“Too many people start to have an imagination about 'nirvana' or the 'perfect transaction' – but that's a science experiment."
It's true, the idea of perfection in payments may be a bit far-fetched, but if there’s no actual “nirvana” then what is everyone striving for?
In a Fireside chat with MPD CEO Karen Webster at this year’s PYMNTS Innovation Project, Paul Galant, Verifone CEO, said it’s really about the day-to-day efforts of delivering efficiency, security and ubiquity.
Galant believes that payments and commerce are converging, and those who see it differently may be in for huge awakening. The payment infrastructures used by merchants, financial institutions and consumers today are by and large separate from those that provide value-adds like marketing, advertising, loyalty, etc., he explained.
In order to truly deliver on a bigger and better experience, Galant said those infrastructures need to come together, which underpins his notion that payments is an “and” business, not an “or” business.
TAKING UBIQUITY TO HEART
For Verifone, a company historically known as a hardware manufacturer, that means delivering on more than just a terminal – the improved consumer experience has to be there as well.
But as MPD CEO Karen Webster pointed out, major shifts are happening across the industry that are bringing changes to how everyone is looking at the physical point of sale. With a push toward mobile-driven interactions, from car-based payments at the gas station to mobile order ahead at Starbucks, Webster posed the question about the need for devices.
“If you can create an infrastructure that can do this and that, essentially managing both extremes, then I think you have a real business and you can monetize that,” he added, bringing things back to the idea of payments being an “and” business.
Since taking the helm at Verifone, Galant has made strides in transforming what was once a company solely focused on selling terminals into a profoundly different organization. With a terminal base of 29 million and the weight of processing half of the world’s payments on its shoulders, Verifone can’t afford to rely on the old terminal-focused approach.
Galant made that point clear when he emphasized, “we don't sell terminals, we deliver checkout experiences.”
But the transformation wasn’t always easy.
Galant explained that prior to his arrival Verifone grew by acquiring other hardware manufacturers but not actually integrating them, leaving him with the tough job of making some hard choices when it came to the 13 various platforms the company maintained at the time.
The decisions to end platforms, even those that may have been producing revenue and contribution margin, was what Galant described as painful but necessary because something had to give.
For Galant it wasn’t about having tons of different platforms, but instead creating a ubiquitous, scalable one where new ideas and concepts could be applied both efficiently and effectively.
“Unfortunately, I can’t invest in 13 different places when the bar keeps getting higher and higher and merchants want to pay less and less," he said.
Both Webster and Galant agreed that the key is finding that common denominator.
What Galant described as “a baseline, and that baseline has to serve the entire population." He looked at the example of a merchant deciding on payment methods to accept, which today ranges from digital wallets to physical cards, along with the staple of cash and even paper-based checks.
In this case, the merchant has to consider the fact that they must be able to serve the grandmother, as well as the millennial, and really everyone in between.
“If they devote all their energy to one segment, and let the rest of it fall away, that doesn't help them with the economics at all, it actually hurts them,” Galant noted.
MAKING THE OMNI PLAY
As consumers move their shopping behaviors and preferences across channels, merchants are compelled to follow. The concepts of omnicommerce and omnichannel have quickly transformed into industry buzzwords, but the real question is whether merchants are really getting what it all means.
When merchants today say “omnicommerce” what Galant says they really mean is that they don’t want to lose any more business to Amazon.
The ability for Amazon to know its consumers before they even recognize they are being known and use the history and data it collects to curate experiences bespoken to each individual and their interests is exactly what physical stores need to be doing, he explained.
“If a store can't recognize you and can't create an equally great experience, plus instant gratification and the social element, that business is going to continue to struggle,” Galant said.
Consumers today want it all – to be able to go to a store, use their mobile device, shop via a catalog or browse for items and online – but still always receive the same, seamless experience.
From the consumer’s standpoint, Galant explained that the desire is that there wouldn’t be a higher amount of friction on one channel versus the others, but also that consumers appreciate when what they have done in other channels is represented within the one they are currently engaging with.
“Right now when we talk about omnicommerce or omnichannel we are truly talking about interoperability,” he stated.
It’s easy to think of innovation as an inherently good and useful thing, but trying to spur innovation in the wrong places can have its downfalls.
In Galant’s opinion, any innovation that doesn’t have a business model is simply a waste of time. He even noted that part of Verifone’s problem in the past was that it was trying to do everything.
So where’s the line in the sand between doing too much and not doing enough?
"I think there's a lot of great innovation, I just can't do it all and make any kind of return,” he explained. “I have to be very careful, I think all of us do, about creating platforms that allow people to experiment at a low cost and scale at a relatively low cost – that’s the innovation I care most about.”
For Galant, Verifone reaching its potential to not only get payments right but also support solutions that can scale, is the type of thought that keeps him up at night.
“What I worry about is how do we live up to our potential,” he concluded.