • Gift Card • Loyalty
  9. 9. Payment Gateway Architecture Direct-to-Processor Payment Architecture
  10. 10. 2 Checkout 3C Payment / Six ACI PAY.ON Adyen Authorize.net Bluefin Payment Systems BluePay BlueSnap BridgePay Cashnet Cayan Gateway – No shortage of choices CyberSource Chase Orbital Gateway Delego Eigen Elavon Converge Elavon FuseBox EVO / Sterling Payments First Data Global Gateway First Data Payeezy Gateway FreedomPay Shopify Simplify Stripe USA epay Vantiv Payment Gateway Verifone Payment Gateway Worldpay Gateway Services GK Software Mastercard Payment Gateway Merchant Link Monetra NCR Connected Payments NMI/CreditCall OLS Paya Securepay Shift4
  11. 11. If you choose a Payment Gateway – Choose carefully… Some gateways are owned by the payment processor: • Adyen • Chase – Orbital Gateway • Elavon – Converge, Fusebox, Simplify • First Data – Global Gateway, Payeezy Gateway • TSYS - Cayan • Worldpay / Vantiv – Vantiv Payment Gateway, • Worldpay Gateway Services
  12. 12. If you choose a Payment Gateway – Choose carefully… Many gateways specialize in certain vertical markets: • eCommerce • Retail • Unattended • Higher Education • Restaurant • Hospitality • Parking Some gateways will only support certain devices: • Cayan • Verifone • etc,. Some gateways will only support certain POS: Some gateways will only support some countries:
  13. 13. Payment Gateway - cons • Single point of failure • Added complexity • High value target with large cardholders database • Additional hop = more time • Added expense Payment Gateway – value add • Merchant Account set up • Hardware and configuration • Great for smaller retailers Payment Gateway Architecture
  14. 14. • Per transaction fees (.04 - .10) • Point to Point Encryption fees • Monthly Account fees • Monthly Minimum fees • Monthly Hardware fees • Initial Set Up fees Payment Gateways charge all or some of the following fees: Typical Gateway models: • Monthly subscription fees • Transaction routing fees of $.04-.10
  15. 15. Direct-to-Processor • Decentralized • Less expensive • Elimination of the “Middleman” • Simplified payment routing • Device Agnostic • Processor Agnostic • Configurable • Customizable Direct-to-Processor Payment Architecture
  16. 16. • Choose your POS • Choose your Payment Hardware • Choose your E2E Encryption • Choose your Processor The Value of Being Agnostic
  17. 17. Payment Gateway Architecture Direct-to-Processor Payment Architecture
  18. 18. 5 Year Cost Comparison – Merchant ABC Transaction model: • Routing fees of $.04 per transaction Merchant ABC 500 Stores 1500 POS lanes 10 Million Trans Gateway Direct-to-Processor Year 1 $400,000 $400,000 Year 2 $400,000 $ 48,000 Year 3 $400,000 $ 48,000 Year 4 $400,000 $ 48,000 Year 5 $400,000 $ 48,000 Total: $2,000,000 $592,000 .04 .04
  19. 19. 5 Year Cost Comparison – Merchant ABC Monthly / Transaction models: • Monthly fees $10 per lane • Routing fees of $.02 per transaction Gateway Direct-to-Processor Year 1 $380,000 $400,000 Year 2 $380,000 $ 48,000 Year 3 $380,000 $ 48,000 Year 4 $380,000 $ 48,000 Year 5 $380,000 $ 48,000 Total: $1,900,000 $592,000 .02 .02 Merchant ABC 500 Stores 1500 POS lanes 10 Million Trans
  20. 20. 5 Year Cost Comparison – Merchant ABC Monthly models: • Monthly fees $18 per lane Gateway Direct-to-Processor Year 1 $324,000 $400,000 Year 2 $324,000 $ 48,000 Year 3 $324,000 $ 48,000 Year 4 $324,000 $ 48,000 Year 5 $324,000 $ 48,000 Total: $1,620,000 $592,000 Merchant ABC 500 Stores 1500 POS lanes 10 Million Trans
  21. 21. 5 Year Cost Comparison – Merchant XYZ Transaction model: • Routing fees of $.04 per transaction Merchant XYZ 250 Stores 500 POS lanes 5 Million Trans Gateway Direct-to-Processor Year 1 $200,000 $240,000 Year 2 $200,000 $ 32,000 Year 3 $200,000 $ 32,000 Year 4 $200,000 $ 32,000 Year 5 $200,000 $ 32,000 Total: $1,000,000 $368,000 .04 .04
  22. 22. 5 Year Cost Comparison – Merchant XYZ Monthly / Transaction model: • Monthly fees $10 per lane • Routing fees of $.02 per transaction Gateway Direct-to-Processor Year 1 $160,000 $240,000 Year 2 $160,000 $ 32,000 Year 3 $160,000 $ 32,000 Year 4 $160,000 $ 32,000 Year 5 $160,000 $ 32,000 Total: $800,000 $368,000 .02 .02 Merchant XYZ 250 Stores 500 POS lanes 5 Million Trans
  23. 23. 5 Year Cost Comparison - XYZ Monthly model: • Monthly fees $18 per lane Gateway Direct-to-Processor Year 1 $108,000 $240,000 Year 2 $108,000 $ 32,000 Year 3 $108,000 $ 32,000 Year 4 $108,000 $ 32,000 Year 5 $108,000 $ 32,000 Total: $540,000 $368,000 Merchant XYZ 250 Stores 500 POS lanes 5 Million Trans
  24. 24. Reduced costs in your payment processing Eliminate middleman gateway fees (monthly or per transaction) Eliminate proprietary solution rental fees Gain negotiating leverage Eliminate proprietary pin pad mfg. solutions (ie; Verifone Point) Eliminate proprietary Processor solutions (ie; Heartland E3, Vantiv Mercury) Increase flexibility Choose and support 1 or more pin pad devices you select Choose a payment middleware solution that supports multiple POS Choose and change to Processor(s) you select “Mix and match” all the combinations across your enterprise Increase security with End-to-end Encryption (E2EE) Why Direct-to-Processor ?

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