B2B Payments

An In-Store Code Twist To B2B Purchasing

In a clever twist on an age-old corporate purchasing dilemma, a merged channel company has worked with Chase Paymentech to allow employees who need to make last-minute supply purchases to do so using a corporate code.

The problem: Due to a major last-minute client presentation, employees need to quickly purchase additional color paper and staples. There’s no time to go through the normal paperwork with Purchasing so the employee bends the rules and drives to the local Walmart or Staples, pays for the supplies with a payment card and then expenses it. Ultimately, this costs the company money because it loses the benefit of corporate discounting associated with volume purchases, not to mention the fact that it throws off corporate financial analysis of how much is truly being spent for supplies.

This is the approach from POPcodes. When the emergency crops up, the employee reaches out to Purchasing and they process the purchase normally through an existing purchase order with a supplier, such as Staples. (Some companies could integrate this functionality into its intranet, allowing for this to be theoretically a 24-hour-7-day-a-week option.) Payment is handled through the standard invoice process. The twist is that the online system generates a code. The employee is given that code. The employee can then walk into any participating Chase Paymentech merchant, say that they have a POPcode and a key will bring up a new screen. Entering the code will allow it to be authenticated. The employee then takes the merchandise and the receipt.

But that’s not a typical receipt. It will display various B2B-friendly details, such as the department code being charged, who approved it at both the department and purchasing, how much is left on the purchase order and other specifics, in addition to the normal product and price details.

The company, however, stresses that Chase is not an official partner in the B2B system–which is purely a POPcodes effort. “POPcodes is currently only certified to deploy on Chase Paymentech platform in North America and there is no official partnership. Chase simply happens to be the first payment processor to certify POPcodes,” said POPcodes spokesperson Kate Nettenstrom. “By April, POPcodes hopes to have many more payment processors on board. We want to be clear that this is not an exclusive opportunity for one payment processor.”

The POP in POPcodes stands for Proof Of Purchase, said POPcode CEO Gregg Aamoth. (Note: Just what we need. More definitions for the POP acronym, beyond E-Commerce’s Point of Presence and in-store’s Point Of Purchase.) The system is in final beta now and is expected to be in final production by April, Aamoth said.

The B2B system is certified for Ingenico and Verifone POS systems and will be initially offered throughout North America. Given that two-thirds of North America (Canada and Mexico) is EMV-friendly and one-third is not, this meant that POPcodes had to create two different systems. Beyond all of the normal security-related differences, the EMV versus non-EMV presents a GUI challenge. EMV systems will be customer-facing, with the customer making the choices, whereas non-EMV systems will typically be associate-facing, with that store employee making the screen choices.

The cost issues are still being determined, Aamoth said. “We will charge on a per-action basis. If you process fewer than 100 actions per month, it’s free,” he said. “For 100-150 transactions, it will be $30/month.” Beyond that, when moving into the enterprise world, “it will be based on the number of locations and how much support we’ve providing,” although he’s expecting a cap of $10,000/month regardless of details.

Perhaps more interesting are the dollars on the other side of the transaction. Aamoth said his company’s arrangement with Chase Paymentech involves “no money changing hands” when it relates to transactions. “We’ve giving them our in-store software and we paid to get our application certified,” he said.

But the issue of whether Chase Paymentech will charge merchants—and how much and when—is still being decided. Initially, Aamoth said, Chase Paymentech’s people want to charge merchants more money if they want additional services, such as POPcodes. “We expect that they will charge retailers more to activate the software. We are in discussion with them on how much they will charge,” he said, adding that “our recommendation is well under $100/month.”

The challenge is that it’s difficult to get merchants to pay for a service—even if only a small fee is sought–that they’ve never used, that customers haven’t been asking for and that they might have never heard of. The merchant is not yet in a position to fairly assess the service’s value. In the same way that Visa chose to suspend any fees for its tokenization for at least a year, why not make the service free and get merchants to like it before trying to charge for it? Aamoth said that that is also being discussed.


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