M-commerce. As smartphones and tablets take over our lives brick-and-mortar stores and e-commerce sites are gearing up for the upcoming surge in shoppers to provide the ‘omni channel’ experience. Today shoppers use their smartphone and tablet devices to research their purchases, read reviews and ask about items others have purchased on social networking sites. This holiday season will see a rise in spending over previous years and mobile commerce alone is expected to rise to $17 Trillion by 2017. So what are retailers doing to upgrade their customers experience? One avenue is mobile point of sale that let’s a company extend it’s sales force with global reach. Tablets are mainly used, although smartphones will work as well, and access to the company’s entire inventory can be accessed anywhere on the planet. To close the sale, electronic payments can be processed at the point of sale with a credit card swipe reader. For larger companies with a local presence, new services are allowing that omni channel shopping experience with in store pickups, returns and exchanges.
Walmart for example now ships 10 percent of its orders from the store to the door. In store pickup is big this holiday season as well. Walmart and Target are set to facilitate in store pickups for e-commerce shoppers allowing them to bypass long checkout lines and take advantage of last minute sales. Much of this is in response to e-commerce giant Amazon. Amazon has many distribution centers but even with those, they can only ship in advance of Christmas. In store pickup can facilitate Christmas eve purchases that online e-commerce purchases cannot.
Much has to be done for smaller merchants to rise to that level of delivery. Software is needed to combine in store inventory with that of online inventory available. Stores also need equipment and space to give packing employees room to work orders. Sales staff need training to help shoppers place orders and even merchandising is typically brought in house where brick and mortar stores and e-commerce buying has been separate.
Technology can be scary, so can change. When you combine the two most people run. Technology can be extremely helpful in growing your business. From Omni Commerce merchant accounts, where you can combine all your processing into one merchant account, to social media marketing where you can reach a larger audience, and even expanding to online sales without a website. Having the right team to help you navigate and keep you up to date on all these new trends is crucial. Here are some tips to help you learn these new techniques and stay ahead to the trend.
Be Proactive, Notify Customers of Issues
Streaming data can be analyzed from multiple sources in real-time, to enable proactive customer service. This could include data from the website, such as a customer’s clicks, as well as mobile app clicks and shipment information. Specialized tools called complex event processing systems are often used to correlate all the data in real-time, analyze it based on the rules defined in the tool and take actions to notify the customer, another application, or someone internal to the business. Retailers can use these systems to reduce call volumes and resolve issues resulting in happier shoppers and higher revenue.
Create Service-level Targets
For the retailer’s customer service to be stellar, targets need to be defined for all key operations such as wait times, same customer calling within a specific period of time and time for one call. These targets can also define service level agreements, where appropriate. These targets should be linked with automated alerts that get triggered when they are not met and used to notify the appropriate staff to resolve. This will help maintain the desired service levels. Most customer service solutions, have a feature to create automated alerts, though not every retailer enables this feature. It is not that difficult if a step-by-step approach is used: (1) Define the appropriate targets and (2) create alerts to resolve the issues quickly.
360 Degree View of Customers
The concept of obtaining visibility to all the customer interactions and taking action based on that has been around for several years, but still it has not been widely adopted. The goal is not only to align customer interactions in different systems like campaigns, recommendations and social networks, but also to correlate this data to determine the next best action to serve the customer. If a retailer knows these activities about a customer, the benefits such as product recommendations are huge. For small retailers, this can be accomplished by first integrating the different systems in their environment and gradually building the correlations to get a full view of the customer.
Empower Reps to Resolve Issues
The customer should not be transferred from one rep to the next to resolve the issue. The reps need to be empowered to resolve the issue. This typically requires providing access to the reps to different parts of the system. The reps need to have the power to refund money up to a certain limit, give away free products or services or issue a one-time savings, such as free shipping or 25 percent off on the next order.
Enhanced Search
Customer service representatives usually search a customer’s history before working on the issue. In most cases, the search is limited to past interactions with service reps. It is important however, to search through all customer communication, including audio files for phone calls, chat interactions and any email communications. Without this enhanced search, the reps are getting an incomplete view of the issue, leaving the customer frustrated. Speech recognition tools enable voice files to be searched or they can be tagged with the relevant keywords manually when the rep is working on the issue over the phone. Software solutions are available for searching through audio files and some come bundled with customer-relationship and ticketing solutions.
Facilitate Feedback
Great customer service can only be improved if it incorporates improvements based on shopper feedback. It is therefore important to make it as easy as possible to gather feedback positive and negative from customers and visitors. If a retailer uses a support ticket system, then the customer should be able to provide feedback on the ticket, just like they would review a product after purchase.
Improve Speed of Response
Most of us have heard a customer service representative say that his systems are running slow, resulting in increased wait time. If this problem is so common, why are retailers not taking action to fix it? It requires an investment for sure. But the money saved by serving more customers in the same amount of time or increased revenue because the customers get answers faster, could make it worthwhile. The easiest technical option to improve the speed of response is to move data that is accessed most frequently, such as customer profile information, product catalog and return policies into an in-memory system to reduce the data access time. Additionally, if a rep has to assemble information from multiple systems (i.e., billing, fulfillment, order data) before answering a customer’s question, consider assembling and loading that information into the in-memory system to make processing of queries faster.
Keep Reps Aware of Updates
Retailers should always ensure that customer service personnel knows about important changes to the business, such as site design updates, new features, new products, and new campaigns, as well as temporary issues, such as shipping delays. The reps need to see the release notes and understand what is being changed in the environment before they start receiving questions from shoppers.
Monitor Social Networks
A negative post on a social network can do serious damage to a retailer’s brand. Consumers know that. Hence customer service teams cannot ignore social networks. They must maintain a live feed dashboard that shows the sentiments on different social networks and what is trending. Based on this, action needs to be taken. Retailers can track this using sentiment analysis that is available in several products.
Up-to-date Knowledge Base
Many retailers track customer queries by creating tickets. These tickets are sometimes handled manually bad, sometimes in an Excel spreadsheet still bad and sometimes in an online ticketing system good. The objective is not only to resolve the customer issue, but also to avoid spending time responding to the same issue later. This can be achieved if the resolutions are updated in the online ticketing system and made available to the customer in a knowledge base. Customers scan search for the issue and if they do not find the resolution they can contact customer service.
When you are first setting up a retail or an eCommerce endeavor, few decisions will be of as much importance as the payment provider that you choose. Your payment provider will handle each and every card transaction your online company makes, and if it doesn’t function properly, or if it has a lot of hidden fees, such as old legacy systems with long term contracts, you can be setting your business up to fail before you ever get started.
So, we are going to explain to you what you should be looking for when you reach this crucial decision in the setup phase of your business, and we will help you find a payment provider that meets your needs perfectly and sets you up to succeed in the business world.
As a general rule of thumb, there are three main factors that you really need to consider when you go to choose who you will be working with: The people involved in the transaction, the fees associated with each transaction, and how the transaction is handled behind the scenes. There are some smaller tidbits that can make a specific provider a better or worse choice, but those three factors will allow you to narrow your search down to a select few of top competitors that will truly help your company succeed.
The Parties Involved
Besides your bank and the customer’s bank, there are three different factors that go into every single one of your transactions, and a payment provider works with all three of them. There’s you, your customer, and the technology acting as a bridge between the two of you. We’ll go into more detail about all that, now.
The Customer
With this part of the transaction, we are really talking about the “issuing bank”. That’s your customer’s bank, and they handle lending the customer the money to make a purchase on your site, and they issue the card that the customer uses to make that purchase. This is your customer’s main form of interaction with the transaction process, and it’s one of the most important factors since it’s what starts the transaction in the first place. However, you have no control over this factor, and you can simply ensure that the technology, which we’ll talk about soon, makes their part of the transaction as smooth as possible.
The Merchant
This is you and your part in the transaction. You function as the merchant that the customer is engaging with, and in order to do that, you need a merchant bank to partner with and work as your company’s bank. A merchant bank functions differently than the bank you use in your day to day life. Instead of issuing you funds in advance for credit purchases and managing your checking and savings accounts, a merchant bank takes in your customers’ payments for you, and then puts those payments into a special merchant account that is a lot like a business’s checking account. Without a merchant bank, you won’t be able to succeed in the long-term with eCommerce.
The Technology Solution
Your technology, and the company handling it, is what makes a transaction possible in the first place, and there are two parts to this imperative factor: The payment processor and the payment gateway.
Processor
The payment processor is what actually handles the transaction. It moves the money between the different parties and delivers it to the banks and accounts involved. If your processor is subpar, your customer’s transaction experience will be, too. You need an up-to-date payment processor that functions smoothly and without any hassle placed on you or your customer to ensure that each customer enjoys a seamless transaction.
Gateway
The payment gateway is essentially what sends the transaction information to the payment processor. It links to your site’s shopping cart feature, and when a customer buys something, it connects to the payment processor and begins the transaction. In order to ensure that your transactions are smooth and effortless, this technological asset needs to be competent and able to easily satisfy your customers without being apparent.
How the Transaction Process Happens
The transaction process is fairly complicated, but it all takes place in a matter of seconds. In fact, it’s usually seemingly instantaneous.
Once a purchase is made, the payment gateway encrypts the transaction data to protect your customer and your business, and then it asks the customer’s bank if it will advance the funds for the customer’s purchase. If yes, the payment will be sent to your merchant account, and if not, the transaction will be denied and ended until a resolution can be found.
Once that step is completed, the funds typically end up being accessible by you the second your merchant bank acquires them and places them in your account, but you may be forced to keep a certain amount in the account to make sure you can cover any returns that pop up.
This part is not instantaneous. It can take a couple days to complete this part of the process.
Transaction Fees
This is easily the factor that you’ll want to pay attention to the most, because a lot of merchant service providers are downright misleading when they quote your rates, and you need to get a firm understanding of how a company sets up its fees to know what to actually expect from your bill.
Most often, companies will quote something like 1.8% rates to interest you and appeal to your more frugal side, but then they’ll apply all sorts of hidden fees that raise that rate as high as 11% without notifying you properly. As you can imagine, that can make your bill a bit more than what you thought it would be.
There are three rate models that are most often used:
Flat-Rate
You’re given a specific amount to pay, and whether that covers your total fees or not, that’s what you pay. You could be overpaying tremendously if you accept a quite a few low cost cards vs. the higher cost cards. The processor is banking on your acceptance of these lower cards to ensure all costs are covered.
Interchange Plus Pricing
This takes the interchange fee you pay and adds a small fixed rate on top of it. It’s not as consistent as a flat-rate fee because of the sheer amount of interchange fees out there and the number of different credit cards with all of the various reward and incentive programs.
Tiered Pricing
This is when the provider creates a few tiers of fees and charges you based on the tier your fees are in rather than each individual fee. The only bad thing about this is that the provider decides which fees go into which tier.
Other Important Things to Consider
Does your processor provide Data Security/PCI protection? What about financial breach protection, in the event you are breached?
Any business or other entity that stores, processes or transmits cardholder data must ensure that their processes meet the Payment Card Industry / Data Security Standard (PCI/DSS). Failure to do so can result in heavy fines being levied.
Understanding PCI/DSS
The PCI/DSS is a global standard defining acceptable practice for any entity involved in the storage, transmission or processing of cardholder data.
In recognition of the sensitive, confidential and valuable nature of this data the standard imposes strict regulations which must be met in full. The full requirements are detailed but are covered by 12 broad requirements. These are grouped into 6 broad control objectives as follows:
1. Build and Maintain a Secure Network and Systems – Install and maintain a firewall configuration to protect data – Do not use vendor-supplied defaults for system passwords and other security parameters
2. Protect Cardholder Data – Protect stored data (use encryption) – Encrypt transmission of cardholder data and sensitive information across public networks
3. Maintain a Vulnerability Management Program – Use and regularly update anti-virus software – Develop and maintain secure systems and applications
4. Implement Strong Access Control Measures -Restrict access to data by business need-to-know -Assign a unique ID to each person with computer access -Restrict physical access to cardholder data
5. Regularly Monitor and Test Networks -Track and monitor all access to network resources and cardholder data -Regularly test security systems and processes
6. Maintain an Information Security Policy -Maintain a policy that addresses Information Security
Any entity handling card transactions must meet the standard and be able to demonstrate (certify) that it does so. The level of certification is flexible and depends on how transactions are processed and in what volume.
A Summary of Benefits
Achieving full compliance with PCI/DSS standards is more than an obligation. It delivers genuine benefits to businesses:
– Lessen the risk of fraudulent transactions
– Prevent security breaches
-Lessen the impact should a breach occur
– Reduce your business’ exposure to risk and liability
– Provide peace of mind for your customers
– Avoid the negative PR associated with data loss
Why are These Requirements in Place?
Card transactions have grown enormously in recent years as cards become the number 1 preferred form of payment. Since no physical money is handled or exchanged as part of these transactions they are dependent on the transfer of data.
That data therefore becomes sensitive and valuable and must be protected. Failure to protect this data can lead to fraud and theft. These crimes often impact both the card holder and the merchant directly. They can also damage or even destroy the reputation of businesses or organizations involved in hacks or data breaches.
More widely card fraud has the long-term detrimental effect of eroding consumer confidence and trust – both in the individual companies affected and in the card payment industry more widely.
Millions of consumers and organizations worldwide are choosing to pay by card. And millions of businesses, professionals, traders and organizations are accepting and handling these payments. Instead of allowing an ad-hoc approach where each business sets its own level of security the PCI / DSS was imposed. This ensures a uniformly high level of data security throughout the worldwide card payment industry.
Keep your Data Secure – Don’t get caught without PCI Data Breach Protection
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Why us? National Transaction Corp (NTC) is a leading, Florida based, merchant account provider proudly supporting clients in both the US and Canada. With over 23 years of experience in the electronic payment environment, dedicated 24/7 live in-house customer and ISO/Agent support, On Site Technology teams, competitive compensation plans, multiple banks and processors to choose from, and flexible merchant pricing options, we have what it takes to help you build long term residual portfolios.
Even before the Coronavirus pandemic, the world of payment acceptance was rapidly changing. Since the pandemic, businesses were sent into a tailspin, trying to adjust. Our ability to underwrite Omni-Commerce accounts, saved many of our ISO and Agent Partners from having to start over when their customers converted to E-commerce based solutions.
Specializing in High Risk Travel, and partnered with one of the largest travel associations, we have serviced thousands of travel merchant accounts. We know how to navigate high risk and large volume merchants through underwriting challenges with huge success. Most of the times, we can even prevent or eliminate the need for reserves, keeping more cash flow in the hands of your merchants.
Because we want you to succeed, we have a dedicated team to help assist you with the sales process if needed. We will be available to you should you need us.
For financial institutions of all sizes, real-time transfers are likely to be a competitive necessity. But small banks must work out how to balance operational headaches with potential advantages.
It has been generally acknowledged that real-time payments can provide some significant benefits to financial institutions. But for smaller FIs, they come with some very real challenges.
Unlike the case with the current standard for automated clearing house daily payment fulfillment, supporting real-time or near real-time payments requires a true 24x7x365 environment. In addition, companies need to have the appropriate reserves on hand and the necessary staff to support real-time payments monitoring and administration.
It is important for smaller FIs to understand the true requirements, costs, and solutions associated with real-time payments adoption. Additionally, they need to know what is available now for real-time payments, and what could be coming down the road.
The Landscape
Today, real-time payment networks are being deployed around the globe. These networks allow financial transfers to occur in near real time, permitting a recipient to have access to funds transferred by a remitter within seconds of transfer initiation.
An important aspect of this process is that the recipient will have unrestricted access to transferred funds. What this means is that after a remitter has initiated a funds transfer, possession of those funds is controlled completely by the recipient. In other words, the remitter cannot recall them. What’s more, settlement of the whole transfer operation is immediate.
This capability contrasts sharply with traditional settlement methods, which delay settlement completion for hours or even days after a transfer.
This is a model typically followed by most funds-transfer operations. For instance, payments via checks or most wallet based payment networks are settled via the ACH network. Historically, ACH settlement files are swapped among FIs on a nightly basis. Until this occurs and the involved banks or credit unions have adjusted their internal balances to account for ACH transactions, transferred funds cannot be used by recipients without restriction.
The main reason recipients can’t fully take possession of the funds is that, until those nightly settlements have occurred, remitters can implicitly cancel the transfers. A remitter could, for example, write a check to a recipient and then simply withdraw all funds from the source account. Thus, the nightly settlement for the associated transfer will fail because there are no funds available to support it.
This basic remitter cancellation feature is part of many funds-transfer approaches that cause delays in settlement for a period of time. There have been some attempts to shorten the delays. For example, NACHA is offering same day settlement, permitting ACH settlement to occur on the same day as the transfer initiation. NACHA has also proposed an additional daily settlement window to allow multiple ACH settlement operations to occur each day.
However, despite these efforts, there is still a delay that could possibly result in interrupted funds transfers.
The RTP Network
Until recently, the only “true” real-time funds-transfer network in the United States was the Real Time Payments (RTP) network. Created and operated by The Clearing House Payments Co., which is owned by most of the country’s largest banks, this solution provides customers of member institutions access to RTP services. These include support for real-time transfers and payments with immediate settlement of all transfer operations.
Rather than directly using ACH settlement, RTP member banks instead settle among themselves using a common general ledger. This ledger is, in turn, supported by a common reserve account maintained by the Federal Reserve, to which all member banks contribute. Its members are required to maintain minimum reserve levels. If these reserve levels fall below a certain amount, additional funds must be deposited.
Since most RTP member banks tend to have large numbers of deposit holders, a sizable number of U.S. customer banking accounts can participate in the real-time payment capabilities it offers.
However, there is a significant number of accounts associated with smaller FIs across the nation that are not affiliated with RTP. For these customers, access to real-time payments may not come as easily. While RTP does offer real-time payment services to smaller FIs that partner with one of its larger member banks or authorized portal organizations, its outreach efforts have been marginally successful at best.
Unsurprisingly, many smaller FIs have reservations about joining a network operated by their larger banking competitors. Though RTP has offered assurances to smaller FIs to further entice them to join, many continue to be reluctant to do so.
FedNow
Recognizing the need to extend real-time payment services to all of the nation’s FIs regardless of size, the Federal Reserve last year announced the creation of its FedNow network. Initial estimates by the Federal Reserve suggest the network will be available by 2023 or 2024, though some industry experts have been skeptical of this timeframe.
The FedNow announcement was greeted enthusiastically by most smaller FIs, as the Federal Reserve is generally considered to be more of an “honest broker” or impartial operator of the payments network as compared to a private company or group.
This helped alleviate the concern that smaller FIs would be disadvantaged if they allied with RTP. However, though the news was positively received, some smaller FIs were disappointed with the four-to-five-year projected lead time before FedNow would be available. As a related correlation, RTP announced an upsurge in interest from smaller FIs following the Fed’s announcement.
Although FedNow seems to provide a promising path forward for smaller FIs, banks and credit unions with fewer resources will be challenged to take advantage of the services provided by the solution.
One of the key problems is the issue of reserves. All FedNow settlement will be real-time gross settlement (RTGS), not net settlement. This means that every single transaction will be immediately and irrevocably settled by FedNow.
This is a stricter process than net settlement, which permits a financial institution to be deficient in required reserves for individual transactions as long as proper reserves are available at the end of a specified settlement window.
Thus, each FedNow participant must monitor its reserve level on a constant, round-the-clock basis to ensure reserves are adequately maintained at all times. If an FI does not have the reserves, the FedNow platform will automatically fail the attempted transaction.
For those FIs not currently required to maintain reserve accounts with the Federal Reserve due to their size, there is also an additional consideration. For these smaller FIs, maintaining a reserve account to support RTGS would be a new operational obligation with additional costs to acquire and commit the necessary funds to cover the new reserve requirements.
Staffing may also be a major issue. Maintaining the staff to cover both normal banking hours as well as the additional 24x7x365 operations will present an increase in workforce and attendant training.
To fully accommodate the FedNow processing demands, these institutions must not only maintain 24x7x365 monitoring staff, they must also have the authority to refresh FedNow reserves if or when those amounts drop below certain levels.
Additionally, there are service expectations to consider with the extended hours. For example, does 24x7x365 operations mean that customer support will also be extended for related issues? FIs will need to decide how they will handle this from both a staffing and training angle.
Anticipating that this would likely be a burden for smaller banks and credit unions, the Federal Reserve is planning to allow participating FedNow institutions to designate service providers that can act on their behalf. These third parties will be allowed to submit or receive payment instructions as well as settle accounts of correspondent institutions.
FedNow regulators have not issued any rules or requirements governing the types of organizations that would qualify to be service providers and the type of oversight that they would be subject to by the Federal Reserve. However, these guidelines will presumably be updated as the availability date for FedNow approaches. Regardless of the regulations ultimately issued, smaller FIs that choose to outsource their FedNow operations will also incur the additional fees associated with it.
Another key concern with FedNow is its proposed interoperability with other systems, like the RTP network. While the Federal Reserve has confirmed this is a high priority for the network, it has also admitted to its complexity and that it may be difficult to have this functionality available during FedNow’s initial release.
In addition, though the Fed has suggested it is open to exploring solutions for true interoperability between FedNow and other payment networks, The Clearing House has expressed its intention to continue expanding RTP to minimize the need for FIs to sign up for FedNow. Smaller FIs will need to keep this interoperability conflict in mind as they consider their long-term real-time payments strategies.
Do They Need FedNow?
Ultimately, each community bank or credit union will need to decide if FedNow makes sense for its institution.
The Federal Reserve has indicated that FedNow participants will each be assessed a portion of the network’s overall operating costs so it can run as a financially self-sustaining platform. Therefore, regardless of the other FedNow issues that smaller FIs must address, there will be additional costs to offer FedNow.
For some FIs, these additional costs could potentially price them out of the network, especially if they have current services that may help provide a semblance of real-time payment capabilities. For example, some FIs currently offer same-day ACH services as their “real-time payments solution,” with the expectation that account holders will be satisfied with unrestricted access to funds if they can be available on the same day as payment initiation.
What’s more, this service could become an even more compelling option after NACHA adds the additional settlement window to its daily processing. Some smaller FIs may determine that “reasonably fast payments,” while not truly real time, are good enough.
It is easy to see how smaller FIs that position themselves as service leaders or innovators may view FedNow services as a marketing advantage, one that distinguishes them in their local markets. However, it is also just as likely that the more conservative FIs may only embrace FedNow if their customers or members demand the service.
The Future
Many of the challenges associated with FedNow are still conjectural. However, it does seem safe to assume that the Federal Reserve is monitoring issues that could diminish its capabilities—or attractiveness—for those FIs that may wish to access FedNow services.
For example, the after-hours liquidity to support RTGS has been suggested as a possible stumbling block for smaller FIs. This could be addressed in a number of ways. One idea would be to use existing reserve accounts as sources to replenish FedNow reserve accounts.
The Federal Reserve has indicated that it may allow existing reserve accounts that currently must be maintained by FIs to be used as sources of funds to automatically maintain the FedNow minimum reserves. If approved, this arrangement could help smaller institutions cover the funds needed for after hours FedNow processing.
Additionally, relaxing the current RTGS requirements for those institutions deemed “well operated” could also provide relief for smaller FIs. As previously mentioned, the Federal Reserve has confirmed that all FedNow settlement operations will be based on individual transaction settlement, which requires FIs to always have the reserves to support each individual transaction.
But the Federal Reserve already allows those FIs with good operating track records to incur “daylight overdrafts.” These overdrafts occur when a bank or credit union is allowed to withdraw more money than it has in its Federal Reserve account to make a payment with the requirement that the overdraft be corrected by the end of a processing day.
With RTGS adopted as the standard for FedNow, offering a “nighttime overdraft” would ease the reserve burden on smaller FIs by allowing their FedNow reserves to temporarily drop below the minimum required levels. For this to occur, however, minimum reserve levels would have to be reset within a specified period of time.
Due to the costs and complexity, many smaller banks and credit unions will be unable—or uninterested—in providing their own additional after hours staff for maintaining 24x7x365 operations. If the Federal Reserve still wants to attract these institutions, a key question becomes who will provide the needed support?
If the Federal Reserve ends up only allowing FedNow processing to be outsourced to correspondent FIs, then the situation becomes very similar to RTP affiliation. That is, smaller FIs will be forced to outsource at least partial operational responsibility to their larger competitors—something that FedNow has otherwise alleviated.
FIs of all sizes outsource various types of processing to outside companies that are non-banks. Fiserv, Vantiv, Jack Henry, and FIS, to name a few, perform several different types of payment processing services for FIs of all sizes. These organizations are not FIs and, consequently, are also not direct competitors.
In turn, it is not hard to surmise these, and similar organizations, will most likely offer after-hours FedNow processing services if the Federal Reserve allows it. This will certainly be a Federal Reserve consideration when drafting final FedNow rules and regulations.
A Question of Value
As mentioned, there is some debate on whether smaller FIs actually need the real-time payments capability that will be offered by the FedNow network. The short answer is some will and some will not. Frankly, many community banks and credit unions are not seeing much demand for real-time payments from their account holders. However, a truly national banking system should provide the same service opportunities to FIs of all sizes competing in comparable market segments.
While the RTP network can provide similar services to those proposed for FedNow, RTP is not generally perceived as a neutral network operator. Many smaller FIs have serious concerns about whether it will treat all its clients impartially.
Real-time payments networks are becoming increasingly available throughout the world. The United States is virtually alone in not having a national fast-payments network operated or directly supervised by its national banking authority. FedNow addresses this imbalance.
This is perhaps the greatest value of FedNow to smaller FIs; namely, it will be a neutral, trusted provider of real-time funds transfer services to all financial institutions, regardless of size. Because of this, many smaller FIs will see the network as an opportunity to better compete with their larger rivals in the world of faster-payment service offerings.
However, for smaller FIs, making the jump to implement these services may not be an easy process. Rather than adopting real-time payments processing for its own sake, community banks and credit unions must look to their own specific situations—their strategic business plans, pain points and accountholder needs before making a decision.
Only by understanding the true costs and impacts of issues like 24x7x365 operations and increased administrative complexity can they best choose the right path for their institutions.
The chargeback process was introduced more than four decades ago as a consumer-protection mechanism. It was meant to inspire consumer confidence in payment cards, which were still a novel concept at the time. Fast-forward to today, though, and these forced payment reversals have evolved into a significant problem for online merchants.
Chargeback abuse—commonly known as friendly fraud—is a major source of loss. In fact, chargeback issuances resulting from friendly fraud were expected to reach $50 billion annually in 2020, according to Mercator Advisory Group.
Even then, this figure is a low estimate. It doesn’t account for current trends in a post-Covid environment, where we’ve seen a dramatic increase in friendly fraud. These attacks were already up by the end of March, and there’s no sign that they’re going to slow down.
Covid-19 might look like the source of the problem on a superficial level. If we dig deeper, though, we see four underlying factors behind the preexisting upward trend in chargeback filings:
More fraudsters view the CNP environment as the “channel of least resistance;”
Inconsistency in technologies and regulations across different markets;
The rise of mobile banking;
The response by card networks like Visa and Mastercard.
These four factors carry diverse ramifications for the market. For instance, roughly $118 billion in e-commerce transactions are declined each year, according to Javelin Strategy & Research. Most of these rejected purchases are false positives, meaning the merchant unnecessarily rejected the purchase in hopes of avoiding a chargeback.
Clearly, there’s a growing disconnect between merchants, financial institutions, and card networks regarding how best to address this situation. We can see this reflected in the fact that the rate of chargeback issuances in North America is expected to significantly outpace those in the European market. This is attributed to factors like strong customer authentication protocols required by the Revised Payment Services Directive (PSD2), and more widespread use of 3-D Secure technology.
The pressure is on for industry players to find more comprehensive solutions for chargebacks. These solutions must be data-driven and adaptable, though. Otherwise, the growing disconnect between cardholders, merchants, financial institutions, and card networks will exacerbate existing problems in the market, leading to further losses.
The good news is that, in the meantime, there are strategies merchants can employ to address these concerns. For instance, even though friendly fraud operates by concealing itself behind false chargeback reason codes, it’s still helpful to have a clear understanding of what each reason code means in context.
Merchants can’t avoid friendly fraud in the same way they can detect criminal attacks or eliminate merchant errors. However, they can minimize friendly fraud risk by adopting key best practices, including:
Notifying customers to remind them about recurring payments;
Keeping organized and well-documented transaction records;
Using delivery confirmation when shipping physical goods;
Providing easy access to round-the-clock, live customer service;
Providing a quick response to any refund or cancellation requests.
Also, if a merchant identifies a chargeback as friendly fraud, it’s important to engage that dispute through the representment process. This is a complex, time-consuming process, which is why many merchants opt to outsource their chargeback management. It’s still possible to conduct the process with in-house management. However, it will require strong evidence to support the merchant’s case, such as:
A legible sales receipt
A tracking number
Any emails or transcripts of communications you’ve had with the customer
Delivery confirmation information
A record of in-store pickup
Photographic evidence (when available)
This evidence needs to be contextualized with a chargeback rebuttal letter, explaining why the original transaction was valid. Also, merchants are on a tight schedule. In most cases, they have only a few days to provide a response to their acquirer.
Chargeback management can be a difficult and confusing process. But, with the problem of chargeback abuse only set to grow over time, it’s something merchants can’t afford to take for granted.
—Monica Eaton Cardone is the chief operating office and cofounder of Chargebacks911, Clearwater, Fla.
There are few moments like now where American consumers are collectively open to the idea of new payment methods – especially contactless ones such as mobile wallets. This is good news for businesses since mobile wallets offer a safer payment alternative to credit cards and drastically reduce customer wait times at checkout.
Mobile wallets (such as Apple Pay and PayPal) use authentication, monitoring and data encryption to secure and transmit personal information, and the level of security associated with them has payment card issuers backing their use. This is certainly helping drive consumer adoption, as does convenience.
In fact, global mobile wallet transaction value is estimated to reach nearly $14 trillion by 20201 – and that is a pre-COVID-19 estimate. New estimates are higher and point to further rapid adoption given the current need for touch-free payment options. According to a recently published Visa Back to Business report,* 70 percent of consumers surveyed in June 2020 have used a new shopping or payment method for the first time this year.
A rapid shift has begun and the numbers tell the storySo what is holding back business adoption of mobile wallets? Until recently, it just wasn’t a priority for many small- and medium-size businesses to enable it or educate their employees on its use. The lack of preferential demand didn’t make it a pressing topic. But that is changing. Consider this:
According to Forbes,2 by 2026, digital natives will be 59 percent of the consumers in the U.S. market.
Of this, 45 percent will be specifically Millennials and Gen Z, representing the largest purchasing power.
As Gen Z move into becoming the largest generation cohort, their purchasing power will be $143 billion.
But it’s not just what lies ahead that SMBs should be focused on now.
According to Visa’s Back to Business report, shoppers are now putting COVID-19 safety measures at the top of their shopping lists and they will reward stores that do the same. In fact, if all other factors were equal (price, selection, location), nearly 63 percent of consumers surveyed would switch to a new store that installed contactless payment options, such as mobile wallets.3
What does this mean for you? Now is the time to connect with customers to make sure they are fully contactless capable and have the technology in place to accept many of the most popular mobile wallets.
1Payments Industry Intelligence, “The rise of digital and mobile wallet: Global usage statistics from 2018,” November 25, 2018. 2Forbes, January 2020 3Visa Back to Business report 2020
It started off as a favor, “Can I bring my puppy, Baxter to work today?” And in the days that followed, everyone kept asking, where is Baxter? So he started making an appearance at the office a few days a week. Now, I can’t leave home without him. He knows the morning routine and as soon as he hears the car keys, he is waiting at the door. When we get to the office, he makes a bee line into every office to see who is here. He greets you as if he has never seen you before, so excited and happy, it can’t help but put a smile on your face. I mean seriously, do you get greeted by anyone in your office with such positive energy? The difference in the office atmosphere when Baxter is here, is incredible. The moral is much higher, the motivation of the sales team has increased and the boss is much calmer. But beware when you enter, he we might look cute and sweet but he will surely greet you at the door with a loud excited vocal bark and crazy twitching tail. And be cautious of where you step as the office floor is now covered in toys and treats. We are not sure who has more fun, the employees playing catch on breaks, or Baxter chasing the balls or toy squirrels up and down the halls. When things are busy, he knows to lay low, but when it’s time for Lunch, you better watch out, he will be glued by your side. When tension in the office gets high, Baxter will zero in on you and demand your attention, as if he knows petting him, will soothe the mood and ease the tension. It is a win win for us all. He might not be a “Certified Therapy Pet”, but in our office, he most certainly deserves the title of “Therapy Pet”.
We care about our clients and are happy to hear from them, we were able to sit down with one of them and hear their story. Let’s get some Monday motivation and meet KashPatel from Baryia Travel.
Thank you so much for taking the time to do this interview, it is an honor. Since we know you are taking time away from your busy schedule let’s get started. Tell us about yourself and your business.
I founded Baryia Travel in 1991 and have been designing luxury travel packages for individuals to small groups! We specialize in South Pacific (Australia, New Zealand, Tahiti, Fiji, Cook Island and Hawaii), Africa (Kenya, Tanzania, Uganda, South Africa, Botswana, Namibia, and the Indian Ocean Islands), and Luxury Cruises (ocean and River). I am a Premium Aussie, Kiwi, Kenya and Fundi (South Africa) Specialist and certified by respective countries Tourism Commissions! I have also completed certification offered by Silver Seas, Uniworld River Cruises, among the major cruise lines. Our expertise include romance (honeymoons, destination weddings, etc.) adventure, and sports (golf, tennis, etc.) travel.
Thank you so much for sharing. Tell us, has the journey been smooth or have there been some bumps along the way?
The journey has been anything but smooth, but we are still going strong now for about 27 years! Couple years after starting the business, airlines stopped paying commissions to travel agencies, but we survived and since then have learned various lessons as we march forward! Although many bumps in the road, it has been a very pleasant and enjoyable journey!
Please tell us more about BaryiaTravel.
Our motto is “Making your dream vacations a reality”. We accomplice this by making sure we understand what they want and design to meet their needs and desire and paying attention to every detail! By working with local tour operators in various countries we make sure they get the best experience!
Wow, that is very interesting, thanks for sharing. What made you decide to open up this business? What are you most passionate about it?
I have been passionate about travel and born and raised in Africa I wanted people to experience this very different continent! One of my first trip after starting my business was Australia and I fell in love with the island continent and since then I have visited South Pacific about 25 times to learn what they have to offer!
Thank you so much for answering all of our questions, before we let you go, is there any tips of advice you would give to other entrepreneurs like yourself?
Listening to customers’ needs and providing superior customer service with attention to details! Provide them off the beaten path experiences!
Share with us how customers can find you.
kash@baryiatravel.com
617-527-4799
We work by appointment only but have flexible hours and can also come to you for a meeting!
It was a wonderful opportunity to meet and talk with Kash Patel, be sure to contact them for your luxury travel needs!
We got the chance to speak with Jan Aragon from Roadway Motors; they want to provide you with the best automotive experience possible and we wanted to learn how their company has grown to be the great one it is. Let’s learn more about them, shall we?
Thank you so much for taking the time to do this interview, it is an honor. We know you are taking time away from your busy schedule let’s get started. Tell us about yourself and your business.
We are a Car Dealership that sells Pre-Owned and New Cars
Picture available at Roadway Motors LLC’s Facebook.
Thank you so much for sharing. Tell us, has the journey been smooth or have there been some bumps along the way?
Everything was perfect from start to finish.
Please tell us more about Roadway Motors LLC: We are a Car Dealership that sells Pre-Owned & New Cars
Thank you so much for answering all of our questions, before we let you go, is there any tips of advice you would give to other entrepreneurs like yourself?
Start small and grow big and strong.
I was such a pleasure to get the opportunity to speak with Roadway Motors. If you are looking for your next set of wheels, they are happy to help from researching the vehicle you want to test drive the ones you like. Roadway Motors is there to help you with a selection of cars, trucks, and SUVs.
