The retail cost of money
Accepting money, cards and now even mobile payments now involves every part of the business, from marketing a new loyalty of gift card scheme, and human resources to train staff in new processes, to finance and IT to provide the integration to existing store and online sales and payment systems
The technology implementation examples and research in this annual Retail Technology 'Money Issue' special aim to offer a guide through the maze of the latest technologies and solutions available in the areas of electronic payment systems, such as chip and PIN and other transactional system components, as well as cash management systems for handling money efficiently, combating fraud and maintaining security.
With so much transactional technology development across multiple channels, we asked some of the IT suppliers in this space for their advice and predictions for retail payments in the coming year. Sandra Alzetta, Visa Europe head of innovation, said the physical exchange of payment instruments (cash or cheques) is gradually being replaced with the virtual exchange of payment data. “This progression from the physical to the virtual, and all the benefits it brings, is driven by the rapid evolution and increasing availability of payment technologies; in terms of infrastructure and transaction processing capability; on the checkout desks of retailers; and in the hands of consumers,” she said.
With the consistent growth of e-commerce, the advent of contactless payments and the approach of mobile near-field communication (NFC) services, Alzetta said these new technologies offer a chance to build a closer relationship with the customer than ever before. But she advised: “Whatever payment method a retailer chooses to offer must have the security, speed and ease-of-use that consumers take for granted in their payments. At the same time, it must maintain the security of the retailer’s own business and, ultimately, provide the right level of choice for the customer.”
Managing payment security
Increased payment choice has brought with it greater operational complexities at points of sale and an increased risk of fraud. This led Dan Starr, executive vice president and chief strategy officer at Optimal Payments, to predict that the future will see merchants getting out of the payment acceptance business and outsourcing the job to increasingly specialised payment service providers. He said: “They have so much else to worry about; they should be spending their limited resources on being better retailers to their customers, not on detecting fraud or blocking hackers, or dealing with the complex issues of processing payments.”
Dr Akif Khan, products and services of director fraud prevention specialist CyberSource, highlighted how the development of tokenisation solutions are allowing retailers to better manage payment information, removing the need for payment data to be stored on their systems and thereby helping to reduce the risk of data breaches. A Payment Card Industry Data Security Standard (PCI DSS) certified service provider generates payment tokens for the retailer, which can be substituted for primary account numbers.
Securing payments with tokens
This makes it easier for returning customers to log in quickly and select their preferred payment type and delivery address rather than having to fill in all their details every time they make a purchase. Though many consumers are still wary of retailers storing their payment card details, Khan said tokenisation and adequate communication could provide reassurance while providing a secure and prompt payment process. He added: “A consistent and secure payment process across all touchpoints is key to gaining consumer buy-in and confidence.”
Knowing where to invest in new payments technology may seem daunting. But the recently published World Payments Report 2011, compiled by Capgemini, The Royal Bank of Scotland (RBS) and European retail payments trade body Efma, offers some indicators. Globally, cards remain the preferred non-cash payment instrument during 2009 and 2010, with global transaction volumes up almost 10% and a market share of more than 40% in most markets. However the report also predicted that mobile payments will represent 15% of all cards transactions by 2013, and will overcome cards volumes within 10 years if growth continues at the same rate.