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Weighing Open-Loop Cards

Convenience Store Decisions – Open-loop prepaid cards present an ongoing opportunity for c-stores, especially since the prepaid market is fostering activities that are putting more of these types of cards in consumers’ hands.

Open-loop is a term most often associated with a credit card carrying logos such as those for American Express, Discover, MasterCard or Visa that can be used wherever those cards are accepted. They are more likely to carry fees. These are different than closed-loop cards, also called single-purpose cards, which have an individual company’s logo, indicating where the cards can be used.

Retailers are typically paid for each open-loop card they sell, or when they reload them. Additional sales hopefully accrue when consumers use them inside the store or at the pump. The overall growth trajectory of both open- and closed-loop prepaid cards is, however, undeniable. According to Global Industry Analysts Inc., the global market for prepaid cards is projected to reach $3.1 trillion by 2022, driven by the growing need for financial inclusion of unbanked consumers, innovative and expanding card features, increasing online transactions, and rising demand for cost-effective and convenient electronic payment solutions.

There will be a move to a more mobile platform that will reside on consumers’ phones, predicted Perry Kramer, vice president and practice lead at Boston Retail Partners.
“Any convenience store that is not already offering prepaid cards should get in the game,” said Kramer.

“Retailers should consider cross-marketing prepaid cards near a small rack of greeting cards for gift-giving occasions,” he added. “It is also key to proactively monitor the in-stock process to make sure they are not missing sales from out-of-stock positions.”

Read full article: Weighing Open-Loop Cards

No chips: A slow go for new credit card technology

CNBC – Less than half of American businesses have adopted the credit card chip technology that was all the rage in the fall of 2015.

Only 37 percent of businesses are currently able to accept chip-enabled credit and debit cards, according to a survey by The Strawhecker Group. TSG’s sample included 92 payment service providers that service more than 3.9 million merchants, or about 50 percent of the U.S. card-accepting market.

Chip cards, also known as EMV cards (for Europay, MasterCard and Visa), are touted for safety and improved security over traditional cards. Retailers, credit card companies and merchants were supposed to adopt the new technology by Oct. 1, 2015, or face penalties. Missing the deadline made U.S. card-accepting merchants liable for fraudulent transactions.

Ten percent of retailers are performing EMV-enabled transactions that are working well, and another 12 percent say their EMV-enabled transactions need improvement, according to a report from Boston Retail Partners.

Read Full Article: No chips: A slow go for new credit card technology

VIDEO: Why are EMV Implementations Complicated?

According to the 2016 POS/Customer Engagement Survey, only 22% of retailers support EMV transactions. Why has the adoption of EMV been so slow?  Well, it’s complicated. Many factors are making this complex, including: debit cards, mobile devices, banks, payment terminals, switches and the certification process.

Watch this video blog post to hear Perry Kramer, Vice President and Practice Lead, Boston Retail Partners, explain the factors that make EMV implementations complex.

Why are EMV Implementations Complicated?

Visit our BRP Videos page to watch videos on other topics.

As always, I appreciate you thoughts on this topic. Please enter your thoughts and comments below.

David

Houston, We have a Problem! – 2016 POS Survey Identifies Issues with Retail’s Faux Omni-Channel

Retailers recognize the need to create a holistic customer experience that transcends channels, but most attempts are falling short.

85percentAccording to the 2016 POS/Customer Engagement Survey, 85% of the respondents indicate that unified commerce is their top priority. Many retailers have taken the “just get something done” approach to deliver a seamless customer experience that transcends channels. The unfortunate result of this quick fix approach is a “faux” omni-channel model that doesn’t execute as promised and has the risk of disappointing customers. While 60% of retailers indicate they have implemented “inventory visibility across channels,” 80% of those retailers indicate that the system “needs improvement.” According to another recent study, this is a real issue, as 60% of click-and-collect orders placed on Cyber Monday had problems.[i]

“Saddled with legacy systems that are not designed to accommodate today’s retail environment, retailers have scrambled to cobble things together in attempts to deliver the omni-channel capabilities customers expect. Retailers need to invest in infrastructure, networks and service oriented architecture (SOA) layer and do it right. The risk of losing customers due to disappointing shopping experiences caused by a flawed omni-channel architecture is deadly and that is why “real” unified commerce is retailers’ top priority for 2016.” – Ken Morris, principal, Boston Retail Partners

The 2016 POS/Customer Engagement Survey of top North American retailers offers insights into retailers’ current point of sale and customer engagement initiatives, priorities, and future trends as the physical and digital worlds converge within the store.2016 POS Survey Cover

Key findings in the 2016 POS/Customer Engagement Survey include:

  • Creating a true unified commerce environment is the top priority – 85% of retailers indicated this was a top priority for 2016
  • Improving customer engagement and the customer experience is critical – 68% of retailers indicated this was a focus for the upcoming year
  • Retailers are still occupied with payment/data security – 38% of retailers stated this was a top priority

I encourage you to download and read the complete 2016 POS/Customer Engagement Survey: https://brpconsulting.com/2016-pos-survey/.

I hope you enjoy the report and welcome any comments or feedback. Please share your comments below.

David

[i] “Buy online, pick-up in the Store. Simple, right? Not this Christmas,” Washington Post, December 20, 2015.

The Road Ahead – Experts share insights on key retail tech trends

Chain Store Age – Chain Store Age spoke to industry experts to get a sense of where four strong trends in retail technology — mobile payment, same-day delivery, Internet of Things and social commerce — are heading in 2016. We also offer a sneak peek at the burgeoning trend of visual search.

Mobile Payment: Calm before the Storm

Even though there was a big buzz about mobile payments during 2015, the penetration and adoption of mobile industry expectations. However, according to Ryan Grogman, VP of Boston Retail Partners, there are reasons to believe that mobile payment is still primed to be a disruptive in-store technology in 2016.

“Like any new technology, there is an adoption curve for mobile payments,” Grogman said. “Taking a card out of your wallet and swiping or inserting is an ingrained behavior that does not take a significant amount of incremental time over taking your phone out of your pocket or purse and holding it to a payment terminal.”

Despite the miss in expectations, Grogman said retailers are making significant investments to enhance their payment security.

“Payment security investments include the installation of advanced payment terminals that will inherently support mobile payments,” Grogman said. “Additionally, the sheer number of mobile payment options means that more customers will have access to using their smartphones for payments.”

Grogman concluded that the key to mobile payment truly gaining traction will be to convince customers of the advantages of choosing to use their phones instead of reaching for their payment card.

“The integration of store-based loyalty cards and specific promotions built around the use of mobile payments at checkout will help drive adoption,” Grogman said. “Walmart Pay is a merchant-driven solution, meaning they can incent their customer base by including promotions and benefits specific to their customer base, which should increase adoption.”

Read Full Article: The Road Ahead – Experts share insights on key retail tech trends

‘Tis the Season — For Secure Payment Processing

Samsung – Just weeks into the 2015 holiday shopping season, retailers industry-wide are tightening mission-critical operations to ensure their shoppers have a satisfying shopping experience. The one area that they can’t afford to overlook this holiday season, however, is secure payment processing. By implementing new security measures across payment networks, retailers are taking steps to secure sensitive customer information this holiday season — a move that promises to drive loyalty well beyond December.

It’s not surprising that 63 percent of retailers reported that secure payment processing is among their top three priorities for 2015, according to the “2015 POS/Customer Engagement Benchmarking Survey” from Boston Retail Partners. Some of the most recognized data breaches over the last 24 months have occurred in the retail industry, and these heists pilfered millions of consumer card numbers, as well as other personally identifiable information.

Often, POS systems are their entry point of choice, due to insecure, Web-based network support and the volume of unencrypted data flowing between networks and units.

Read full article: ‘Tis the Season — For Secure Payment Processing

Mobile payments fail to impress so far this holiday season: report

Mobile Commerce Daily – Mobile wallet platforms did not fare well during this year’s Black Friday retail frenzy, most likely due to do inconsistency with retailers and consumer use, with Apple Pay at its lowest usage rate and PayPal being used more than others, according to a report from InfoScout.

The holiday weekend is known for its chaotic shopping sprees, with many retailers seeing long lines and disorderly checkout experiences, which may have led consumers’ choice to stick with established payment methods such as credit cards. On Black Friday this year Apple Pay saw only 2.7 percent use with all eligible transactions at retail locations, and Android even lower with 2 percent of possible transactions being used.

“No one wants to be ‘that person’ that holds up the line in a retail store on Black Friday,” said Marty Whitmore, vice president, Boston Retail Partners. “This lack of confidence and uncertainty around whether or not Apple Pay or Samsung Pay are accepted obviously caused a hesitancy in the consumer to present the device for payment.

“The other key takeaway is that there is still some concern around security and a general lack of awareness around the Mobile Wallet,” he said.

Read Full Article: Mobile payments fail to impress so far this holiday season: report

Online Retail Fraud to Increase 106% – Are you ready?

As the portion of shopping done online rises, so does the importance of e-commerce to retailers’ overall strategies. Unfortunately, the increased focus on e-commerce also extends to fraudsters looking to make illegitimate purchases – a trend accelerated by the EMV liability shift earlier this month. As more retailers have provided greater payment security in the store with the addition of EMV, fraudsters will be shifting their efforts to target e-commerce sites.

106 Percent online fraudAs a result of EMV according to Trustev, and referenced in our 2015 E-Commerce survey, online fraud is predicted to increase 106% over the next three years. Fraudsters also are looking to exploit ecommerce transactions to capture credit card numbers and other personal data. These changes in the retail landscape make it more important than ever to protect customer data and effectively monitor online transactions.

Online transactions create a unique set of security challenges. Since the transactions are “card not present,” there is no way to verify the card’s legitimacy by verifying the signature, checking the customer’s ID or matching the last four digits of the card. To protect themselves from fraudulent online transactions, retailers must implement a rules-based fraud detection tool, auditing suspect transactions and authorizing legitimate ones.

Protecting Online Customer and Payment Information

Today’s customer expects a certain level of convenience when shopping online including the ability to save their personal and payment information on sites they frequent.

Customer Information – Retailers should be encrypting all customer information as soon as it enters their environment.Hacker_Thief_2

Payment Card Information – Further, the amount of credit card data retailers must save to offer this convenience makes it a target for hackers. Fortunately for retailers, tokenization technology works for both brick and mortar and e-commerce transactions. In fact, all of our clients currently implementing tokenization are implementing multi channel tokens. This not only secures their customer’s credit card data, but also provides the retailer with an omni-channel payment solution central to creating a consistent brand experience across channels.

PCI is not Enough

With the shifting retail paradigm, simply passing PCI is no longer enough to truly protect customer information. Retailers must build security into their technology roadmaps to ensure that the level of protection is commensurate with their omni-channel strategies. We suggest an annual security audit outside of PCI and other standards to ensure that security measures are not in place merely to pass audits but to truly protect the customers’ information retailers work so hard to gain and retain.

As always, I appreciate your opinions on this topic. Please share your comments below.

Dominic

Mobile ordering, payments responsible for 20pc of Starbucks’ October transactions

Mobile Commerce Daily – Starbucks experienced a considerable rise in revenue this third quarter, with sales toppling 18 percent higher, with stores that were early adopters of the chain’s mobile ordering and payments options the biggest winners.

The beverage marketer has also seen mobile ordering and payment account for 20 percent of its revenue this month, underscoring growing consumer demand for streamlined ways of purchasing on-the-go food and drink. Other quick service restaurants and retailers would be well-poised to follow Starbucks’ model of mobile innovation, which bestowed the brand with a $4.9 billion total revenue in Q3.

“Starbucks is a leader in the mobile apps space and has been extremely successful in getting its customers to download and use its app,” said David Naumann, director of marketing at Boston Retail Partners, Boston. “Consumers are reaching app fatigue and retailers are competing for precious space on consumers’ smartphone screens.

“The key to mobile app success is to provide real value so that customers are compelled to download and use the app,” he said. “Starbucks has cracked the code by combining loyalty rewards, ordering and payment benefits on its mobile app.

“Retailers can learn from Starbucks’ mobile app success by adopting similar principles.”

Read full article: Mobile ordering, payments responsible for 20pc of Starbucks’ October transactions

Will Chase dethrone Apple with bank-branded mobile payment adoption?

Mobile Commerce Daily – Chase’s dedication to competing with current mobile payments developers, such as Apple and Samsung, could potentially offer it front-runner status as its substantial customer base strays away from the pigeonhole caused by software developers.

The bank is the first to develop a mobile payment platform, named Chase Pay, and is likely to hold its own against big names in the field as its customers use a varied range of devices, opening it up for a wider audience. Chase is one of the larger banks, and all its customers with a smartphone are automatically eligible.

“The greatest advantage for a bank, like Chase, to introduce mobile payments is that they are not tied to a given smartphone manufacturer like Apple, Android and Google,” said Ryan Grogman, vice president at Boston Retail Partners. “Another benefit for large banks entering the mobile payment space is the large volume of customers that will automatically be signed-up for the service.

“It is estimated that one if every two households in the U.S. is a Chase customer,” he said. “Chase Pay is also backed by the Merchant Customer Exchange Consortium so they are going to have the support of over 100,000 retail locations at launch.

Read full article: Will Chase dethrone Apple with bank-branded mobile payment adoption?