Merchants, acquirers, processors, anti-fraud providers and others serving the card-not-present payments market met in Orlando, Fla. recently at the first annual CNP Expo. For our readers who were unable to attend the groundbreaking event, CardNotPresent.com will be offering glimpses of the important information covered in two-and-a-half days of panel discussions on a host of issues relevant to merchants that take card-not-present payments and the technology providers that serve them.
By D.J. Murphy, Editor-in-Chief
Mobile applications that enable consumers to shop at a retail location, but pay using their mobile device to avoid long lines at the register are gaining momentum. As smartphones and tablets increase penetration, some merchants are blending the online and offline shopping experiences so they don’t lose engagement with tech-savvy consumers who are using retail stores as a showcase to find the best online deals while they’re still in the store.
On the CNP Expo’s first day, Paul Tomasofsky, president of the Secure Remote Payment Council, moderated a panel that discussed existing and potential line-buster solutions, how businesses justify a higher CNP interchange rate for what could be card-present transactions and the value proposition delivered to consumers and merchants by mobile solutions that leverage mobile devices inside the physical retail environment.
In the last decade, as e-commerce has asserted itself, brick-and-mortar businesses have found themselves competing not only with others in their local area and in their category, but with online behemoths, according to Alex Keisner, head of strategy and business development for San Francisco-based mobile commerce and payments provider GoPago. Mobile, he says, enables them to adapt to a new competitive environment.
“One of the trends we’re seeing is around modernization and that recognition of the need to compete not only with the stores around them, but with everyone that’s online,” says Keisner. “Companies like Amazon and eBay have taken over, achieved economies of scale. And, the fact they can gather data about their customers really makes them powerful and makes it hard for brick-and-mortar retailers to compete. We try to provide these businesses the same benefits an Amazon or eBay already has because they are already online and see this information already.”
Keisner says the number of options and solutions available to brick-and-mortar merchants looking to undertake that process of modernization is extensive.
“In our space what keeps it interesting is nobody’s winning yet,” he notes. “The technology includes everything from call centers to fax systems to cloud-based mobile solutions like ours, to NFC and QR codes.”
But, for companies delivering solutions like this, how do they convince merchants that it will be worth the investment, especially considering the fact that, if the solution uses a CNP channel, as GoPago’s does by linking consumers’ credit cards to the app for payment, merchants will be paying a higher interchange rate (despite the fact that both the customer and merchant are present)? There are things providers can do to affect interchange in small ways, says Brian Krakower, CTO of San Diego-based Restaurant Revolution Technologies, but in the end, solution providers simply need to deliver value.
“It’s a question we get asked by every customer or potential customer,” says Krakower. “We scratch and claw and do everything we can to get the transaction rated as high as possible. But even with those methods we don’t do much to change the rate. Ultimately, this is an additional cost and it’s our burden to make sure we still prove a strong ROI even without [lower interchange].”
Krakower says restaurants that use RRT’s call-center-based ordering system benefit by customers ordering more frequently and more customers being able to get through so a restaurant’s takeout volume is increased.
For Keisner, the value of a solution like GoPago’s is giving small businesses the tools they need to compete, not only with other brick-and-mortar businesses, but also with larger e-commerce companies as the retail environment continues to evolve.
Stay tuned to CardNotPresent.com in the coming weeks as we present summaries and audio clips from the most exciting and relevant sessions at the 2012 CNP Expo. If you’re interested in being involved in next year’s event as a sponsor, exhibitor or attendee, contact Steve Casco at firstname.lastname@example.org.