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Letter from the MAG Board Chair: MAG Year In Review (MAG Quarterly- Volume Five, Issue Four)

By John Drechny, MAG Board Chair & Senior director of Payments Services, Walmart

December 7, 2017

We have made tremendous progress over the past year. The MAG has grown the membership base by 24% and now includes 19 of the top 20 merchants. We have expanded the reach of our conferences, with attendance up 16%. Educational programs included 13 webinars and 4 educational sessions. We added two new Board members, John Manna with Lowe’s and Gina Powers with Dunkin Brands. Our staff has grown to include Laura Townsend as SVP of Operations, Beth Provenzano as VP of Public Affairs and Mary Kay Carlson as a Support Analyst. We have a solid financial performance leaving us with considerable reserves while expanding our delivered value. Each and every one of you should be commended for contributing to the success of the MAG over the past year.  Without your dedication and participation none of these successes would have been possible.

While these are all great accomplishments, it is just the foundation on which we need to build. The retail space is transforming at a rapid pace, and I would guess most of you are feeling the acceleration of change within your organizations. Technology is creating new opportunities and, if leveraged correctly, will allow for merchants to take a leadership role in payments. The ability to incorporate data into the decision-making process through the use of machine learning or artificial intelligence will be critical to success of lowering fraud. Real time payment platforms, which will be brought online in the near future, allow for different relationships between merchants and financial institutions. Distributed ledger technology could allow for cross board solutions that don’t require a single authorizer to validate a transaction. Bots can simplify remedial tasks allowing staff to concentrate on building for the future. As these new technologies are brought to market the MAG must adapt to help our members by educating and advocating on their behalf.

While all of these new technologies show promise, merchants will be inhibited from creating the needed responses without changes to the fundamentals of the payment network rules. The Digital Commerce committee has developed key principles to advocate for the required changes. One such key principle is the use of data in authentication, which should determine the risk and pricing of the transaction and not just the channel in which the transaction occurred. The Operations Committee has created a roadmap for Network Best Practices and will use the criteria in a scorecard to measure each network’s effectiveness against the principles. Mastercard’s announcement of no longer requiring merchants to collect signatures starting in April 2018 is a result of this effort. I stand by my prediction at the Annual Conference that the next time we meet (don’t forget to register for the Mid-Year Conference) signatures will be only a memory, and merchants will save millions in both labor and chargebacks. After successfully beating back the banks’ Durbin repeal efforts, the Advocacy Committee is focused on educating regulators and legislators about the barriers to a fair and transparent payment landscape.   

The MAG will need to expand from our traditional membership and sponsorship base to include more entities on the cutting edge of technology. We need more pure play ecommerce merchants who can help us bolster our discussion points on authentication. Acquirers like Stripe and Braintree should be recruited to help merchants understand the usage of APIs in managing their payment infrastructure. P2P players will need to be engaged to understand their roadmap on expanding their acceptance to point of sale. We will also need to educate ourselves on cyrptocurrency and what role it might play in the payment ecosystem.

As you can see, IT IS A GREAT TIME TO BE IN PAYMENTS. The MAG is positioned to be the center of education and advocacy on merchants’ behalf. I am excited about the future; and, with continued contribution from our fantastic base of members, we are set to make a difference in the next generation of payments. 

I hope each of you gets a chance to recoup and refresh with your loved ones this holiday season and I look forward to seeing you come back energized to make a difference in 2018.

Thanks For Your Support,

John Drechny