Payments and technology is converging like never before, as traditional players mash up their capabilities and ideas with the new payments kids on the block. But they’re all looking for the same thing when it comes to merging the two concepts — a way to turn payments into commerce solutions that add value to members of the ecosystem.
To start the conversations, this means digging into how data and payments, retail, and security all converge to make payments a critical yet invisible part of the process. It means thinking outside the traditional payments box and thinking about how to leverage data in ways to drive commerce in a convenient, secure and frictionless manner.
That was the theme of the conversations that came from one of the discussions at Innovation Project 2015 two weeks ago when payments, commerce and retail executives came together to debate how they think payments and commerce are being innovated by data and digital-driven solutions.
“I think the big takeaway is that people are still trying to figure out all the new entrants — how to handle the data and to tie it all together for a good value proposition for both the consumer and the retailers,” Kim Fitzsimmons, U.S. Market President for Chase Merchant Services, said following the panel she was part of.
The panel seemed to agree.
From both a bank and merchant’s perspective, they concluded encouraging commerce isn’t just about buying and selling, driving the bottom line, or transaction volume. It’s about creating relationship between people and the things they are buying, where they’re choosing to put their money and how they’re interacting with the services that enable them to do so in a seamless manner. That means working together — across industries — in ways perhaps never thought of before.
“Historically, at the banks they never looked at it all together and that’s all changed. As payments become more ubiquitous, you have to look at both sides of the equation,” Fitzsimmons said. “So it is a matter of looking at it from the top down, having visibility and determining what the issuing side of the house is doing as well as the acquiring. And not just from the demand of where the product is going but also the economics.”
To keep up with the economics of the payments ecosystem as it develops into that ubiquitous system that takes into account the perspectives of merchants, the issuers and the consumers, the panel came to perhaps a controversial conclusion: Those leading the charge must embrace open systems to bring about shared rewards.
Interesting, wouldn’t you say?
This, they conclude, may mean having scalable, non-proprietary platforms that simplify payments innovation. Why, because innovation happens in cycles, they said, and creating a system that provides value to all parties involves taking a multi-platform approach that takes into account the needs of all stakeholders — the banks, the issuers, the consumers and the merchants.
Over the long term.
The panel also concluded that innovation in the payments industry today isn’t about what’s going to happen in the next three to five years, it’s about the next 20-30 years and therefore, what systems need to be brought up to speed to get us all there.
It’s about enabling speed, security and an invisible payments process in a way that creates a scalable platform for everyone to build from, regardless of which side of the industry they’re coming from. That’s the perspective Jan Estep, CEO of NACHA, shared following the panel discussions.
How does the payments industry mesh data, security and payments into one consumer-centric model that creates a more seamless process for both the banks and the merchants in a way that enables commerce? By working together, Estep said, and by adapting, and moving forward under one vision and one platform.
“Across the payments industry we see a lot of innovation in pockets — or in industries, or with certain players within a close-loop type of environment,” she said. “Those are all enablers, but only for a few parties. I think we’re still trying to figure out, ‘How do we make it easy for everybody?’ To some extent, that will take away competitive advantage if you say ‘make it easy’ for everybody. So it is one of understanding where we have roadblocks and where we need to change.”
Consumers want transactions to be easy and banks (and consumers) want it affordable and secure; merchants want the experience to be frictionless to encourage consumers to remain loyal and spend more. But not all merchants willingly share data with the banks and the networks, and vice versa, even when consumers seem to be willing to share with both.
So, who in the payments industry is going to break down the barriers preventing innovation from reaching its full potential?
That’s where the conversations need to be headed, the panel experts concluded. If there was one takeaway from Innovation Project 2015, it was that it’s going to take a willingness from those across the payments, retail, and technology sectors to cross industry lines to create comprehensive commerce solutions. And this will need to be done in a manner that’s secure and efficient for the consumer.
That’s where the concept of shared rewards comes back into play. No one side can do it alone. As we know, in payments, innovation isn’t a one-sided concept. Innovation happens when leaders from various sides of the payments spectrum come together to reimagine the value exchange between all parties at the intersection of retail, payments and data. And perhaps even mobile and social.
That’s where innovation — from payments to commerce — truly begins.