The ongoing coronavirus pandemic and resulting economic crisis are reshaping the way business is done — and the way we pay.
A recession is almost certainly taking shape.
Where consumers are pulling back, where firms across all verticals are seeing headwinds and declines in top and bottom lines — and could be tapping small business loans to stay afloat — there may be opportunity for independent software vendors (ISVs) and payments facilitators (PayFacs) to serve merchants’ changing needs.
“We are looking at significant economic challenges,” he told PYMNTS, “but the goal right now is on keeping the current customers happy … these ISVs and PayFacs need to be prepared to ride out the storm now, but also position themselves to be stronger in the future.”
Most immediately, he said, amid the deluge of eCommerce transactions and shuttering of brick-and-mortar locations, these service providers need to make sure they are helping merchants across all verticals embrace card-not-present (CNP) and direct-to-consumer (D2C) ordering capabilities.
Contactless payments are also becoming the norm even in brick-and-mortar commerce, and as consumers become hesitant to carry or handle cash, companies need processing partners who can help them do that — even across industries that are currently being decimated, such as travel, hospitality and restaurants.
Speed of payments is critical, but so is security, maintained Danner.
ISVs and developers are doubtless going to see more chargebacks as the economic toll of the recession deepens and as consumers push for refunds, a trend that is already evident in hospitality and airline verticals.
“We will also start to see, unfortunately, an increase in consumer fraud,” said Danner.
That increase will come as people try to take advantage of the chaos of the current situation.
He noted that cybersecurity companies around the globe are reporting an increase in phishing and social engineering scams, as well as counterfeit goods (such as masks and other items related to the battle against COVID-19, the disease caused by the coronavirus). He said PayFacs, in particular, have to be mindful of fraud risks and chargebacks, and many of them have been adding features into their offerings such as fraud tools for merchants.
“There’s an opportunity perspective to be the trusted advisor for many of these markets," he said of these forward-thinking PayFacs and ISVs — and chiefly, at this moment making sure that consumers are able to pay in the ways in which they want to pay.
To do all that and become a trusted advisor in the process, he said, PayFacs and ISVs can examine the data that can help them offer more value-added services to merchants that can ultimately grow their businesses once the dust settles. ISVs, for example, can help merchants, such as coffee houses or other food establishments, develop loyalty programs.
He pointed to the fact that studies have shown loyalty promotions can increase sales and increase the lifetime value of customers. Some studies, he said, have found that customers would shop more frequently with a merchant if loyalty programs were on offer.
Of course, gaining access to that data, and leveraging it, can be problematic for legacy developers who have been putting merchants on four, five or six different processors and platforms.
“It’s difficult to get consolidated data,” he said.
He noted that getting data from a single source accessible to the ISV through platforms (such as RS2’s) is an ideal strategy.
“Making data and payments easier to work together really does translate into more money,” he said. “As a development company, you won’t know what you can really offer the markets until you can see the whole picture of a business. The consolidated data offers a powerful way to control the destiny of those developers and how they can move forward.”