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Evolution in Payments & Commerce: Collaboration - Progress but Far from Perfection (MAG Quarterly- Volume Five, Issue Four)

By Laura Townsend, SVP, Operations, Merchant Advisory Group

December 7, 2017

Is the payments industry taking an approach towards collaboration that will result in mutually beneficial outcomes?  Historically, I would suggest the answer is ‘no’.  However, the past should not predict the future.

Collaboration enables individuals to work together to achieve a defined and common business purpose. Collaboration is also a key tenet to knowledge management or transferring ‘know-how’ among individuals.  Collaboration relies on openness and knowledge sharing but also some level of focus and accountability on the part of the business organizations involved.

Interestingly, the derivation of the word collaboration is “to labor together.”  Clearly, labor is indicative of work.  Yes, collaboration is work, and sometimes it can be especially hard work.  Yet the results that can be achieved through successful collaboration are endless. Successful collaboration, at the conceptual level, involves:

  • Awareness – We become part of a working entity with a shared purpose
  • Motivation – We drive to gain consensus in problem solving or development
  • Self-synchronization – We decide as individuals when things need to happen
  • Participation – We participate in collaboration and we expect others to participate
  • Mediation – We negotiate and we collaborate together and find a middle point
  • Reciprocity – We share and we expect sharing in return through reciprocity
  • Reflection – We think and we consider alternatives
  • Engagement – We proactively engage rather than wait and see

With that foundation, the question is whether the payments industry is taking an approach towards collaboration that will result in a mutually beneficial outcome.  Historically, I would suggest the answer was ‘no;’ however the past should not predict the future. 

The MAG’s mission is ‘Driving positive change in the payments industry through collaboration…’.   Since joining the MAG I have seen evidence of progress in the level of collaboration across the payments industry.  Throughout this year, I have seen examples of stakeholders motivated to align on a shared purpose of improving the customer experience, as part of our efforts on operational and digital commerce payment matters.  Stakeholders seeking a middle ground have proactively engaged in finding possible alternatives to mitigate pain points. 

One such fabulous example is the recent announcements by major networks to eliminate the need for obtaining a customer’s signature for payment purposes.  Over the past decade there has been a debate over the value of signature as an authentication tool.  Within that timeframe, no-signature programs have been introduced, eliminating the requirement for signature on qualified transactions.  The value proposition was improved speed of service and throughput benefiting both retail operations and issuer payment volumes while reducing friction for the customer at the point of interaction all while preserving security for our mutual customers.

These programs ultimately eliminated signature for at least three quarters of the payment transactions in the U.S.  Further collaboration with our network partners and motivation within our respective organizations to find common ground for the benefit of a mutual goal of improving the customer experience has led us down the path towards elimination of signature altogether.  I am confident that over the course of time, all network partners will reflect on the current state of payments and consider alternatives which will lead them to a similar conclusion.  As in-store and e/mCommerce experiences continue to expand and converge, new and improved digital authentication methods are emerging which bring better security to the payments ecosystem. Elimination of signature will help pave the way for adoption of these methods.

I predict that continued collaboration among industry stakeholders will drive forward solutions that address other customer experience pain points, including, but not limited to, delayed access to funds for merchandise returns at physical retail locations and declines at the point of purchase for e/mCommerce goods and services.  

Despite this positive step forward, there is a long road ahead and many instances remain in payments where collaboration is limited or non-existent. This continued behavior will keep the U.S. payments industry from successful advancements in innovation and security. The lack of collaboration ultimately hurts the consumer. 

This collaboration takes time, effort, and requires proactive engagement and participation by all stakeholders to be successful.  The MAG will continue efforts to collaborate in order to positively influence the future of payments for the benefit of your retail customers.  We urge all stakeholders in the industry to follow suit.

To learn more about progress regarding collaboration with our network partners, visit the Operations Committee webpage.