REVEALED: Omnichannel’s Best-Kept Secret

As MPD CEO Karen Webster pointed out at the start of the recent PYMNTS webinar, “Omnichannel Commerce’s Best Kept Secret,” the appeal of secrets is in trying to guess what they are.

It’s fun for people to speculate on separating myth from fact related to the formula for Coca-Cola; countless films have been made about folks trying to get their hands on the access code for the U.S. president’s “nuclear football” passcode; and — most recently — the world was teased about a “big secret” that NASA had discovered on Mars. (It of course turned out to be water, which is neat, but a lot people had no doubt been hoping it would be aliens.)

In the realm of omnichannel in the payments ecosystem, the opportunity exists for retailers to reinvent their experience using mobile, applications and technology. The secret, of course, is how to get it done — and profitably.

That’s the very secret that Webster and her two guests — Joe Aleardi, Director, North America, at IBM Commerce, and Joe Peterson, Payment Specialist, North America, at IBM — set out to uncover for their audience.

Unlike some truths that lose their appeal upon being revealed, what was uncovered in the discussion was not only worth knowing, but actionable.



According to Aleardi, the root of uncovering omnichannel commerce’s best-kept secret lies in retailers’ desire to execute it profitably by building loyalty in the last mile. That’s a “critical” component, he says.

“Easy and profitable are often two sides of difficult coin to balance,” Webster observes, given that retailers have to consider what needs to be done on the back end in order to deliver a successful customer experience.

Something that Aleardi has observed at IBM is retailers successfully navigating an internal transformation into “omnichannel-centric organizational structure” — both from a personnel/departmental point of view, and (just as importantly) from an IT infrastructure point of view.

Building single platforms that span the entire organization that help serve the customer best, regardless of the channel, effectively allows retailers to establish the seemingly (but not actually) contradictory notion of a “channel-less” omnichannel operation.

Sharing a slide indicating the growth in card-not-present transactions, both online and on devices in-store, Aleardi remarks on the “advent of acceptability” of mobile technologies (as well as others) that help retailers deliver to their customers a personalized experienced “that’s in context with who they are, what they’re attempting to do, and what they’ve done in the past.”

Those elements combined, he continues, “are really driving significant growth in card not-present-transactions.”

Having been working on omnichannel for close to a decade, retailers understand better than they once did that it is “not about any single step — it’s about the entire journey that the customer travels with your brand.”

Using a basis of single-brand, customer-facing capabilities within omnichannel, retailers are now moving toward areas like improving handling of returns and demand-replenishment forecasting to drive both top- and bottom-line growth.



Discussing another slide that includes the statistic that “20 percent of millennials would shop with a digital wallet via mobile device, even while making in-store purchases,” Aleardi notes that the world of commerce is becoming one where, regardless of where the consumer is during the shopping experience, they’re going to go to a device that is easiest for them to buy on.

“That creates a lot of complexity for retailers today,” he says.

Taking that statistic into account combined with another on the same slide — that “4 out of 5 customers dislike the checkout process” — it appears to Webster that what retail consumers are looking for is a “reinvented experience.”

Aleardi agrees. Customer preferences — causing, as they do, more and more retailers to second-guess the role of the POS system and accelerate the pace of deploying mobile technologies in stores — are “driving transformation of a big part of retail,” all the way to changing entire store layouts to incorporate a customer pick-up area.

Those efforts notwithstanding, Aleardi has observed that a number of retailers are still not delivering the omnichannel experience effectively for their bottom line — and, in some cases, not effectively for the customer experience.



Peterson steps in to address a slide showing that “only 16 percent of merchants feel they can be profitable today at delivering omnichannel solutions.” He recommends that retailers allow alternative payment types and wallets that are better enabled in both card-present and card-not-present environments, along with improved security, to “enable consumers to have a better ease of checkout.”

The next slide shows that “security and privacy” is the biggest concern (46 percent) for consumers at checkout, while “speed of checkout and complexity” is second at 23 percent.

With security being “at the forefront” for both the merchant and the consumer, Peterson advises IBM’s merchant clients to incorporate allowing payment types that customers prefer — such as ones like Apple Pay, which securely store credit card confirmation.

Overall, he lays out three strategic needs that retailers need to have on their road map moving forward: EMV readiness (especially now that the liability shift deadline has passed); an internal push for omnichannel capability; and protections against data breaches.

Aleardi remarks that those requirements speak to the need for retailers to equip themselves for the future. Even those who met the EMV deadline will have another hurdle to overcome in the next 12 months, and then another one a year after that, and on and on.

Flexibility in their infrastructure and processes, Aleardi comments, is essential for retailers that seek to be ready for even as-yet-unforeseen challenges.



Addressing a slide displaying the timeline of IBM’s omnichannel selling and fulfillment capabilities — in which payments sits centrally between “before purchase” and “after purchase” — Peterson states that what “really sets [IBM] apart” is its advanced reconciliation engine.

Here, he reveals (with a new slide) what he describes as one of “the best kept secrets” in omnichannel: The IBM Payments Gateway (IPG) — “a truly global solution,” Peterson says, that helps merchants accept, connect, secure and manage payments worldwide.

IPG was originally a strategic offering, but IBM found it best to bring the solution’s ability to connect into 70-plus countries and 170-plus payment types to all of its merchants and connections.

At a high level, IPG connects into the merchant processor’s statement. IBM creates a shadow HR account for each single order that will automatically call out to the processor if orders are not coming back on time (or at all).

The solution is “almost a checks and balances” system against the processor, says Peterson, in addition to saving the retailer both time (as sorting out the complicated processes of reconciliation would otherwise be done in-house) and money.

He notes that, through the implantation of IPG, IBM has been able to help its merchants understand — and sometimes reduce — their interchange rates, as well as improve conversion rates (using data on consumer-time-on-website and payment types presented in relation to shopping cart abandonment).

Aleardi adds that IPG is representative of IBM’s general principles in building commerce solutions that are “personalized” and “contextual” — and that goes for smaller merchants as well as large ones.

“What has really moved the needle,” remarks Aleardi, in the company’s ability to deliver omnichannel solutions that are SaaS and cloud,” as those functionalities allow IBM to “take a lot of the heavy lifting” out of its customers’ hands.

Moving the responsibilities of PCI compliance, P2P encryption and tokenizing data from in-house to a cloud-based third party such as IBM, which stores all related information in secure servers, adds Peterson, and allows merchants to “focus on selling goods.”



As the webinar winds down, Aleardi offers a summation of IBM’s perspective on omnichannel and its challenges involving the last mile:

“We are certainly engaged — and have been for quite some time — with many retailers, large and small,” he remarks. “We’ve seen a lot of the challenges they’re facing today and have helped many overcome…them.”

“It’s a complex environment,” concludes Aleardi, “one that takes very good planning and execution,” as well as a sound strategy, to ensure that not only are retailers delivering a great single-channel customer experience within omnichannel, but that they are doing it profitably and effectively.


To view the webinar in its entirety, click here or see below.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.