The PaymentsJournal podcast

#Business News #News #PaymentsJournal

28:52

Retailers are facing a rapidly evolving landscape where consumer expectations, AI advancements, and social media platforms like TikTok are redefining engagement. It feels like the holiday shopping season just ended, but when do retailers start planning for the next one, and some retailers already behind the curve for this season? Joining us today is Carey Cockrum, Director of Consulting at Cella by Randstad Digital, where she helps major brands and marketing teams optimize their strategies with data-driven insights, AI-powered content creation, and cutting-edge retail marketing trends. With the holidays just around the corner, she’s here to share what’s next for retail marketing, campaign optimization, and how brands can stay ahead in a hyper-competitive space. ABOUT CAREY COCKRUM Carey has been a part of the Creative Agency space for nearly 30 years. She has served as Designer, Creative Director, Creative Operations Lead and Agency Lead in both internal and external agencies (big and small). Carey has worked directly with C-suite stakeholders to understand organizational strategies that inform effective creative solutions. She is a bit of a data nerd and loves demonstrating results. Brands she’s supported include Fruit of the Loom, Wendy’s and Humana. In her free time, she enjoys going back to her creative roots through painting and drawing. She also spends her time improving upon the house she lives in today in Southern, MI - inside and out. RESOURCES Catch the future of e-commerce at eTail Boston, August 11-14, 2025. Register now: https://bit.ly/etailboston and use code PARTNER20 for 20% off for retailers and brands Don't Miss MAICON 2025, October 14-16 in Cleveland - the event bringing together the brights minds and leading voices in AI. Use Code AGILE150 for $150 off registration. Go here to register: https://bit.ly/agile150 Connect with Greg on LinkedIn: https://www.linkedin.com/in/gregkihlstrom Don't miss a thing: get the latest episodes, sign up for our newsletter and more: https://www.theagilebrand.show Check out The Agile Brand Guide website with articles, insights, and Martechipedia, the wiki for marketing technology: https://www.agilebrandguide.com The Agile Brand podcast is brought to you by TEKsystems. Learn more here: https://www.teksystems.com/versionnextnow The Agile Brand is produced by Missing Link—a Latina-owned strategy-driven, creatively fueled production co-op. From ideation to creation, they craft human connections through intelligent, engaging and informative content. https://www.missinglink.company…

The PaymentsJournal Podcast

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Focused Content, Expert Insights and Timely News

27 episodes

The PaymentsJournal Podcast

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updated 3 days ago

Series home•Feed

Focused Content, Expert Insights and Timely News

27 episodes

#Business News #News #PaymentsJournal

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The PaymentsJournal Podcast

1
The Connecting Thread: How PAR Values Can Mitigate Fraud and Supercharge Loyalty Programs 19:55

3 days ago19:55

19:55

When customers make purchases using Apple Pay or Google Pay—or enter their card info at online checkout—their sensitive data is protected by replacing it with a token. While this safeguards consumer privacy, it has also created a challenge: because the same card can be tokenized differently across multiple merchants, businesses are losing access to vital customer insights that could drive smarter marketing, stronger loyalty programs, and better fraud prevention. In a recent PaymentsJournal podcast, Andrew Sjogren , Director of Product Marketing at IXOPAY, and Don Apgar , Director of Merchant Payments at Javelin Strategy & Research, discussed a promising solution: using personal account reference (PAR) values as a consistent, secure link across transactions to help merchants reconnect with critical customer data and unlock new insights. A Single Consistent Value As the e-commerce space has evolved, a personal account number (PAN) from a single card can be tokenized countless times. That same card might also be tokenized in multiple formats, including network tokens, PSP tokens, and universal tokens. This has led to a more secure, yet increasingly fragmented, digital economy. “As in so many times in payments, the solution becomes the problem,” Apgar said. “After so many data breaches, everybody rightfully invested in tokenization. Now that merchants are moving ahead with orchestration strategies to optimize other metrics and payments, competing token strategies mean merchants have lost track of the customer journey, because they’re no longer able to connect the dots and follow the breadcrumb trail from disassociated tokens.” Despite these challenges, merchants have found workarounds to link transactions to customers. For example, the merchant might have a customer log into their website or enter their information at a point-of-sale device. A small coffee shop, for instance, might ask customers to enter their phone number at checkout to manage their participation in a rewards program. Though these patches exist, they are manual workarounds that require customer participation and can often cause friction at checkout. Tracking transactions using a PAR value could offer a universal solution requiring no manual intervention. PAR is a 29-character alphanumeric identifier associated with a single card account, developed by EMVCo several years ago. “With so many different token formats, you lost sight of these tokens being associated with just a single card account,” Sjogren said. “All of a sudden EMVCo says, ‘We’re going to establish this PAR reference value, it’s going to be that common thread so no matter what token format or where it’s tokenized, you’re going to have a single consistent value linked to that card.’ That’s a transaction that you can operate on—without being afraid that it’ll come within PCI scope.” Satisfying Compliance and Reducing Fraud The fact that PAR satisfies merchants’ Payment Card Industry (PCI) obligations is a significant advantage, and the protocol could help mitigate many of the fraud and compliance challenges merchants face. “From a compliance standpoint, it can descope your PCI, if you’re storing PAN anywhere for customer record keeping,” Sjogren said. “Maybe you’re passing on the PAN to a fraud services provider to associate with an account. PAR can just replace PCI-sensitive data in many cases where it is used outside the transaction, and you’re incurring no scope there.” Beyond improving compliance, PAR can help merchants fight fraud more proactively by providing fraud prevention tools with deeper insights into potential threats through access to more data. There are also specific types of fraud that PAR can address head on. For example, when merchants run promotions designed to attract new customers, existing customers often create additional accounts to take advantage of the offers. Sometimes, a single customer may create multiple accounts using different email addresses to repeatedly access discounts and promotions. PAR can help mitigate this behavior by identifying each instance where a card account is used to create a customer account. It could also be leveraged to assess whether an account carries a higher risk of friendly fraud. “You can say, ‘Wow, this account looks like a high risk for friendly fraud because we have a very high dispute rate here,’” Sjogren said. “If that persona gets flagged with a friendly fraud warning, even if they come back and add their Google Pay as opposed to their direct card in this new account, if it’s related to that underlying card account, you can quickly identify that account and take the correct measures to control the promotional abuse.” PAR at the Ballpark Beyond improving fraud prevention, PAR can also have a substantial impact on the customer experience. This is possible because PAR can serve as the connecting thread across all transactions—whether the customer paid with Apple Pay or Google Pay, the merchant submitted the transaction as a network token or a universal token, or the card was tapped or swiped in person. “My favorite metaphor is that baseball season is starting up,” Sjogren said. “Here in Boston, I’m getting our Fenway Park tickets and I’m taking my kid, who just turned 6, to his first baseball game. I buy tickets online and have those mailed to me; I walk into the park; I buy a few concessions as we’re heading to our seats. When we’re in our seats, I buy him his favorite Italian ice. Afterwards, we go and pick up a jersey at the shop, maybe a few other souvenirs.” In the current paradigm, all these transactions occurring within a single environment would appear as separate, unrelated events, making it difficult for the ballpark to link them to a single buyer. By utilizing a PAR value, the organization could gain insight into the customer’s preferences—from their favorite snacks to their favorite player—putting the ballpark in a much stronger position to engage the consumer through targeted loyalty and marketing programs. “The ballpark example is interesting because, when you peel it back and get into all the different point-of-sale environments, types of transactions, reasons for the transactions, and the timing, it (reveals) a complex ecosystem,” Apgar said. “That’s a really good use case for a data technology like a PAR, to connect the dots of the customer journey.” A Quality-of-Life Addition The potency of the technology also increases as merchants scale. While PAR is specific to a single card account, it can create significant value for merchants who utilize multiple payment channels and various token formats. Although PAR technology has been around for some time, it hasn’t gained as much traction as other tokens, largely due to the ubiquity of alternative formats and a general lack of merchant awareness. However, the benefits of PAR suggest that the protocol is likely to be thrust into the limelight soon. “The reason that we pushed this on our roadmap was that, as an orchestrator sitting on top of an entire payment stack, we’re in a unique position to add value across the entire merchant payment ecosystem,” Sjogren said. “By offering it as an orchestrator, we can support the entire payments flow and make it standard across your vaulting and transacting.” “PAR essentially can be a quality-of-life addition,” he said. “What PAR does is it steps in and it takes the busy work out, and it provides a leak-proof foundation so that you’re not seeing a lot of slippage in the tracking that you’re doing.” [contact-form-7] The post The Connecting Thread: How PAR Values Can Mitigate Fraud and Supercharge Loyalty Programs appeared first on PaymentsJournal .…

The PaymentsJournal Podcast

1
Sports and Entertainment Venues Can Be a Proving Ground for Payments 27:03

9 days ago27:03

27:03

A cursory survey of sports venues will reveal fields sponsored by Citi, Chase, PNC, and Truist—just within Major League Baseball alone. However, the connection between payments and the arenas and stadiums that host events runs much deeper than naming rights. With a captive audience of thousands, there’s a strong opportunity to drive loyalty and revenue, which is why so many stadiums and arenas are exploring new pay methods. In a recent PaymentsJournal podcast, Christopher Miller , Lead Emerging Payments Analyst, and Jordan Hirschfield , Director of Prepaid at Javelin Strategy & Research, discussed their experiences at sports arenas across the U.S. and the emergence of new payment protocols at entertainment venues. A Cash-Free Stadium The greater movement away from cash and toward digital payments has been gradual shift on a national scale, but many event venues have already made the transition to cashless operations. “I went with some friends to Charlotte to a soccer game for the team we support in Atlanta,” Hirschfield said. “You walk in this big 70,000 seat football stadium, and the first thing you see is a massive banner that says, ‘We are a cash-free stadium.’ I go to enough games, and almost every stadium I’m in nowadays is cash-free. It creates a lot of openings for organizations to grow their revenue base through new kinds of payment activities.” One unique aspect of sports and entertainment events is that they attract a captive audience of tens of thousands. Many attendees have paid a premium for entry, and re-entry is often not permitted. Not only are most patrons there for the duration, but they are also frequently loyal and enthusiastic supporters of the team or artist they came to see. These factors create opportunities for venues and payment firms to drive revenue and foster innovation. “Many new technologies—and I’ll take biometric authentication as an example—have the best application in scenarios where you have loyal, repeat customers for whom it is worth the effort to enroll. And they believe that there is a benefit to them of enrolling that they will receive repeatedly,” Miller said. “Folks like season ticket holders are a slam dunk of a category there.” Season ticket holders have already invested a substantial amount of money, are likely to spend more, and visit the sports venue frequently. This gives the team or arena a strong incentive to provide them with unique and distinctive experiences to engage and retain them. “It’s really a sweet spot for both piloting and implementing these types of things,” Miller said. “We’ve been seeing, for example, biometric entry for a couple of years. There are some stadiums that have done away with every form of media whatsoever—there’s not even digital tickets. Your face is your ticket, your face is used for payment, and there’s just nothing but your face, not even digital wallets. But that’s at the far end of the spectrum.” Cautionary Tales Though stadiums and arenas can be effective environments for introducing these new programs, the initial scope should be manageable. “The Intuit Dome in Los Angeles was the first one I know of that went fully biometric,” Miller said. “The first event there was a concert, and the biometric entry system was broken, and long lines formed of angry people who had been told they didn’t need tickets. It was a cascade of technological failure that delayed individuals from experiencing the concert or, at the very least, colored their perception of what type of experience the arena could be trusted to give.” These issues can impact repeat patronage, but they are also common when dealing with emerging technologies. “I was at a soccer game in Atlanta this past weekend and the Just Walk Out technology was down, so all of these stands were inoperable,” Hirschfield said. “They had food spoiling on the shelves, the hot food, but it goes to show there are limitations still in current technology that need to be addressed. There’s a lot to learn and these are great ways to learn without putting too much at risk.” Because hiccups occur, piloting new technology programs is the best route. For example, at Chase Center in San Francisco, a biometric payments pilot was limited to a certain concession stand. The pilot was rolled out as a unique, one-off experience, allowing the technology to be tested and challenges to be identified before scaling it throughout the venue. Blending Team and Brand Loyalty Another area of opportunity is for retailers to bring their full loyalty programs to the arena environment. There is a growing presence of retailers in arena concession stands, such as the Chick-fil-A stands in the Mercedes-Benz Superdome in Atlanta. However, these locations don’t fully function like their other franchises. “It adds to a little bit of confusion on the part of the patron because I have a Chick-fil-A loyalty account and prepaid account, but I cannot use them at what they call their licensed venues,” Hirschfield said. “Gift cards are not applicable at the venue, and I can’t use the app to order. It shows there’s a need to grow—they need to figure out how to blend my loyalty to Chick-fil-A and my loyalty to my team.” This pain point may ease due to moves happening behind the scenes. There has been a long-term trend of consolidation, involving major companies like Ticketmaster and Live Nation, as well as other arena management and ticketing vendors. Additionally, there has been substantial consolidation in ownership across sports franchises and leagues. It has become more common for ownership groups to purchase multiple teams, creating opportunities to deliver experiences across multiple franchises. One of the main reasons licensed stores at venues can’t offer loyalty and prepaid services is that their payment systems are tied to the arenas, which have historically been highly fragmented across the nation. As consolidation reduces the number of management companies, it will become easier for companies like Chick-fil-A to integrate and offer their full experience at sports and entertainment venues. “Being able to use a prepaid card issued by the retailer with whom you have a loyalty relationship in these license scenarios changes the game of what’s possible for those types of partnerships, who can obtain value, and how they can attain value,” Miller said. “I think there’s a technical problem there to be solved. There’s a good business opportunity to step into that niche and bridge this gap.” Opening Opportunities Through Wallets Another way to leverage the stadium environment to build loyalty is through prepaid wallets. More venues are offering tickets pre-loaded with benefits like $20 in concession value or discounts at arena retailers, but there is still plenty of room for improvement. “I was in Utah at the Utah Jazz’s arena, and they have a great app where you can pay in the app and then go pick up your food,” Hirschfield said. “It reduces a lot of friction, but how do you load a wallet into that? Then you get those benefits that we’ve seen from other stored-value wallets, like reducing the amount of transaction fees because you’re doing it on a one-time basis versus a many-time basis.” “In sporting events, I’ll sometimes go to three different concession stands in one event, because I’m with my wife and my kids,” he said. “My daughter wants ice cream, my wife wants a piece of pizza, and my son wants a hot dog. Those are three different places and three transaction fees that can be easily eliminated through technology.” A team-centric digital wallet also opens possibilities for new partnerships and rewards programs. For example, at T-Mobile Park in Seattle, if a customer uses their Alaska Airlines Bank of America credit card on a Friday night, they receive a discount. However, to take advantage of this benefit, consumers must remember to bring the card and use it for transactions. “Shifting all of those payments to a team-operated wallet changes the nexus of how valuable that partnership might be for both sides,” Miller said. “If the take rate across all the consumer base can be increased, than the economics of that partnership are improved and we haven’t had to do much. This is relatively small potatoes from a technical perspective, but it does acquire a scale at which it makes sense to take that leap.” The post Sports and Entertainment Venues Can Be a Proving Ground for Payments appeared first on PaymentsJournal .…

The PaymentsJournal Podcast

1
The Future of Payment Cards: Metal, Personalization, and the Power of Design 22:12

23 days ago22:12

22:12

Because digital payments offer such powerful use cases, many speculate that they will inevitably replace physical cards. However, this perspective overlooks several key factors—not only are physical cards highly reliable at the point of sale, but they also offer personalization options that create a tangible connection between consumers and their payment method, something digital payments can’t replicate. In a recent PaymentsJournal podcast, James Sufrin , Senior Vice President of North American Payment Services at IDEMIA Secure Transactions , and Christopher Miller , Lead Emerging Payments Analyst at Javelin Strategy & Research, discussed the continued prevalence of physical cards, how customized card offerings with advanced card designs, features and metal cards, can help brands drive loyalty, and the future of premium card products. The Digital Wallet Dilemma: Convenience vs. Adoption Digital wallets can be a gamechanger in e-commerce, allowing consumers to skip the hassle of reentering card details at checkout. However, their advantages are less pronounced in retail, dining, and entertainment settings. “Physical cards are important, and we think that the market is demonstrating that they aren’t going away anytime soon,” Sufrin said. “Quite frankly, I just started to use my digital wallet in earnest last year and it’s still a mix for me. I still sometimes pay with my digital wallet and sometimes with my physical card, and honestly, I don’t know that I could even tell you why in certain instances.” The “why” we favour certain methods of payment or even certain bank cards, can be complex and indeed we may not understand it. In a National Library of Medicine study 1 into our subconcious ability to authenticate banknotes, it was found that accurate authentication of banknotes is possible within one second of viewing. Every moment of every day, we are all experiencing and acting on cues all around us, and the payment experience is not excluded from this phenomenon. The look, feel, weight, and sound of a payment card provides us with cues which we interpret emotionally, without knowing we are doing it. A certain payment method can make us feel safe, cool, or part of a particular group we have a positive association or aspiration to. Even for those who tend to favour the digital experience, the presence of that physical card in their wallet carries huge importance, whether they are aware of it or not. The ongoing rise of Metal payment cards supports these findings, with banks and their customers increasingly opting for a payment card with a heavier and more distinctive metal composition and design. This sentiment is reflected in recent Javelin research, which found that nearly all respondents had used a major credit card in the past 12 months. However, only about 20% of older users and roughly 85% of younger users have used a digital wallet in the same period. These numbers dropped substantially when respondents were asked if they had paid with a digital wallet in the past seven days. This highlights a major flaw in the digital-versus-physical payments debate—the assumption that the two are mutually exclusive and that one will inevitably dominate. “Cards are there, wallets are also there, and I think it’s important for us to understand that many people are both,” Miller said. “We like to divide the market into segments as if those are separate groups of people, but they are not. A digital wallet user can still want a physical card for no reason, for some reason, or for a specific reason. Those all remain possibilities even as digitization continues.” Customizing for Brand Loyalty Regardless of their payment method, consumers have become extremely accustomed to customization in their products, services, and experiences. With the rise of hyperpersonalization, they are also increasingly willing to pay a premium for tailored solutions that reflect their individual preferences. “They may have a perfectly good, non-expired payment product in their wallet, but if they see something that piques their curiosity, maybe they’ll pay $2, $5, or $50, depending on what it is, because they find value in that,” Sufrin said. “It goes back to choice and optionality”. Delivering this personalization is critical for financial institutions, especially given that the U.S. has more financial institutions than any other country in the world. In the fierce competition to be a customer’s top-of-wallet wallet choice, customized offerings are a powerful tool for financial institutions to drive brand loyalty. “Recently, we’re coming across a number of neobanks or fintechs who are really struggling,” Sufrin said. “This is also the case for some classical banks and credit unions, they’re struggling to maintain an active user base. Why? Because customers have choices, and when they have choices, they’re going to pick and choose based on a level of customization and a level of experience that that they find satisfying.” “That brand loyalty becomes super important—certainly to the consumer—but I would argue it’s more important to the financial institutions that are serving that consumer base,” he said. Developing Unique Experiences One effective way to build customer loyalty is by offering an experience that is unique. To develop this strong connection with consumers, many organizations are taking a more personalized approach from the very beginning. For instance, many financial institutions are now notifying their customers at each stage of the process—from the moment their card is produced to when it is on the way to their mailbox. This level of communication is especially important for premium products, such as metal cards, where a luxury mindset should shape every aspect of the customer experience, including the packaging. Take, for example, Apple, which sends out its metal card in packaging that reflects the company’s trademark sleekness. This attention to detail has made a lasting impact. “The unboxing experience is such that people literally posted videos of themselves opening the package that they received with the card that was in it,” Miller said. “That’s more than just it being metal, there’s also how is it delivered to you, which reinforces the nature of your association with that particular product. At least that’s the theory, and there’s pretty good evidence that it does create some bonds or exclusivity there.” It is telling that a tech giant, known for its digital wallet, also offers a physical card. Certainly, a physical card gives mobile wallet users the full spectrum of payment capabilities. For example, in certain situations—such as dining out—digital wallets still fall short of delivering the ideal payment experience. However, Apple has invested into the design and packaging of its card, recognizing that many consumers view premium cards as both a status symbol and a reflection of their personality. Brands offering these kinds of experiences are becoming more desirable to consumers. “It’s not even that they’re considering one financial institution versus the other in terms of the selection of whatever they’re buying,” Sufrin said. “It’s that experience that’s going to drive them to loyalty. I think that loyalty is so critical to the success of these companies, whether they’re banks or consumer electronics companies.” Blurring Segmentation Lines The desire for customization and a premium experience may have been associated with affluent demographics in the past, but market segmentation has increasingly blurred over the past few years. This shift has prompted financial institutions to take a closer look at their customer base, not only within the mid-market but also within the subprime segment. “There’s a higher end of the subprime customer base that they want to serve with a more premium product or a metal product,” Sufrin said. “What we’re seeing is that the consumer themselves are saying, ‘Why not me? Why would it just be for the wealth management clientele or for a big bank or a credit union or a fintech?’ Those segmentation lines are clearly not as defined as perhaps they once were.” Balancing Digital and Physical Payment Innovation The growing demand for personalized payment methods across all demographics means consumers will continue to expect more from their financial institution. This creates new opportunities for these organizations to better serve their customers. “There’s still a sense in which consumers have to make a choice to acquire a particular product,” Miller said. “Lots of pieces, including physical media, influence their decision to acquire that particular product. Even if they don’t use the physical product in the moment of making the payment, it is still part of gaining their attention and their choice—their repeat love, if you will—in their ongoing payment experiences.” While premium cards are often seen as a status symbol, they can also serve as a practical, everyday payment option. For example, a metal card is far more durable than conventional PVC cards. This combination of functionality and customization makes for a payment method that can resonate with consumers in a more tangible way. Although digital payments should remain a key focus for every financial institution, physical payment cards aren’t going anywhere anytime soon and should still be top of mind for organizations. “From my perspective, it’s convenience, its status, and it’s the experience,” Sufrin said. “It is evolving, and that customization, that optionality, that premiumization, is a big part of it. It’s really important that financial institutions figure out ways to differentiate in any small manner they can, so that they can not only capture that client, but retain them long-term.” Learn more about how consumers prefer to pay via new research from IDEMIA Secure Transactions. 1 Banknote authenticity is signalled by rapid neural responses – PMC The post The Future of Payment Cards: Metal, Personalization, and the Power of Design appeared first on PaymentsJournal .…

The PaymentsJournal Podcast

1
Reconciliation Isn’t Just for the Back-Office Anymore 22:16

29 days ago22:16

22:16

Reconciliation has traditionally been seen as a back-office function, but modern technology has made it a priority. Automation, real-time data, and embedded finance solutions are transforming cash flow management, risk mitigation, and operational efficiency, enabling businesses to take a more strategic approach to maintaining their books. Penny Townsend , Chief Product Officer at Qualpay, explored the evolving landscape of reconciliation during a PaymentsJournal podcast. She spoke with Don Apgar , Director of the Merchant Payments Practice at Javelin Strategy & Research, about leveraging reconciliation to drive profits and the impact artificial intelligence will have on the future. A Technological Makeover Twenty years ago, reconciliation was a straightforward, even sleepy process. An accountant or bookkeeper would check the business’s bank account, then perhaps walk into the next office to ask how many sales had been completed that day. Early software like QuickBooks or Quicken helped streamline the process, but the responsibility fell almost entirely on a single person. Fast forward 20 years, and everything has changed. Advances in technology have dramatically improved the flow of information. Aligning cash management with sales has become a priority. Merchants now have much greater control— not just over distributing products and services in a timely fashion, but also over tracking revenue from those sales. In addition, with payments being accepted in different ways—digital wallets, crypto, ACH, credit cards—merchants need to be able to handle various transaction methods. As a result, payment processing and reconciliation have evolved into strategic priorities. “We as an industry have done a good job of making it easy for the merchant to accept payments, embed them into software, and integrate them with other workflows,” said Apgar. “But we’re still, for the most part, sending out statements of card transactions and leaving it up to the merchant to reconcile that to a paper bank statement that comes in the mail. The next step in the payments automation revolution is automating the rest of the workflow in the back-office, not just at the front counter.” Bringing Flexibility to the Statement Many of these statements are still just pieces of paper that merchants can’t click on or interact with. While some service providers have replaced paper statements with online portals, the statement itself is often nothing more than a glorified PDF. Viewing the information online doesn’t give the merchant any real advantage over seeing it on paper. The challenge is compounded by the need to reconcile the merchant account, the bank account, and the merchant’s internal records. “Merchants have to log into each of those different portals to be able to see that 360-degree view,” said Townsend. “But every time you make a hop between systems, data gets lost. That little piece that matched the transaction probably disappeared somewhere along the line. By the time that you look at your bank statements, you’re like, ‘Oh my gosh, what happened?’” More Money, More Problems Not only does the merchant have to verify that the money goes into the right account, but also that they’re being charged the correct fees and how those fees were deducted from sales. Everything must balance, and the process becomes more complex as the business grows. Some vendors offer all-you-can-eat buffet pricing, where everything is charged at a flat 3.5%, making reconciliation straightforward. Flat-rate pricing is almost like charging merchants a premium for simplicity, but it only really works for smaller businesses. Larger businesses must focus on minimizing costs upfront while ensuring they receive the proper amount of cash in the right amount of time. The reconciliation process isn’t just about verifying what happened—it’s also about identifying what didn’t. “In a previous organization, when we were doing reconciliation, we fed it into the accounting package we had,” said Townsend. “And then all we had to do was to look at exceptions. We used to have an accountant spend a full day doing the reconciliation work, but we decreased it down to this accountant having only to look at exceptions.” When merchants reach that level of efficiency, it can have a material monetary impact. While they primarily focus on fees and payment transaction costs, they also incur soft costs, such as indirect payroll expenses and employees’ time. This is where the reconciliation process can make a difference. “The questions merchants bring to the table are usually, ‘how much is it going to cost me?’” said Townsend. “They should be asking, ‘how can I improve what I’m doing?’ ‘How can I offer newer payment types?’ It is a mind shift in how people think about it, making payments more strategic than operational.” Dealing With the AI Data Data from additional sources adds complexity to the reconciliation process, but also creates opportunities, especially with the integration of artificial intelligence. As a result, there is greater flexibility in connecting sales data to bank deposits. With automated information delivery, merchants can act on real-time data rather than relying on month-end batch processing. AI will transform both payment processing on the front end and reconciliation on the back end. It will provide faster ways to analyze discrepancies and identify mismatches. Businesses like restaurants, with their rapid cashflow, will be able to consume data, match it to sales, account for fees, and quickly flag exceptions. The biggest challenge for merchants will be finding a processor or acquirer that delivers the necessary data and has the backend processes to support it. “I feel privileged to be part of a company that is thinking about these things every day and how we can improve for our merchants,” said Townsend. “When it’s done right, reconciliation can transform a business. You can focus not just on cash but cash forecasting as well. Figuring out what doesn’t work versus what’s actually working is always a good idea in a business.” The post Reconciliation Isn’t Just for the Back-Office Anymore appeared first on PaymentsJournal .…

The PaymentsJournal Podcast

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Infostealers: The Latest Cyberthreat Facing Financial Institutions 25:47

5 weeks ago25:47

25:47

Last year, a breach of cloud storage company Snowflake resulted in data stolen from more than 150 companies , with more than $2 million extorted from victims. The attack was carried out by an infostealer, a type of malware that didn’t directly infiltrate Snowflake but instead entered through a client with weak security measures. The growing market for financial data stolen by hackers has made these attacks an escalating threat to financial institutions worldwide. In a PaymentsJournal podcast, Mike Kosak , Senior Principal Intelligence Analyst at LastPass , and Jennifer Pitt , Senior Analyst in Fraud and Security at Javelin Strategy & Research, looked at the threat that infostealers currently pose to banks. They discussed how infostealers present risks even to third-party vendors, and how organizations can stay one step ahead in protecting their sensitive information. What Are Infostealers? Infostealers are a specific type of malware that collects critical information from victims’ computer systems. They primarily target browser-based data, such as credentials, session tokens, and details about software that can be extracted from the operating system and sold to malicious brokers. Infostealers are generally small, lightweight programs built for speed. They’re designed to execute quickly and then delete themselves. This rapid execution is a key reason why infostealers are so difficult to detect. In 54% of the cases that security service Spycloud examined, the victim had an active antivirus program running on their system. Infostealers are typically sold by initial access brokers, a subset of the cybercriminal ecosystem focused on gaining entry to systems. This initial access allows other, more specialized groups to take action using the stolen information, including ransomware operations and nation-state threat actors. These brokers are agnostic to the buyer, willing to sell the data to anyone. FIs Are Especially Vulnerable Infostealers often target financial institutions, not just because they hold the money, but because they can scrape passwords from customers’ browsers, which frequently include login credentials for financial institutions. This tactic is a way to circumvent many of the fraud and account takeover prevention measures that FIs have in place. Customers at financial institutions often reuse passwords across multiple accounts, including those at different banks. Many of these financial accounts are linked to other services like email or social media, with the same passwords being used. These reused credentials are especially valuable to infostealers. These kinds of attacks are not limited to customers; employees have also fallen victim. If multi-factor authentication is not enforced for employees, they often use weak, short passwords or reuse them across multiple systems. Some employees continue to access personal accounts or use personal devices at work. In recent months, major browsers have implemented strong mitigations, but larger infostealers have been quick to figure out workarounds. “They’re constantly evolving,” said Kosak. “It’s a very effective marketplace and a very effective tool. It’s cost effective and it works. That keeps bringing on more of these threat actors, both people who are trying to make money on the initial access broker sites and the developers themselves.” Infostealers are also targeting session tokens, which can be used to circumvent credentials if the right protections aren’t in place. If criminals get the data fresh enough, most of it ends up available for sale within a day of the of the time that it’s stolen. The Hidden Risks The risks to financial institutions from infostealers are broader than they might initially appear. While the primary threat is theft, there is also fraud loss, operational risk, and reputational risk. Once a financial institution starts losing a significant amount of money from this, if it lacks proper protections in place with the media, the reputational risk can be massive. FIs should also consider their business-to-business connections. Infostealers can target supply chains and third-party vendors just as easily as customers or the business itself. Supply chain vulnerabilities can have second- and third-order effects, impacting customers as much as a direct breach of the institution. When an organization hires cloud service providers or third-party vendors to protect its data, the original institution remains responsible for vetting that third-party processor. It must ensure the vendor has the proper security protocols in place to deter infostealers. “The Snowflake data breach happened because they hired a third-party company that didn’t require multi-factor authentication,” said Pitt. “Ultimately, the customer is going to hold the initial institution responsible. They’re going to start leaving banks for somebody else that will actually protect their credentials.” The Latest in Prevention Identity and Access Management (IAM) programs can significantly reduce the risk posed by infostealers. An effective IAM strategy includes strict access controls and continuous monitoring to detect and respond to suspicious activity. When only authorized users can access sensitive data, it becomes much harder for threat actors to exploit stolen credentials. Multi-factor authentication remains absolutely critical , as is requiring customers to use unique and complex passwords for every account. If passkeys are an option, use them as well. “That’s an absolutely critical next step when we think about how to mitigate this risk in the longer term,” Kosak said. “Passkeys are going to become more and more important. We’re still very early in the adoption cycle on that, but they’re phishing resistant.” Another important factor for FIs to be aware of is cracked software. People concerned about infostealers should resist the temptation to download and install free software applications. “If you see something that looks a little off the books, it’s probably going to come with a nasty surprise,” said Kosak. “They direct people to these YouTube links that deliver malware. Stick to known app stores.” Behavioral detection, including user behavior analytics and device fingerprinting, is emerging as a strong defense against infostealers. They help detect account takeovers, for instance. If an FI detects any anomalous behavior, they can have processes in place to mitigate these risks and cut off the actions as they’re happening. Polite Paranoia All financial institutions have annual training requirements that everyone must complete to understand the threat environment. There’s another aspect that can be a bit harder to implement and articulate—the culture side. The core issue is instilling a culture of polite paranoia. “You’ve got to be willing to raise questions both up and down the chain if you see something that’s suspicious,” said Kosak. “Being willing as a new junior associate to raise your hand and say, ‘hey, this seems suspicious to me, that’s a cultural aspect to an institution.’ Being willing to be challenged if you’re a senior in that institution and say, ‘hey, I’m glad you’re asking that question.’ That’s really powerful too.” “These threat actors will use fear and intimidation and psychological pressure to get people to act without having the time or feeling like they have the channels to raise questions,” he said. “Polite paranoia takes that away from them.” The post Infostealers: The Latest Cyberthreat Facing Financial Institutions appeared first on PaymentsJournal .…

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Personalized Gift Cards Are the Cornerstone of Employee Engagement Programs 17:19

6 weeks ago17:19

17:19

Across industries and companies—from small businesses to large enterprises—organizations are constantly searching for ways to improve corporate culture and boost employee engagement. However, in large, dispersed companies, providing employees with the personal touch needed to maintain motivation can be particularly challenging. In a PaymentsJournal podcast, Julie Gu , Vice President of Sales and Marketing, North America, at Prezzee, and Jordan Hirschfield , Director of Prepaid at Javelin Strategy & Research, examined key trends in employee incentive programs, the challenges organizations face, and how customized gift card program can effectively drive engagement. Don’t Skimp on the RICE Just as important as understanding what employees bring to the table at work is recognizing who they are as individuals. This is why organizations are increasingly interested in their employees’ hobbies, wellness, and inclusion interests. As companies explore ways to boost employee engagement, there is an acronym—RICE—they should keep in mind. “You know I’m Asian, so I never skimp on the rice,” Gu said. “What that means is that ‘R’ is for rewards and ‘I’ for incentives. ‘C’ is for celebrations—and that’s celebrating moments big and small, professional, and personal. Then, there is ‘E’ for engagement, which is making sure you’re forming a daily habit throughout, and that transcends all the aspects.” Fostering engagement on a daily basis can be difficult in a busy office—and even more so in virtual or hybrid teams. “We’re very virtual in our organization, so I joined a running group,” Hirschfield said. “I’m a poor runner, but it motivates me to run. Someone just ran a marathon, so it’s a great opportunity to celebrate that. With all these groups, we’re getting updates on coworkers who are having babies or weddings or things that humanize the organization. You don’t want to be an organization that’s robotic.” Reinforcing the Right Behaviors This shift toward interest groups is a key engagement trend. While many companies have already implemented enterprise resource groups (ERGs) to foster inclusion, interest groups can be more enjoyable and feel less obligatory than ERGs. One of the most common types of interest groups is step challenges. However, many organizations are evolving past simple challenges like reaching 10,000 steps in a day. Micro-challenges, such as hitting 500 steps in a day, can be even more impactful. “The micro-goals are important because that person who hasn’t been participating in an exercise program might be intimidated by 10,000 steps,” Hirschfield said. “I look at myself—I work at home, so I’m not walking from my car to the elevator, which adds a couple hundred steps here or there. Getting to 10,000 steps can be difficult for some people, but when you have attainable goals, they get that feedback and engagement.” In addition to setting smaller goals, more companies are creating groups around shared experiences. As they organize these activities, organizations should ensure they support interests that positively impact their company. “The first step is to think about what behaviors are already happening around the organization that you want to reward?” Gu said. “What do you want to continue to validate and celebrate? Who can you showcase as a great example of somebody who’s already living our core values who we can show as an ideal value ambassador? You want to reward those behaviors and make that a daily habit.” Once organizations recognize existing behaviors, they can begin identifying the activities they want to incentivize. For instance, many employers emphasize mental health and wellness initiatives, as a healthier workforce tends to be happier and more productive. “Think about which ways you want to reward versus incentivize, and from there, cascade down to the snackable ways (you) can start, so you can start small,” Gu said. “It shouldn’t feel like this big three-year-long, road-map project that you have to tackle, because that’s where budget constraints and a lot of challenges start to happen.” Closing the Feedback Loop As companies refine their employee engagement plans, one of the most important aspects to consider is the employee themselves. “I have three keywords—feedback, feedback, feedback,” Hirschfield said. “Employees want to feel like they’re being heard. Incentives are going to boost morale—Javelin has a lot of data that proves that—but what also boosts morale is giving employees what they want. That doesn’t mean you need to cater to their every whim of the employee; it means you’re listening to them.” If employees see that even one program is introduced based on their feedback, it will make them feel that their voice matters and that they belong within the organization. However, as organizations shift their incentive plans from being employer-driven to employee-driven, it’s important not to overlook the link between the two. “People leave companies, but they stay for managers,” Gu said. “It’s critical to empower managers when we talk about employee rewards and engagement and incentives. It’s about how do we make sure that employees’ direct support every day is empowered. It makes them feel that they have a sense of community, and that they have this closed feedback loop and can feel heard.” This community isn’t possible if the manager themselves doesn’t feel equipped with the tools or support needed to reward their teams effectively. One simple, turnkey way to empower managers in driving employee engagement is by enabling them to deliver gift card rewards. Many companies have adopted this approach using small-denomination gift cards. For example, a manager could send a $5 gift card to recognize a team member for excelling at a task or contributing in a meeting—an appreciation that can have a greater impact than a simple kudos. “A $5 card when it came from my manager probably feels a lot better than $25 coming from some generic HR inbox or a person who I’ve never met,” Hirschfield said. “The opportunity to make that connection is a huge step. If it’s an HR department that controls these budgets, it may be empowering managers to have access to it and make it easy for them to personally provide those rewards. It’s critical in terms of making that human-to-human connection.” Beyond Monetary Value Personalized incentive programs that utilize gift cards are an integral way to create connections and make an employee feel appreciated. Not only are gift cards the most popular gift among recipients, but they can also be tailored to the employee in many ways. “You can include additional messages so that when I send you that gift card—even though it’s only for $5—the message that I send is that I noticed that you are training for a marathon, so here’s $5 towards your training regime,” Gu said. “It’s not really the monetary value, it’s the fact that you feel heard, seen, noticed and appreciated—and you feel supported for something that’s a big task.” When giving a gift card, a little extra thought goes a long way. If the employee is training for a marathon, they might appreciate a $5 gift card to Starbucks. However, a gift card to a Dick’s Sporting Goods along with a personal message could have a much stronger impact. “When you personalize it, you provide that reward or incentive or celebration that speaks to what that employee is doing, so making sure those are choices available to the HR department or the manager who is providing that opportunity, those are key,” Hirschfield said. A Means to an End For many organizations, implementing a personalized engagement program that leverages gift cards can be a daunting task. However, companies like Prezzee offer solutions that tailor incentive plans to an organization’s specific needs. “We make your goals our goals,” Gu said. “Where are you struggling to find engagement or retention? Are you having attrition issues? In terms of employee engagement, we are constantly thinking about it every single day, from our employees to your employees, and we think of the gift card as a delivery vehicle—and a means to an end.” The post Personalized Gift Cards Are the Cornerstone of Employee Engagement Programs appeared first on PaymentsJournal .…

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Inside Outsourced Item Processing: A Client Case Study 15:16

6 weeks ago15:16

15:16

When Academy Bank first considered outsourcing its item processing, it anticipated a challenging and uncertain journey. However, partnering with Fiserv transformed the experience, delivering both anticipated and unexpected benefits—ranging from a streamlined training process to a significant reduction in client impact errors. In a PaymentsJournal podcast, several members of the Academy team—including CIO Shannon Gilley , Executive Vice President & Director of Deposit Operations Margaret Bosley , and Item Processing Assistant Manager Dionne Green —discussed the challenges that outsourcing presented and how the new system has changed how they operate. They spoke with Candace Burleson , Implementations Analyst at Fiserv, and James Wester , Co-Head of Payments at Javelin Strategy & Research. A Legacy of Problems As Academy embarked on its outsourcing journey, the bank encountered numerous challenges. The proof team was tasked with monitoring140 branches, overseeing everything from the opening run to the end run. Many branch scanners were nearing the end of their lifespan, and perhaps most concerning, the physical tickets were increasingly contributing to negative client experiences. “One of the biggest challenges for us was that we were the frontline of support for all of the branches,” said Green. “We had over 140 branches that we were balancing daily, with just eight full-time employees that divided all of those runs. If there were any connectivity issues when the branches were trying to open up their runs or any issues related to the scanner, we were the front line of support.” The Academy team had a single dedicated resource that was responsible for custom scripting. If there were any issues or incidents with that individual, there was no contingency plan in place. Balancing was an issue because of all of the manual or physical tickets being run at the branch level. The team had to wait for batches to close at the end of the day and often were forced to double their efforts by handwriting tickets and manually inputting them into the teller system. The manual processes also resulted in errors affecting client accounts. The branches were saddled with hardware that was near the end of its life and was in bad need of standardization. The different types of printers across the branches resulted in a continual need for additional software or logins. Increased Efficiencies Once outsourcing was in place, Academy found several efficiencies on its end. The proof team was reduced by two full-time employees who had been handling keying and balancing proof work. Additionally, Academy had been relying on an external provider for keying assistance when short-staffed, at a cost of $600 to $800 per month. This expense was completely eliminated. “It was always difficult for us to maintain eight FTEs for this department,” said Green. “When folks get into banking, they expect bankers’ hours. These were not bankers’ hours. Because of the different time zones that we support, our balancers would have to work until 8:00pm and 9:00pm, and sometimes on Saturday.” The efficiency gains were significant. With fewer client-impact errors at both the branch and operations levels, the time spent correcting those errors dropped to just five to seven person-hours a week. Branches were able to shift their focus to sales, while the proof team redirected its efforts toward more critical functions, such as receiving training to identify check deposit fraud. “Our goal,” said Gilley. “is to focus on our clients, making sure that we are working on the products and services that are meaningful to those clients every single day. Moving that technology to our software provider has really freed us up in order to focus on the more important things.” An Involved Process Outsourcing can initially seem challenging and expensive. But the costs of keeping everything in-house can often be even higher. “Don’t underestimate your current costs when you look at everything involved with your in-house process,” said Bosley. “Don’t underestimate those costs, because you are going to see significant savings in areas that maybe you didn’t even expect to.” At the same time, banks should be transparent with their employees about the process. While it will be a journey, understanding the long-term benefits will make it worthwhile for everyone involved. The post Inside Outsourced Item Processing: A Client Case Study appeared first on PaymentsJournal .…

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Beyond Checks: Why Prepaid Cards and Digital Payments Are the Smarter Choice 19:33

6 weeks ago19:33

19:33

Many organizations still rely on paper checks, with no immediate plans to phase them out. However, one of the key issues with checks is that criminals favor them as well. Last year’s AFP Payments Fraud and Control report found that checks are the most frequently targeted payment method for attempted payments fraud—nearly twice as much as ACH transactions. In a recent PaymentsJournal podcast, U.S. Bank’s Scott Pope , Senior Vice President, Senior Manager of Risk and Compliance; Consumer and Small Business Payments and Mike Watercott , Vice President and Working Capital Consultant, Treasury Management, as well as Jordan Hirschfield , Director of Prepaid at Javelin Strategy & Research, discussed the vulnerabilities of paper-based payments and the advantages of shifting to electronic transactions, particularly through prepaid disbursement options. An Increasing Liability Check fraud has been the impetus behind the rising prevalence of mail theft, with criminals robbing postal carriers for arrow keys to access blue mailboxes. Once checks are in their hands, they have numerous ways to either sell the data or manipulate it for fraudulent purposes. Though these crimes may seem like isolated incidents, check fraud is often carried out by sophisticated criminal networks. “In many cases, it’s a sophisticated supply chain of bad actors, where the person stealing the checks and posting them for sale on the dark web is just one link in the chain,” Watercott said. “Fraudsters may alter or ‘wash’ stolen checks. Washed checks may also be copied, printed, and sold to third-party fraudsters on the dark web, generating even more fraudulent transactions.” Beyond fraud or theft, issues with checks don’t always stem from nefarious activities—sometimes mail is simply lost or misdelivered. These vulnerabilities increasingly make paper-based instruments a liability. “It starts with control,” Pope said. “When a company is using a paper check, once they have signed that check and placed it in the mail, they have lost control of it. In contrast, with electronic payments, including prepaid, the control is always there. If the payment has been misdirected or stolen, there are processes in place to quickly replace it and to end its access to the underlying funds.” Dramatically Safer In addition to their vulnerabilities, checks also lack many of the fraud prevention tools that electronic payments provide. With digital transactions, the sender can proactively investigate recipients before ever sending a payment. For example, the payer can verify whether the account is open and in good standing and whether it is owned by the intended recipient. With prepaid payment methods, additional controls are built into the card activation process. Though some fraud mitigation tools exist for paper checks, such as positive pay, these processes aren’t as robust as their electronic counterparts. Positive pay verifies checks by matching them against a customer’s issued records. Any discrepancies are flagged as exceptions, requiring the customer to approve or reject payment. “Just as the check payment process is manual and time consuming, so is the fraud mitigation process,” Watercott said. “You’re sending check issue files to the bank, you’re reviewing and reacting to positive pay exceptions daily, and then you’re reissuing checks. As you move away from checks, you gain opportunities to tap into more proactive risk mitigation before payments even happen.” In addition, regulatory requirements at both the state and federal levels provide protections for prepaid and electronic transactions that don’t exist with checks. Once a check clears, the only data typically available in statements or transaction histories is the check number and amount. In contrast, electronic transactions and prepaid cards provide organizations with a wealth of additional details, such as the merchant’s name, terminal ID number, location, and phone number. Many organizations use this information to identify potential fraudulent transactions. For example, a business owner might recognize the merchant where a transaction took place but not the city in which the purchase occurred. Once they report a suspicious transaction to their financial institution, the bank is legally obligated to investigate and determine whether the transaction was fraudulent. If fraud is confirmed, the customer can receive a full refund of the transaction amount. “Throughout that entire process there is a level of transparency; financial institutions are required to send notices and information to the customer during the process, which adds to the outcome,” Pope said. “From a regulatory and risk management perspective, I clearly see electronic payments and the use of prepaid cards as dramatically safer than checks.” The Tortoise and the Hare, Reversed Electronic payments offer enhanced security and controls, along with tangible benefits driven by improved efficiency. Chiefly, they elevate the customer experience—the convenience of credit, debit, and prepaid cards is a key reason these payment methods have outpaced checks. While consumers will certainly cash a check if they receive one, electronic payments are preferable to paper checks sent by mail, which require a trip to a brick-and-mortar financial institution. “Electronic payments reduce so much friction in the whole process,” Hirschfield said. “It’s the opposite of the tortoise and the hare. We always hear about how slow and steady wins the race but here, quick wins the race. The tortoise is going to run into roadblocks—be it bad actors or just unforeseen circumstances—that get in the way. You want to be the hare in a payment, the one who is getting there quickly.” Another integral aspect of a positive customer experience is the freedom of choice. Supporting a wide array of electronic payment options allows consumers to customize their payment experience to suit their preferences. Beyond consumer benefits, electronic payments offer powerful advantages for businesses as well. While some businesses have leveraged the float inherent in check transactions, electronic payments provide greater working capital benefits. With a known settlement date and increased transaction visibility, payers can better manage cash flow and financial planning. “I think of the visibility of checks as like ordering something online but receiving zero shipping tracking,” Watercott said. “If that check is stolen, you might not know about it until you get a call weeks later asking, ‘Where’s my payment?’ Just removing the payment from a check is already a step in the right direction in terms of fraud risk reduction.” Implementation Considerations As organizations transition to electronic payments, there are many considerations. First and foremost, they must understand the scope and breadth of the unique rules that govern electronic payments. For example, there are regulations like the Electronic Fund Transfer Act, also known as Regulation E, which was enacted to protect consumers’ rights in electronic transactions. Additionally, network rules, such as those governing the ACH process, provide protections for both consumers and the organizations using these services. Ensuring compliance with all applicable rules and regulations becomes even more complex when third-party vendors are involved. However, financial institutions still have strict compliance mandates that remain in place regardless of outsourcing certain tasks to third parties. If a fintech fails to uphold its share of the compliance burden, the bank—not the fintech—will ultimately be held responsible. “As institutions are transitioning from paper to electronic disbursements, they need to be aware of the organizational structure that they will be involved in,” Pope said. “Are they looking to leverage a fintech as part of this process, and how does that fintech manage their risks associated with partnering with banks? There is a lot to consider, depending on the model that you’re going to be engaging in.” A Balancing Act Though the task may be daunting, the benefits of payments modernization make the transformation a necessity. For many organizations, an incremental approach is the best way forward. “In the grand scheme of things in the industry, there’s no finish line to this,” Hirschfield said. “There’s never going to be a world without fraud—we have to be realistic about that—and there’s never going to be a world without payments. It’s all about continuing to progress so that we are working in a world with less fraud and with increasingly faster payment options.” However, as organizations transition to faster payments, they can’t fully abandon legacy payment methods. “Payments is a balancing act,” Watercott said. “You have to be both a master in defense, I call that checks, but also be on the offense by embracing digital payments. The sports cliché that defense wins championships doesn’t always apply to payments. It has to be a balance of embracing innovation, but doing it in a secure, risk-oriented way. Work with your partners towards setting a goal of making check issuance an exception and not the norm.” The post Beyond Checks: Why Prepaid Cards and Digital Payments Are the Smarter Choice appeared first on PaymentsJournal .…

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Down the Path to Full Payments Orchestration 34:57

7 weeks ago34:57

34:57

Many businesses are familiar with payments optimization, which focuses on enhancing the outcome of individual transactions. However, the growing field of payments orchestration takes a broader approach. It addresses larger issues, such as deploying the latest payment methods and technologies faster than competitors and improving payment performance at scale. The goal is to deliver the most secure, frictionless customer experiences while also driving profitability. Orchestration, at its core, provides the foundation for payments optimization to thrive. In a PaymentsJournal podcast, Brady Harris , CEO of IXOPAY, and Don Apgar , Director of the Merchant Payments Practice at Javelin Strategy & Research, spoke about the benefits of payments orchestration, from dynamic routing to enhanced data and analytics. Like Conducting an Orchestra Simply put, payments orchestration unifies a merchant’s payment operations, providing a comprehensive view of what’s happening across the entire ecosystem. It allows them to identify where breakdowns are occurring, resolve inefficiencies, and enhance security by leveraging multiple fraud prevention tools, optimizing authentication processes, and ensuring compliance with global security standards. Large enterprise merchants typically have as many as 20 or more integrations with various payment service providers (PSPs) and acquirers around the world. IXOPAY has had customers with more than 150 to 200 different processors they’re managing behind the scenes, requiring upwards of 150 to 200 full-time employees. Businesses are starting to move away from off-the-shelf orchestration solutions in favor of a global network of payment providers, typically through a third-party orchestration layer. “Companies in different industries and sizes start to play this game of payments whack-a-mole,” said Apgar. “They start out with a PSP and find there’s something missing—a new payment type or fraud solution. So another integration layer comes into play and eventually you wind up with this massively complex web of integrations.” The orchestration mindset drives efficiency into this web of integrations, which were originally built to fill gaps in what was once a simple payment process. “Before I fill another gap, why don’t I take a step back and see what are the universe of payment solutions that I would like to have?” Apgar asked. “How can I put them all together in one basket, even if I need to use multiple providers and do it in an efficient fashion? It’s like conducting an orchestra where all the all the instruments are playing their individual sounds, but come together to form the music.” The Promise of Tokenization IXOPAY started hearing from large global merchants with substantial payment volumes who realized they wanted to own their own data through vaulting solutions. That’s where tokenization comes in. With tokenization, businesses can not only own their data but also leverage it to improve authorization rates and reduce fraud and risk. “Think about millions of transactions and all of the intelligence that sits at that transactional level—how can you create actionable insights that the business can then synthesize and operationalize back into the business,” said Harris. “When you combine them together in highly configurable, very customizable ways, you are now effectively offering these very large merchants a way to customize and build their own payments infrastructure with out-of-the-box solutions. To me that is next-gen orchestration.” While tokenization has significantly enhanced data security, it has also reduced visibility into customer data. Tokenization makes it challenging to track customers across different channels and geographies. However, this challenge highlights the importance of orchestration, especially as more enterprise-level merchants explore tokenization strategies that can help unify customer interactions across multiple sales channels. Another major advantage of payments orchestration is its ability to optimize soft declines, through card lifecycle management tools. In a recurring billing environment, where payments are repeated, cards can expire, or customers may need to replace lost or stolen cards. Even so, the card is still linked to the same name and associated data. Payments orchestration allows entities to refresh this sensitive but important card-level data, resulting in higher authorization rates. Making Use of the Data Data and analytics continue to be a major challenge for many merchants. “We (work with) a large fashion retailer who said they didn’t have a good data strategy on how their different payment methods are being used,” said Harris. “But payment analysis for that merchant is manual. This leads to all kinds of challenges as to where to grow the business, where to expand geographically, what payment acceptance types they should invest in. It’s hard for them to even build out basic roadmap priorities in a way that helps optimize sales and drive revenue.” Financial reconciliation of this data presents another hurdle. Merchants managing multiple acquirers in an orchestrated environment must reconcile and understand the fees. Additionally, when it comes to chargebacks, merchants need to determine where a transaction was authorized and ensure it’s properly routed back to the right acquirer. “There’s a lot of day-to-day blocking and tackling of data before you even get into analytics,” said Apgar. Promise for the Future Next-gen payment orchestration involves a simplified operations layer designed to handle millions of transactions at scale across multiple providers. It also includes a central access point with dynamic routing that can switch in real time between different processors based on sophisticated rules or requirements. Merchants can customize these rule engines to establish how payment transactions are cascaded. This is also where artificial intelligence comes into play. As merchants add new geographic locations, and layer in different interchange card types and issuer transactions, rules-based routing becomes increasingly complex. An AI agent, however, can account for all the variables that influence routing decisions, moving beyond a static set of hard-coded rules. “It’s mind-blowing what that’s going to do as we continue to iterate on this idea of dynamic routing,” said Harris. “I don’t know where it’s headed, but holy cow, the future is bright. “If you’re a mid-market retailer, look at orchestration as a solution,” he said. “There’s a lot of optimization and a lot of business benefits, typically at a much lower cost. That really frees up businesses to focus on what they do well, which is growing revenue and expanding their business.” [contact-form-7] The post Down the Path to Full Payments Orchestration appeared first on PaymentsJournal .…

The PaymentsJournal Podcast

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The Untapped Power of Payments Data in Bill Pay 19:36

7 weeks ago19:36