Digital Payments

Visa’s CyberSource On The Digital Payments Evolution

The “online version of a payments terminal” was how the media portrayed Visa’s acquisition of CyberSource in 2010. Then, it was a very easy way to mentally place the online payments processor in what was at the time a nascent online payments ecosystem.

And very nascent it was.

At the turn of the 2010s, online commerce was roughly a tiny 4 percent of all retail sales, but growing at nearly a 15 percent annual clip. The acquisition, CyberSource Senior Vice President Andre Machicao told Karen Webster in a recent conversation, was an investment in the inevitable digitization of commerce, but more importantly, Visa’s commitment to being the catalyst for that transformation.

The acquisition also sent a signal to the rest of the payments ecosystem that digital commerce was “for real” and payments would play a key role in accelerating that evolution.  It’s easy to forget that, a decade ago, more than 96 percent of retail sales happened in a physical store.

“Visa knew, and merchants knew, that online was going to be relevant,” Machicao said. “The decision to acquire CyberSource was an investment in building value-added services around accepting cards and various forms of digital payments online.”

Ten years later, CyberSource and its role in the payments ecosystem has evolved — because, as Machicao put it, commerce itself has evolved.

“Now, as payments finds itself on the precipice of a new decade, and a powerful enabler of commerce across shopping channels and contexts, payments can no longer be thought of as a transaction to be processed, but as a tool to drive consumer engagement and top-line growth for merchants,” Machicao said.

The Digital Change Of The Commerce Tide (Foreseen And Not)

Reflecting on the last decade, Machicao said he and the CyberSource team did a pretty good job at anticipating how the digital commerce landscape would evolve and the pace at which it would move.

That said, there were a few surprises — the impact of mobile on accelerating digital commerce, and the merchant’s struggle to deliver a truly integrated and unified commerce experience.

A decade ago, he noted, most merchants were trying to “get online.” Then, the focus was on building independent eCommerce channels, managing them separately from their brick-and-mortar operations and often with separate acquirer relationships.

What mattered most was getting different shopping channels up and running.

As online shopping became more popular, consumers quickly grew frustrated by different experiences from the same merchant across those shopping channels. Consumers saw commerce as a single experience conducted across a variety of possible channels — stores, apps, websites, social networks and marketplaces.

Machicao said it became clear very quickly that the merchants who could meet those customer expectations across that diversity of shopping channels — not just within them — would win their hearts and their wallets.

Making Unified Commerce A Merchant And Consumer Win

Digital-first merchants, Machicao observed, have the edge and many have managed to deliver and scale a unified commerce opportunity across shopping channels and devices to the delight of their consumers. The CyberSource cloud-based platform gives digital-first merchants access to payments processing, as well as other value-added services like fraud and security, all easily accessible by application programming interfaces (APIs), and all able to connect to the physical store and the point of sale (POS) systems that support those transactions.

“A lot of emergent firms found it easy to ingest our APIs and create their own innovations from there, which included the physical POS,” he said. “And since Visa is already very much a part of face-to-face transactions, we realized we need to build on that and invest in expanding our channel capabilities everywhere.”

Integrating commerce experiences across the physical point of sale, Machicao noted, is complex, and a key driver of Visa’s recent acquisition of PayWorks. Its cloud-based solution for in-store payments processing is a natural complement to the CyberSource vision of making it easier for merchants to offer a unified commerce solution for their customers.

What’s Next

Over the last 10 years, Machicao told Webster, he and the CyberSource team have been laying the foundation for the digital commerce future that they bet a decade ago would define how commerce would be done. The next 10, he said, will be about using that foundation to innovate the next generation of commerce journeys.

The proliferation of channels and choices, Machicao said, means helping merchants think about payments as a strategic enabler to improving conversions — instead of a transaction to be processed. CyberSource has the tools and insights to share with merchants that can help them offer a more curated payments experience — surfacing the right payments method at the right time, in the right shopping channel to make the sale.

“What we saw a decade ago was that digital was not just transforming payments, but really commerce as a whole,” Machicao said, adding that CyberSource is now playing more of a central role in helping merchants improve sales conversion across all the channels consumers shop with them.

“Payments is no longer a discrete part of a linear transaction,” Machicao said, “but an integral part of the commerce and brand experience.”

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