As VeriFone looks out over the next decade in payments, it sees a world where terminals are as relevant as they are right now – with one big difference. Vin D’Agostino, VeriFone’s SVP of Global Commerce Enablement, tells MPD CEO Karen Webster that what’s different is what those terminals do. Sure, they enable payment acceptance, but that takes a back seat to a host of activities that help merchants sell more stuff in a world where plastic (still) and digital live side by side.
KW: So VeriFone is talking a lot about commerce, not just payments, and commerce enablement. Tell us what that means – what do you do, and how do you help clients?
VD: Commerce enablement is one of our three global lines of business, and I think we’ve set a simple goal – just help our clients drive new revenues, either by enabling them to acquire new customers, or sell more products to existing customers.
To do this, we try to leverage our global franchise. Today, we have more than 20 million VeriFone devices installed in over 150 countries. That’s basically our terminal business. While most people today see those as special purpose devices built just to accept credit and debit cards, they’re actually pretty sophisticated computers. More and more, these devices are connected back to us, effectively to our payments as a service business. It’s really our clients who are driving this connectively back to us because they’re asking us for more help in dealing with the complexity of taking payments today.
In commerce enablement, we’re leveraging these connected devices by making them do more for our clients than just securely accepting payments. We’re trying to help them drive additional revenues and make their customers’ experience more meaningful, before, during, and after a transaction.
KW: So what are some of the use cases or examples of where you’re enabling commerce today?
VD: One important use case is in the petroleum convenience store vertical. In the U.S., there are somewhere between 120-150,000 convenience stores, and about 80 percent of those actually sell gas. Today, VeriFone plays a significant role in helping our clients in this industry make more money by using our in-pump technology, what you actually pay with. We are both entertaining customers at the pump as well as advertising products in the convenience stores, which is where a lot of the money is made. What we’re effectively doing is leveraging our technology to help move consumers from the gas pump into the store.
Once we get the consumer inside, we help the merchant sell more to that consumer with our in-store solutions. We do this by suggested selling, making them offers in real-time at the POS. So, for example, if a customer buys a Pepsi, we might offer a discount on a bag of Frito Lays. What we’re really doing is enabling our clients to make a lot more money.
For example, we have one client called Parkers, a small convenience store chain in Georgia and South Carolina with about 33 locations. They’re using our in-store solutions to deliver offers and digital coupons to consumers in real-time at the POS. They’re also providing sales associates with scripts on their screen to support the offers being made and close the sale. When they installed this, Parkers saw a 5 percent increase in sales, which is a significant increase for a convenience store. And it doesn’t stop at small stores – this technology and result has led a lot of the leading fuel manufacturers in the world to sign contracts with Verifone to buy these solutions and deploy them across their franchise.
KW: So what does that mean when you say you leverage your connected device? Beyond payment, what are you enabling?
Another example would be our taxi business. We have digital screens in thousands of taxis in major markets in the US and Europe – these screens are part of our payment system, but they also sit in front of passengers in cabs and offer entertainment and targeted promotions and brand messages. We have a captive audience, with the average cab ride lasting 15-20 minutes, so we can do a pretty good job of curating content.
We’re experimenting now with closing the loop on marketing, finding out if we can target a consumer in a taxi with an offer and prove that that offer results in an action by linking that person and the payment transaction in that cab to the advertisers’ POS.
Those are two ways we are enabling commerce, but more broadly, we’re thinking about these as applications on a platform. We’re building this platform to expand beyond these two merchant verticals, and beyond this country to other areas of the globe.
KW: So you guys made a big splash around Apple Pay, and your stock got a nice boost as a result of you being part of that mobile payments scheme. Tell us a bit more about how that fits into this whole commerce enablement play of VeriFone’s.
VD: Sure. Today, we have millions of VeriFone terminals in the field that have NFC capabilities in them, so we were excited to partner with Apple in enabling acceptance of Apple Pay. But it’s still the early days for Apple Pay, and honestly, for most mobile payment solutions. But the ability of this powerful iPhone 6 to interact with millions of terminals around the world opens up a whole bunch of potential for shopping experiences and fiscal brick and mortar that we can facilitate between our merchants and their consumers. I’m excited about the opportunities that will come down the road for our commerce enablement business, and the opportunities it will unlock for our clients to engage their consumers in more meaningful ways.
KW: Do the merchants have to do anything special to accept Apple Pay, or is anyone with an existing VeriFone terminal that’s NFC-enabled able to process that payment on day one?
VD: If the NFC capability is enabled in the terminal, they can process that payment on day one.
KW: What is the role of security on all of the things that you’re focused on? Obviously there’s the EMV compliance aspect, but as we’ve seen, there have been a number of other vulnerabilities around POS transacting that have gotten in the way of safely transacting with a retailer. What’s your perspective on this and what are you doing to help merchants keep their environment secure?
VD: Sadly, the payment system is always going to be under attack by criminals. That will never change, regardless of how commerce evolves. But at VeriFone, security is in our DNA – it’s something that we’re continuously working with clients and partners on to address their concerns and to improve our security offerings.
As we look forward, the reality is that implementing effective, multi-layered security solutions has just become very hard, and EMV, encryption, and tokenization just make payments more complex than it’s ever been. Our merchants don’t have the bandwidth or appetite to manage that kind of complexity while trying to do their day jobs. So we’re working with merchants and ecosystem acquirers, processors and gateway providers to try to chip more of the burden away from merchants. We’re doing that by delivering security-related updates and software and services directly to clients, and that’s largely why a lot of these devices now connect back to VeriFone and to our cloud.
Once they are connected to us, we can actually help merchants do more than just stay safe. We can protect cardholder data better but also help them leverage the investment they made by engaging their customers more meaningfully and selling more things.
We’re not going to stop there as we evolve our commerce business. We’re thinking about new layers of security, so when merchants adopt more technologies like NFC wallets or BLE capabilities, those adoptions don’t result in increase exposure to cyber criminals.
KW: We have consumers running around with devices connected to the internet, and there’s always been this thinking that hardware will be subordinate to software because connected devices will evolve and it won’t matter what they are as long as there is connectivity to the cloud. Thinking about this at the POS, does it worry you that the POS device that’s at a fixed location today could become irrelevant over the next several years or decade?
VD: Payments in an interesting business, and adoption of new technologies in payments historically just take a long time. When I look forward a decade, I still see a pretty vibrant terminal business with devices connected, doing much more than accepting payments but accepting payments at physical points of sale. I still see people using plastic cards, even as payments move to these powerful devices like iPhone 6. There’s still a pretty clear role for a terminal, looking at how Apple has leveraged NFC. Even beyond that, our intent is to leverage these sophisticated, powerful computer terminals connected to the cloud to do much more. Given the nature of what they do, there still good be roles for these devices.
I feel confident that with capabilities of a company like VeriFone, with the innovation and passion for the payments space that we have, we can play an important role in the digital world of tomorrow.
KW: So you’ve been with VeriFone for about 9 months after a very long career at JP Morgan Chase. What’s the biggest difference about being in a company that’s all about technology versus one that’s on the services and issuing side?
VD: I would actually say that the technology part of it is the consistent part. Payments is a wonderful industry, and it lends itself so well to digital that no matter which side you’re on, technology is at its core. I’d say the thing that VeriFone has enabled me to do is spend much more time on the merchant side of the business, which is a part of the business that I really love. It’s a part that I think deals with the more underserved part of the payments system. Historically, I think the payments game and innovation has really worked well for the consumer side, and slower to help merchants especially in brick and mortar stores. I’m most excited about helping that client base in this evolving world of new technology.
Senior Vice President of Global Commerce Enablement at VeriFone
As the Senior Vice President of Global Commerce Enablement, Mr. D’Agostino is responsible for drafting VeriFone’s “next chapter” strategy; altering the company’s business model through partnerships around the world, and managing select initiatives as they relate to enabling global commerce. Prior to joining VeriFone, Mr. D’Agostino led the Payment Strategy for JP Morgan Chase since 1985. In this role, he was responsible for enterprise strategy, corporate development activities and led the Payment Steering Committee. During his time at JP Morgan Chase, Mr. D’Agostino led the development of the firm’s business strategy at LabMorgan, where he was responsible for the incubation and formation of a real-time e-payment platform, evaluating payment investments and providing payment domain expertise. Beyond these roles, he has held various leadership positions in general business and operations management in the securities and payments industry. Throughout his career, Mr. D’Agostino has held various board positions; Chairman of clearXchange, Early Warning Services and Austrapay; Square advisor; Advisory Board of SVPCo; MasterCard Debit Advisory Board; BITS Advisory Board and Visa’s International Advisory Board. Mr. D’Agostino holds a Bachelor of Science and MBA in Finance from St. John’s University.
Listen to the full podcast here.