Throughout my career, some of the hardest decisions I have made were the ones where I needed to make an instant decision that affected an unknown future. The reason I feel these are the hardest decisions to make is they must be made on assumptions. Often, when gathering information for these decisions, those supplying the information presented it with bias.
For example, when I was working for a merchant, I was asked several times about making an investment in enabling contactless payments. While contactless payments have some positive attributes, I was led to believe they would lead to incremental sales. I was even shown data in the early days (2010), proving this fact.
As I asked more questions regarding the data, I realized there was a bias that was causing one to believe contactless payments were creating sales. At the time, issuers were only giving contactless cards to their top spending cardholders in the portfolio due to the expense of the card. Hence, the average purchases of the cardholder with contactless cards were greater than those of other cardholders regardless of the payment form. I asked questions like, how did the spend compare both before and after the card was issued to the same person or was a control group in place which the cardholders were issued a new card without contactless being measured? By asking those questions, I learned the business case was not as strong as I was led to believe.
As I continued to dig into additional information around contactless acceptance, such as how it works within a wallet and who else sees the data generated by the transaction, it became clear, it was not going to be high on our priority list for the foreseeable future.
This is just an example of how important it is to understand more than just the high-level view of what is being proposed before implementation. Even when things are presented as a requirement, that might not be exactly correct. For instance, when merchants started seeing debit screens prompting on terminals for things like U.S. debit, once properly vetted, it became clear this was not a required implementation.
My point is that being inquisitive is an important job function in the payments space. When approaching new requirements or products, I would suggest your first step be to seek a greater understanding of what is being proposed. I find the best way to do this is not by listening or reading presentations but instead by asking questions of various subject matter experts.
There are a lot of great innovations happening in the payments space. We see new products or processes that are leading to reduced fraud or faster transactions. Some processes are even opening new channels for merchants to engage with customers. But not all of them will be the right fit.
One way to help vet these new processes is by participating with the MAG’s Innovation or Collaboration Committees. This way you get the advantage of asking your questions to MAG staff and industry partners, as well as listening to other leaders in the payments industry ask questions. The committees also engage directly with some of the people leading the initiatives discussed, which helps in getting questions answered quickly.
Besides being inquisitive, another important part of thinking past the obvious is understanding the purpose of the change and the benefit you are being told it will provide. Over my years in the payments industry, I have been part of many significant changes that have made the payments system work better, such as payment credential vaults. This is a process where the merchant either internally creates or uses a third party to store all their replicable payment credentials in a vault with limited access and replaces the payment credential with a form of token in their infrastructure.
By using these vaults merchants can better secure their payments infrastructures and reduce the risk of being involved with malicious activities by thieves trying to steal the data. Even with these benefits, there are a lot of questions merchants need to consider and ask to think past the obvious benefit of securing their payments infrastructure. For example, can the process support various providers a merchant may use in their payment process? or does it limit a fraud provider who is trying to look across the environment of the cards being used to spot patterns of fraud. Another question may be, can you still use a payment orchestration layer that may enable different acquirers for different types of payments? One acquirer may accelerate in subscription processing and another on instantly delivered products. If you have not enabled a token system that can be utilized across the various parties, it may not allow you to take advantage of these scenarios.
One key question you may want to ask is their ability to route the token to different networks. This is another place where being inquisitive will pay off. While the answer to this question may be yes, the follow-up question of, does the alternative network receive the same information to share with the issuer as the token provider? This will lead to a different answer. In this case, you may find out certain pieces of the tokenization process may not be passed which could lead to the issuer treating the transaction as less secure.
To be clear, I am excited about the changes happening in the industry and would recommend many of the changes to merchants to enable a better and safer customer experience. My point is, to ensure there are no unintended outcomes based on the decision you may make today you should:
- Ask probing questions
- Have a network of industry people you trust to help you understand what is proposed
- Be involved with communities that engage in digging into the specifics
- Understand the desired outcomes for your business
As always, the MAG will continue to provide the industry with the platform to discuss these important decisions. Through collaboration with everyone involved in payments, we can move the industry forward.