The PYMNTS team caught up with experts in the payments field to ask them their views on industry trends, predictions for the coming year and what their ideal payments system looks like — and how far off that vision is.
Andy Freedman, Head of Marketing at Riskified, shared with the us the importance of fostering open and free-flowing communication across the industry, focusing on the improvement of the consumer experience and reducing false declines once and for all.
PYMNTS: WHAT WERE YOUR BIG TAKEAWAYS FROM 2015?
AF: The first is regardless of the channel, offline or online, fraud is real and it is here to stay. While EMV will certainly support some of the merchant pain points in the card present environment, fraudsters have always been active and they are not going away. What we see in the data is that fraud rates continue to escalate across vertical globalization of eCommerce, with cross-border growth only accelerating that need, and merchants are starting to really pay attention. We’ve done research on the topic of turning away good customers and found that the amount of false declines in the U.S. alone is about $118 billion and that’s a huge number of legitimate customers who are being declined at the point of sale, either in a store or through an online purchase. Correcting for that is really the biggest challenge that merchants face.
PYMNTS: WHAT DO YOU SEE AS BEING LARGER ISSUES OR THEMES LOOKING FORWARD TO 2016?
AF: I think what’s exciting about the opportunity is that the payments industry as a whole is going to be counted on for growth in ways it hasn’t before. In a lot of ways, payments is meant to be invisible, it’s meant to be something that lives behind the scenes and I think what will be new is that the payments industry as a whole, specifically security and fraud companies, will help unlock new growth opportunities and be counted on that by companies who are dealing with all sorts of competition. The other side is looking at reducing those false decline numbers as a way for growth. A lot of customers we meet with today that have high decline rates are being conservative, they don’t want to bear that hard cost of chargebacks so what they are doing is just saying “no” a lot. I think payments as an industry and the solution providers are going to be looked at to show that top line growth and help the payments teams be counted on for opening up new markets and reducing the amount of good customers who are being declined.
PYMNTS: WHAT WOULD AN IDEAL PAYMENTS SYSTEM LOOK LIKE? ARE WE HEADED IN THE RIGHT DIRECTION?
AF: The payments industry is counted on for authorizing and making sure there are funds attached to everything that comes through and I think it’s a pretty good job being done on that side, but the problem is that merchants bear the burden. The responsibility and liability is heavily weighted on the retailer, which causes the overall issues of bad customer experiences. But customers could be part of the solution. When you look at Amazon Prime, part of the benefit of member solutions is that you’re committing or buying into the service being provided but you also receive all of the benefits that come with that: guaranteed shipping, great product experience, free returns, etc. Customers are willing to pay for a better solution and having less friction put on them. I’m not advocating that customers should have to pay for a better payments solution, I think it’s about balance and every party needs to come to the table and own their components. The more that merchants and payments providers are talking openly about the challenges, it will start to address concerns. That’s the only way to make progress, is to lay out all the issues, have open conversations and figuring out what the right balance looks like.