The problem — and opportunity, of course — is that so many relatively mundane consumer and financial tasks are moving into the mobile realm, a place where physical, government-issued ID documents are not necessarily required or pragmatic. And as that shift occurs, there is increasing pressure from consumers and businesses to shorten the time between consumer intention and finalized transaction – and to do so in a way that prevents the creation of any exploited holes for criminals to go through.

That’s the setting for the latest edition of the PYMNTS Topic TBD interview series, in which Karen Webster talks with Dewald Nolte, CCO at Entersekt. The discussion took place during a recent surge in global attention to issues of trust. That stemmed from the recent Davos conference in Switzerland, where the world’s elite talked a lot about trust — more specifically, the decreasing levels of trust that the general public has for public institutions, social media, big tech and companies in general (but, apparently, not individual employers).

How to Trust?

Part of the reason for having more trust in employers than in other people and organizations is that, essentially, people know employers in real life, Nolte said. That gives people the chance to have that “proverbial look in the eye,” something that does not come, for instance, with Facebook – no matter how many times people see news or social media images of CEO Mark Zuckerberg.

But most people don’t live in villages or small towns anymore, and no matter how familiar consumers might be with local merchants or even bank tellers, more and more retail and financial tasks keep migrating online. Face-to-face contact, at least in matters of trust, seems to be headed toward something that might one day be considered a type of luxury or perk. More often, criminals are finding it easier to steal or buy enough data from the online black market to impersonate consumers, open fake accounts or commit other types of digital fraud.

That goes for the real, physical world of retail, too. A determined, clever criminal could buy a car with a fake persona if he or she is just “able to produce the right documentation,” Nolte told Webster during the PYMNTS interview.

Going forward, “we should probably start thinking about digital ID the same way we think about money,” he said. “The data should be very well-protected in the same way that digital cash is protected.”

That’s a common thought, of course, but still vital, and leads to the next step in making sure digital ID has the needed level of trust in the coming years and decades. That next step, in fact, could potentially counteract the numbness that has set in among many consumers thanks to all of those data breaches — along with the sense that, in Webster’s world, when it comes to online security and trust, “things are spinning out of control.”

Trust Anchors

One possible remedy?

What amounts to anchors for digital ID and trust.

The idea, according to Nolte, is to first recognize that mobile devices — mostly smartphones now, but perhaps with bigger roles for smartwatches in the coming few years — are the tokens that provide access to payment, financial and commerce functions. Those devices, though, need a trust backstop themselves — a communication and authentication process in which a trusted third party confirms that the digital ID offered by the mobile device is, indeed, legitimate.

Nolte used a common consumer example to illustrate that view. “In a store, when a consumer pays with a card, the bank tells the merchant that” the transaction can go through because the customer is legitimate (or at least as legitimate as can be reasonably determined). “The merchant trusts the bank enough” to let the purchase go forward and gives the consumer the goods he or she is buying.

The opportunity for digital ID is similar: have that trusted third party authenticate consumer IDs for a retailer or other participant in the specific transaction. That third party must have the trust of consumers and retailers, of course.

Banks and Governments

That’s why, in the U.S. and many other parts of the western world, financial institutions could play that role, given that “consumers already trust them with their bank accounts,” Nolte said. In certain countries, the post office might suffice. In many countries, though — especially those in emerging markets — the government would be a bad choice, given how some of those non-democratic regimes have fragile trust relationships with citizens.

Consumers also need a reliable place to turn to should they lose their mobile devices and need to rebuild or regain parts of their digital identity — it’s not like they can simply show up at Google headquarters and expect help there, of course. Having a trusted, reliable third party — think of it as a trust anchor — could help solve for that problem as well.

Concepts of identity and trust have changed often throughout history, and have led to significant shifts in politics, economics and culture. The ongoing shift is no less historic, but nothing guarantees that it will go smoothly. Identifying stronger anchors of trust could help tilt the odds in favor of a positive outcome.

The post Banks As The Keeper Of Consumer Digital IDs? appeared first on PYMNTS.com.

Consider the fact that decline rates are at eye-popping levels. Here’s one example: According to the Aite Group, one global Fortune 500 company estimated that bank decline rates stand between 20 percent and 30 percent, and to shave even 1 percent off that tally “would save this firm as much as $100 million in annual revenues.”

Legacy systems — the formerly tried-and-true ways of doing business — tied to eCommerce aren’t cutting it anymore. Aite said the fraud controls at both merchants and issuers that do not leverage the rich consumer data at hand can result in eCommerce decline rates as high as 20 percent. Conversion is paramount then, and can get a boost when merchants offer a relatively wider range of payment methods and currencies to customers, while seeking to stanch decline rates.

To do that, with each method brought on board, merchants must tailor their fraud efforts and how they approach the customer experience in general. At present, merchants manage payment costs as a key performance indicator (KPI), stated Aite. They should consider factors beyond cost, though, even if it means offering payment options that prove expensive, at least initially.

Time for a new model, a new way of thinking? After all, saving a sale can be worth an awful lot to a business.

Auth Shopping In A New Marketplace, Defined

In the latest Topic TBD, ModoPayments (Modo) Founder and CEO Bruce Parker told Karen Webster that the decline tsunami is a solvable problem: “We need something in our sourcing of payment services that we don’t really have today, which is more of a marketplace kind of activity or idea,” he said.

That’s because, once in a while, a given provider of card processing is not going to offer the authorizations that are desired and needed. The next processor down the street, though? Well, maybe they can offer the authorization — so guess who’s going to get the merchant’s business?

“If we have a provider [that] cannot help us right now, but there’s another one [that] can, well, we’re just going to use the other one,” he said. “That’s the thing that I think is missing now. How we get connected to payment services is a little bit too much about integration, and it is a little bit too complicated.”

When it comes to shopping for the next provider, welcome to the concept of “auth shopping,” to coin a phrase. It’s a process that is not necessarily as fluid and efficient as one might think. As it turns out, the nuts and bolts of connectivity are sticky and keep stakeholders tethered to inefficient processes.

The connection itself is no easy task, Parker noted. As an example, for a card processor, there are the activities of connecting to back-end systems and application program interfaces (APIs), and tying everything to a merchant’s systems.

“All of this is not something that people look forward to,” he said. “That’s plumbing.” Once the pipes are there, people tend to not mess with them. “The reason that it is hard today is that we really have not thought about building multiple connections,” though some of the more tech-nimble merchants and newer eCommerce players have indeed been busy adopting sophisticated payment systems. Parker named Walmart and Airbnb among them — and auth shopping is part of their new processes.

Auth shopping rendered through those players is as simple as knowing there is an authorization that needs to be done, “and how do I inform my payments stack so that I can get the best outcome?” Parker said. That outcome, of course, is one that looks for an authorization rather than a decline, appropriately adjusted for risk.

Things have reached a point where declines have gotten so bad, so quickly, that stakeholders must mull what they can do — strategically — about the problem that is now front and center, Parker explained. As it turns out, the problem is tied, in part, to technology.

A Twitchy Neural Network

The reason the declines are accelerating, Parker noted, is because the technological tools that the issuers use when it comes to authorization have been around for a long time, but are no longer as efficient as they were at one time.

“Most issuers are using a form of neural networks as a foundation of how they determine whether or not to authorize a card from a fraud perspective,” said Parker. The neural networks are made up of computer systems based on the construct of the human nervous system, and are getting a little twitchy.

All too often, cardholders with good funds backing them up see their cards declined. That’s because the neural network sees something it doesn’t like. When the decline comes back to the merchant, they get a generic descriptor. They see the decline, which says something like “do not honor,” said Parker, who noted that “when you’re talking to the call center and the person running the platform, they cannot tell you why” the card was declined.

To put it another way, the reasons are non-deterministic. “This is the original, foundational black box,” he said, “and it is good, but not good enough in the moment. And that is why we are seeing declines absolutely rocketing up.”

Modo has had conversations with merchants that have billions of transactions in annual volume, where decline rates are an upward of 30 percent. The percentage of those transactions that are tied to fraud, theft or lost cards — someone who leaves their card in the back of an Uber, for example — stands at about 2 percent to 3 percent.

Parker said the choices are to wait it out and determine that 15, 20 or 30 percent declines are fine for now, and hope they will get better, or retrain the system. One solution might lie with taking the same card data and merchant identity (ID) that had been presented to processor A and declined, and take it to processor B with a different merchant ID so that the transaction will go through.

Auth shopping, he told Webster, is an effective way to deal with the vagaries of neural networks, which he likened to a dog that has been kicked while its abuser wears a certain pair of shoes. If the dog sees the shoes, it gets scared. However, wear a different pair of shoes and all is well.

The shoes in this analogy extend to eCommerce in the form of merchant IDs, said Parker. The neural networks get a little afraid and react much like guard dogs. That reaction blocks the consumer from the payoff of transaction, after choosing an item, typing in the card data and hitting submit. The cardholder phones the bank, the bank has missed out on its own revenues “and everyone is unhappy in this scenario,” Parker explained.

Switch out the merchant ID (the shoes, in other words), and get past the dog (the neural network). The transaction goes through and everybody is happy.

Beyond Auth Shopping

Beyond auth shopping, with an eye on solving the plumbing problem, said Parker, “payment services shopping, [alternative payment method (APM)] shopping … let’s just go shopping for a whole bunch of things.”

It could be the great unbundling of payment services. The marketplace ideal, where auth shopping and payment services shopping promote a frictionless experience for the customer and validate the technology investment for providers, Parker told Webster, “is almost like sunlight — it is the best disinfectant and is the best way to get that behavior, the best outcomes … if we can democratize access to payment services. If we make it not about integrations, not about connections, not about data formats, then it becomes about, ‘Hey, I really want to try this brand-new checkout.’ And there are several out there, and they are amazing.”

For the merchants then, connectivity and interoperability are fostered through a single point of access in the marketplace model. Without worrying about plumbing, the merchants can focus on providing a range of payment options to consumers — spanning, say, Google Pay, Samsung Pay, Apple Pay, Venmo and any other number of checkout solutions. It’s the marketplace that enables innovations and efficiencies between buyers and suppliers, and ultimately benefits consumers.

“When you take plumbing out of the equation, everyone can go shopping. Merchants can go shopping for payment services, consumers can go shopping [for] the things they want from those merchants and more business gets done. It’s ‘more better,’” he said, perhaps coining another phrase.

The post PODCAST: Why Merchants Should Go ‘Auth Shopping’ appeared first on PYMNTS.com.

In Illinois, and a handful of other states, changes in how employees are reimbursed for business-related expenses herald changes on a broader scale, and in how firms use technology to make sure that expenses are being recorded accurately. In the case of Illinois, an amendment to the state Wage Payment and Collection Act means employers must reimburse for “all necessary expenditures” incurred in the course of normal duties, and need not require the submission of receipts.

In the latest Topic TBD, Danielle Lackey, chief legal officer of Motus, said the law across Illinois — and states such as California, Massachusetts and several others — represents a shift from usual practices. Before those state-by-state mandates, employers usually opted to give road-bound employees who use their personal vehicles a monthly allowance to cover mileage costs.

“But the employer does not have the obligation to know, precisely what that cost is,” Lackey told Karen Webster. With this new position, reimbursements are considered wages in Illinois, though they are not taxable wages, she clarified.

Miles To Go For Mileage Reimbursement

“The biggest category that we are going to see come into play,” Lackey added, “will be reimbursement for vehicles, because that is a big cost” to firms across several verticals.

Tracking the mileage becomes challenging to both employer and employee, but the technology to do so does indeed exist. Lackey noted during the interview that Motus offers a cloud-based platform that tracks mileage per employee.

The traditional method of offering up allowances — and accepting receipts and written reports across a variety of expenses, but especially mileage — has been a low-tech, high-cost approach. Here, the employee simply tells the employer what the mileage has been. In tandem, there tends to be exaggeration by employees on business mileage, pocketing some extra money and taking a bit off employers’ bottom lines.

Lackey stated that when looking at the difference between auto-capture technology that comes with expense-reporting automation apps versus someone who simply reports their mileage manually, there can be a 15 percent to 20 percent cost savings. Beyond mileage, there are other costs involved that factor into consideration over personal vehicles being deployed during work, such as registration, taxes and insurance.

She noted that IRS guidelines cover fixed and variable rate reimbursements, as tied to mileage reimbursement plans. “This would be quite difficult to manage manually,” she said of companies that may have several employees on the road at any one time. Variable costs are particularly tough to track, as mobile employees can pay more for gas in one state than another and even across local landscapes, where city rates can be more than those seen at a small town fill-up station.

“It is important to have the data and the algorithms and the system in place” to separate those costs, calculate them and apply reimbursement rates, said Lackey. In the drive to embrace that technology, she told Webster that there are solutions from FinTech firms that can help employers both accommodate the law and be fair to their employees.

Best practices include employers deploying auto-capture solutions (such as those offered by Motus), which grab data as employees are driving. After all, she said, “the notion that an employer is going to figure out what the depreciation costs are” and what tax issues may arise “is not really tenable in terms of the time and the cost it would take to do that individually.”

Lackey noted that pharmaceutical firms or beverage and food enterprises, for example, may have been giving their employees an allowance, and “they may likely have been [doing] it in a way that the allowance is treated as a perk, never additional compensation” — a practice that will change across Illinois and the other states with newly changed wage mandates. For some of these companies, it is rather easy to fall afoul of federal laws — if an employee incurs costs that, netted out, mean they are making below minimum wage, the employers “are in trouble … and they should already be thinking about these things.”

Living In A Data Age

Lackey stated that we are living in a data age, one where companies have a fairly good understanding about where their expenses lie. “But if you think about hotels and business lunches, those all have receipts, and they are easier for a company to track,” she told Webster. Fuel and other vehicle-related expenses are not as easily evidenced by receipts, and therein lies the value of auto-capture technology.

Motus’ own approach is that the cost of the actual technology should be de minimis, said Lackey, who stated that firms deploying Motus’ cloud-based solutions have a return on investment (ROI) from within six months to a year. The end result in the wake of the legislation over mileage and business-related expenses in general can be extended to other areas of technology in the service of work — and as bringing one’s own device becomes a standard daily practice.

“As technology and our lives evolve,” she said, “these things, [such as devices], fall under an umbrella that they are there to help you do your job … so it won’t be so much that we legislate about cars and phones individually. People are not working and sitting in offices anymore. There is a lot of blurring the lines of what is work and what is personal.”

Lackey said the blurring lines mean that employers must get ready to deploy technology to comb through information and make sure employees are paid what they are owed. “It absolutely comes down to having the data. Having a policy in place — and the new law is very clear about this — and making sure you follow it means ‘you are good’ as long as the policies are reasonable,” she told Webster.

For both employers and employees, “the bottom line is what matters … but also fairness matters,” she said.

The post Auto-Tracking Road Warrior Employees As The Wheels Go ‘Round appeared first on PYMNTS.com.

Millions will trek to their families, possibly grumbling all the while as the holidays fast approach. Millions of corporate road warriors are embarking on their final sprints toward drumming up new business, maintaining current clients and boosting employers’ top lines.

Time to think about how we take to the skies and how consumers will pay for it.

POS Financing Gains Ground

In a Topic TBD interview with Universal Air Travel Plan (UATP) CEO Ralph Kaiser, the executive told Karen Webster that among the trends gaining traction with airline merchants is the emergence of point-of-sale (POS) financing. UATP exists as the oldest payments network in the world, having been in service for more than 83 years and serving the global air travel market exclusively.

Paying for tickets — which can, depending on the season and destination, cost thousands of dollars — over months can certainly render them more affordable. Kaiser told Webster that POS financing may prove especially appealing in “less developed countries, where there’s not as much availability of credit or credit cards, [and] where there are more cash transactions. It’s probably going to add a greater population to the traveling public, and that means more people are going to access air travel.” He stated that POS financing will not displace other forms of payment, but should lead to accelerated activity in the coming years across corridors, such as Central and South America, the United States and Canada.

As for the conduits to that financing, he said, noting PayPal Credit and other partners, instant credit check and review — with tailored offers — “might bring people, who otherwise might not take a big trip, to be able to do it.”

The Mechanics And Risk Of POS Financing

Of course, air travel is a commitment and risk that remains unique to finance providers. After all, trips are booked months in advance and can be tweaked, changed drastically in terms of the detail (destinations and days) or cancelled outright.

Kaiser explained that the first payment is charged when the trip is booked, and “the airline will receive its funds. So, it is the providers taking the risk, because they are underwriting the risk of the loan.”

He noted that, in determining this financing, the underwriter reviews the services being booked and takes note of the device being used — perhaps a penthouse that might be financially out of reach is being put on a card. “If they cannot afford this, it will all be factored and decided whether it is a good risk or not. It is a more holistic way of viewing your customer than just the traditional credit score,” he told Webster.

Alternative Payments Now Preferred Payments

In discussing the embrace of alternative payments, Webster noted that offerings such as Alipay and WeChat Pay have hundreds of millions of monthly active users (MAUs). There exists a significant number of travelers who want to take trips outside of China — and, of course, bring with them significant opportunities for commerce into the countries they visit. The alternative payments they wield are being accepted at UATP partners, said Kaiser, who stated that “we link Alipay to the global airline industry” and “we are seeing the alternative brands being picked up. One of the issues is convenience, and also that trust is a big factor.”

Kaiser noted UATP’s position as a neutral agnostic player that connects payment methods and brands to airlines across any market the latter chooses, adding that newer entrants like Amazon Pay are also likely to gain visibility.

Simply put, he said, these alternative payment methods are fast becoming how consumers believe they should pay and, more importantly, how they prefer to pay. Kaiser said alternative payment choices offer a win-win situation for the airlines because they are less expensive for merchants to accept and “we find giving people options is a better way for airlines [to] enhance revenues … than by simply giving a credit card option.” He noted that, in markets such as the European Union (EU), the efforts to cap interchange fees show a drive to bring down costs to the merchants.

In short, consumers want to use the method that is convenient for them, and they already have a range of choices in how and where they book airline travel in the first place. Kaiser said airlines have a vested interest in steering customers to the airlines.com site, where bookings and payments can be made directly — and offering alternative ways to pay can help cement that activity.

Trends In Corporate Travel

Beyond the move toward alternative payment offerings, other trends are afoot. Among them, said the CEO, are innovations that allow for corporate travel managers to get negotiated rates from airlines. Using the rails provided by UATP means that there can be savings realized by all parties of the transaction.

“There is a drive on both sides of the equation to take out some additional costs,” he said. Airlines pay many fees to multiple providers for an array of services. The traditional interchange and merchant service fees have been relatively high, measured against the cost of an airline ticket.

Kaiser continued, “And so, airlines are starting to have conversations with corporate travelers and corporate travel managers about ‘if you can do things to take some of that cost out by booking through preferred channels or preferred provider[s], or use my preferred form of payment, then I can share some of that savings with you.’”

There are two ways to share that savings, he told Webster. Savings can be in the form of a rebate, but what most corporate travel managers are thinking about is whether they can get a discount off the fare, especially if they do a lot of business with a particular carrier. In this case, they can get non-published discounted fares. He stated that commercial card programs are on offer for profitable companies with solid economics, and that some of the existing relationships (when it comes to corporate travel activity) can be rationalized even further in the form of mutual benefit — and can even stave off regulatory tinkering by dint of showing proactive economics that help end users.

Though the bottom line is always a big driver, the direct relationship fostered by UATP between the corporate travel manager and the airline can allow for other benefits, such as pre-boarding, lounge access or waived bag fees. “If you bundle that kind of thing with the discounted fare for using the UATP issued card, that can be a powerful loyalty tool,” he said.

Friction In The Process — Solved?

Beyond payments, there is friction for corporates around reconciliation, Kaiser said. Some of the alternative payment brands may not understand the uniqueness of how airline tickets are sold. There can be change fees or refunds involved, so backing that transaction out of the system toward back-office reconciliation is not always easy. He said some of the payment systems for airlines might also be older than would be seen elsewhere.

Blockchain is among the technologies being considered by UATP, said Kaiser, to take out some of the friction on the processing side via smart contracts. Everyone who ties into that contract cannot manipulate data, and changes to itineraries or scheduling are updated instantly.

However, “blockchain is not going to make your flight not get delayed,” he said, tongue-in-cheek.

Headed into a peak season for consumer travel (and where corporate travel may taper off into the holidays), Kaiser said the company has seen record numbers of travelers in as many as seven of the past nine months. “So, I would say the travel business, with regard to airlines, is fairly strong right now,” he told Webster.

The post UATP CEO Sees Alternative Payments Taking Flight With Airlines appeared first on PYMNTS.com.

Across it all lies the friction of accounts payable (AP) and payment management workflow, rendered inefficient by paper-based processes. Paper is the conduit of communications and payments (via checks, of course), and is the way payables have been tracked and satisfied over centuries.

It’s high time for payables to be transformed, to make the shift into digital methods.

The urgency is borne from the fact that B2B payments are increasingly becoming cross-border, especially for mid-market companies. In addition, time constraints bump up against complexities tied to everyday business processes, ranging from validating supplies to making sure taxes are paid in far-flung jurisdictions.

In a Topic TBD interview with Tipalti, CEO Chen Amit told Karen Webster that the tension between buyers who want to keep their money as long as possible and the suppliers comes as there are constraints tied to business models, processes and technology. Those constraints set up roadblocks to a happy medium where buyers and suppliers can both feel good about making payments.

Behind The Buyer/Supplier Tensions

“There are multiple aspects to the tension,” he told Webster. “Some buyers have incredible power over suppliers to improve their payment terms.”

Certain verticals have structural challenges in place, he said, that illuminate the power buyers can wield in supply chain economics. For example, in the auto industry, it can take months to get paid as cars are assembled and sold to end customers.

“The whole supply chain needs to finance the effort and the labor, and the materials that go into the process,” he said. “It is a natural component of [auto] production and it just has to be faced.”

Even as the business model dictates a longer, relatively drawn out payments timeframe, said Amit, the process of the payments workflow is a labor intensive one, too, and they are slow.

“Paper checks are still very common in parts of our economy,” said the executive. “It can take weeks for a paper check to clear.”

However, even before that last step (waiting for the check to clear), the processes of capturing invoices and approving them, connecting with banks, and providing payment instructions — and to say nothing about getting the correct information from the suppliers — all take weeks.

Stopping The Paper Chase

There’s certainly acknowledgement that the paper flow, and even the flood of emails and phone calls that can lead to a productivity drag, needs to stop. There’s no dearth of recognition of this need. Consider the fact that, over the next three years, as many as 88 percent of businesses plan to reduce the number of paper invoices they receive from suppliers by at least 25 percent, as estimated by the Institute of Finance and Management.

The shift toward automation can pay dividends. Firms that automate the invoice approval process spend 75 percent less to process a single invoice. They can process more than 10 times as many invoices per full-time equivalent. In addition, Amit said, automation can shrink the compliance and supplier validation efforts from weeks to, “potentially, hours.”

That’s especially important against a backdrop where B2B payments are increasingly becoming cross-border, and where manual business processes are glaringly inefficient. The regulatory landscape is changing as well, where manual efforts mount as executives endeavor to comply with new rules and regulations that can change quickly.

“If you have international suppliers, the friction can be tremendous,” said Amit, which creates even greater delays when suppliers need to get paid, when regulators are not satisfied or when banks reject payments because governance details are lacking. The more steps tied to vetting appropriate information or onboarding suppliers, the greater the potential for breakdowns and delays in the process with manual and paper-based methods.

“It doesn’t make sense to not automate this part of the business [before payment instructions are made]. It helps everyone,” where 80 percent of the labor can be saved, he said. “There are no losers in this part of automation. The supplier gets more transparency in the delivery of the payment. The buyer can save some time … and economics are being created where everyone wins.”

Negotiating Terms — And Growing Top Lines

Automation means that buyers can offer dynamic payment terms, said Amit. He noted that Tipalti has a product that helps suppliers get paid earlier, for a discount.

Good payment policies lead to revenue generation for the buyers and reduce the costs of working with suppliers — who, of course, get paid earlier. Thus, he said, the incentives are aligned between buyers and suppliers, and the concept of dynamic discounts and payments acceleration are gaining corporate adherents. Amit also stated that the payments acceleration movement — where Tipalti works with third-party lenders that underwrite Tipalti’s customers —is seeing a “great hunger” from investors to finance such efforts.

In a discussion on whether there is too much debt out there financing various supply chains (the subject of a recent interview in this space, speculating that there is a ticking debt bomb in the U.S. economy amid supply chain financing), Amit said “you are either efficient or inefficient, competitive or not competitive. Blaming it on financing and lending is pointing the spotlight in the wrong place.” The businesses that spend hours, then days, wrestling with compliance mandates and paper-based payments processes, ultimately, spend zero time on such efforts because they go out of business.

In the quest for efficiencies, companies find them by sourcing products and services on a global basis — a trend that is strong and continuing, he said, noting that Tipalti is able to “offload some of the challenges to our customers.” Businesses do not want to become payments experts, choosing instead to focus on the core business at hand, Amit explained, leading to a strong demand for payables automation across all verticals and small- to large-sized businesses (SMBs).

The post Tipalti On Automating The Yin And Yang Of B2B Payments appeared first on PYMNTS.com.

Call centers, particularly those dealing with financial transactions, have a strong need to be sure that the person on the other end of the line is actually their customer. The fact that most firms know that, and set up measures to properly authenticate those customers, is a good thing, said Chief Commercial Officer Dewald Nolte of Entersekt in a recent conversation with Karen Webster.

The fact that every institution seems to use a different authentication method, on the other hand, is less useful.

Sometimes, that cashes out in semi-amusing ways. Webster related a story of trying to figure out purchases on a credit card statement that entailed two different authentications by two entities using completely different methods in under five minutes. Other examples, Nolte noted, included customers who were asked to show funny notes they’d written, make funny faces or even hold up that day’s newspaper as proof they were a real, live person.

That, Nolte said, is the fun side. The less fun part is that customers who go through so many variations on authentication are left unable to question when one is going wrong.

“Fraudsters can take advantage of the fact that authentication is all over the map,” Nolte said, “especially if they manage to intercept legitimate calls. Customers don’t know when to ask ‘when do I not trust this anymore?’ because every time they do an authentication, there are different requirements, and answering a lot of personal questions doesn’t strike consumers as odd.”

That’s bad for consumers, bad for the development of digital channels for commerce and bad for financial services in general because it will act as an inhibitor on what the market can develop. The goal, Nolte said, is to find a way to standardize the way authentications are done, since it could create opportunities and make things much easier on users.

Friendly Friction

The dominant conversation around payments and commerce when it comes to authentication matters (among other things), Nolte noted, is that consumers hate friction and can’t bear to be exposed to it. Thus, friction needs to be rooted out at all costs.

That is true, he said, but with a significant asterisk attached. Consumers can be very tolerant of friction when they perceive it as serving a useful purpose and if the tasks they are made to undertake aren’t terribly onerous.

“The user isn’t even likely to perceive it as friction at all,” Nolte said, “because it is something they know, and it is something they can become accustomed to. That actually can be something they find reassuring in the process because it always goes through the same way and in the way they expect it to.”

Consumers get frustrated when the friction causes an interruption in their activity in an unpredictable or unexplained way. He noted that he had a friend who tried to sign on for a Netflix subscription with a card that was inexplicably declined. He didn’t stop to try and figure it out, but moved on to the next card in his wallet and was watching a movie shortly thereafter. The next day, he got a call from his bank, noting that his card was in a batch of compromised cards that it had deactivated.

That next-day explanation after the client was inconvenienced, Nolte said, means a lost the client. From then on, the friend used the card that worked more reliably, finding a way to authenticate a transaction more useful than spontaneously having the plug pulled on the card.

When the trusted entity is a bank, they are reaching out to the customer to say,“I have you, I am protecting you and someone cannot use your card or account without your knowledge.”

Get it right, he noted, and a working process makes consumers more loyal.

“If you get it wrong in the [state] we are in (this is the era of instant gratification), that customer is probably gone,” Nolte said.

Doing It Better

There are many ways to standardize and simplify the authentication process for consumers, ways that do not compromise its security or strength. These aren’t complex things, Nolte noted. A customer who has dialed in and been authenticated by a bank should be able to port in an authentication if they are transferred to a merchant. That is not terribly difficult to pass along. The mobile device itself contains a massive amount of potential for streamlining security, while still maintaining its strength.

“The way we see the industry moving forward is to embrace the fact that the mobile device is a very powerful device that the user has on them at all times,” Nolte said, “and to leverage all that processing power to really enhance the user experience.”

There are a lot of tactics to get there, he noted, but when businesses can lock in on the device itself and verify that “that mobile is the right mobile,” the industry itself will be able to make a great leap forward. The industry also needs for organizations that reach out to consumers to be able to verify themselves as well. Fraudsters spend all kinds of time pretending to be groups they aren’t — the IRS, the bank, the head of a lottery organization.

The goal, he said, is to create a reciprocal relationship of trust between both parties, and bring that to each conversation, user and institution so that everyone involved feels certain of who is on the other line. The mobile device is a strong authentication factor, one that has a rich future in creating the right context to, perhaps, create that trust.

What’s Next

Humans, he told Webster, are creatures of habit, who can tend to make change at a slower pace than most people want. A certain number of early adopters jump at novelty and, at some point, a tipping point is reached and everyone else runs along for the ride.

Authentication, with the regulatory push behind it, is getting to the point where the changes are beginning to happen. Mobile, he noted, is becoming mandatory in some areas, where the regulation is more stringent insofar as it is becoming the most usable tool.

“I would be surprised, in the next three to five years, [if] we don’t reach that point with mobile authentication,” Nolte said.

There are and will be stumbling blocks to progress. The majority of authentication mechanisms in place are still one-time passwords, despite their many flaws, but the world is moving away from that.

“It is considered good enough by a lot of banks and organizations because you only need to have someone’s phone number to use it,” Nolte said. “But at the end of the day, the use cases will drive real adoptions. SMS is good enough for certain kinds of events, but as we get into more complex emerging use cases, they won’t work.”

As the scenarios become more complicated, and as customers want to do more on mobile that requires they be authenticated, this will drive the adoption and push for more advanced authentication methods. In addition, as open banking becomes more of a global norm (and as consumers desire to consolidate more actions across providers), banks, FinTech firms and the like will encounter more authentication methods and vote for the ones that work better.

“Consumers will ultimately choose,” Nolte said. “They’ll choose the use cases they most want to pursue, and they will choose the authentication methods that increase their comfort, without confusing or [complicating the] transaction for them.”

The post Entersekt: Why Authentication Needs A Standard appeared first on PYMNTS.com.

However, it’s becoming a showstopper. On average, patients now pay 20 percent out of pocket on top of deductibles that hover around $1,800 annually, growing to 30 percent over the next few years.

In the latest Topic TBD, Bill Lodes, EVP of strategy at payment systems provider First American, told Karen Webster that providers have a different incentive to not only fix healthcare payments, but improve delivery models and billing practices.

Telemedicine, Portals And Recurring Payments

Lodes said that the models of delivery are changing, where traditional management plans are no longer the only options. For one, there are now concierge models, where physicians charge fees to patients on an annual or monthly basis and patients have 24-hour access to their providers. Think of it as more personalized medicine, where the appointments last well beyond mere minutes as they did in the past.

Another option is, notably, the rise of telemedicine, which connects providers and patients through apps and websites — with the convenience of saving time, and perhaps best-suited to basic health issues.

There is also the self-funded model, where employers provide healthcare benefits to employees using the company’s own funds and must assume the direct risk for paying the claims. Here, the onus is on the patient to do research, to find the provider of an MRI, for example, that can be cheaper than the one down the street.

The overarching mindset is one of saving time and costs.

The shift to those models demands a shift in how payments are collected, said Lodes — no easy task in a system that is hardly known for its tech advances. No longer can they rely on collecting payment at the time the patient is in the office, especially if there is never an in-office visit in the first place.

“Now, patients and providers are responsible for … having to make a one-time payment or set up a payment plan,” he said. For the providers, he added, “to manage the process with a legacy system is difficult.”

As the newer healthcare provider models offer a more immediate environment for scheduling appointments with doctors, getting seen (whether in person or online) and having treatments or prescriptions rendered, the push for providers to get paid is more immediate as well, said Lodes. Companies, such as First American, are being enlisted to address the upfront costs of it all when it comes to payments, including the credit card and ACH payment.

Lodes noted that — at least for now — there is still, of course, room for the traditional in-person visit.

“Where we stand today [is] still in the early stages,” he said of the transition. “Certainly, we see a fair share of doctors who have researched these models, have spent the time taking a look into the pros and cons of this model and have been setting up those practices, limiting the numbers of the folks that are in that practice and charging that monthly, reoccurring fee.”

New Patients, New Ways To Pay

The creakiness of those legacy systems, said Lodes, is exposed more fully in an age where more patients, hailing from Generation X, are making payments of all types from their mobile phones.

“They want to make payments right away,” said Lodes, shedding light on the traditional push and pull of payments in healthcare, where payment might be rendered before or after a visit or procedure, and all of it dependent on the plan the patient is on.

However, uniformity is needed — as to what is to be paid, when and even how. This transparency can be aided with new payment options, such as financing that can be wrapped around the service at the time of rendering.

Addressing The Pain Points (Even While Managing Pain)

“With more sophisticated plans coming into play, [they need] to be more upfront with the patient as to how much they are going to be responsible [paying] for that procedure,” Lodes said.

This suggests that there may be other models that need to be wrapped around that service, with such financing options as payment plans, recurring transactions, and setting up the ability to store credit cards and pay securely in a manner that meets payment card industry (PCI) compliance requirements.

“I think this is going to become even more prevalent in the future as we go to some of those newer models,” he said.

Clearly defined payment terms also include tracking the balances that can change across each stage of a procedure, and can be addressed with a card on file, for example. Automating and recurring payments helps ease the paper chase, the billing and non-billing paper statements that are sent to patients post-visit, which are done manually and inefficiently.

“There are people coming into the marketplace [who] are providing those types of technologies that allow some of the legacy players to catch up and offer those [portal experiences] on your iPhone or Android,” Lodes told Webster.

However, as the transition toward tech-based healthcare marches on, there will be a continuing need for companies like First American “to provide those technologies,” he said, “to make it easier for the patient to interact back and forth with the doctor and their insurance company.”

The post How To Fix Healthcare Payments appeared first on PYMNTS.com.

“The moment of inspiration is now critical because it is fragile,” Bishopp said. “When I have that moment when I want to buy or donate something, I don’t want to have to jump around to a bunch of different websites or move around [to] a bunch of different screens. I want to be able to do it here, where I am.”

For the platforms that connect consumers with the merchants that could potentially serve them, the competitive pressure has evolved. It’s not just about bringing groups with mutual commerce interests together, but about making them able to seal the deal with a transaction. Now, platforms are increasingly adding payments to the mix and becoming marketplaces.

It’s a development that one can see all around the industry as of late.

In the last week alone, Zillow adapted its platform so that landlords and tenants could handle rent payment via its portal, and acquired a mortgage lender so users could directly arrange financing while browsing for homes on the site. Instagram has spent much of the last year upping its commerce capacities on-site, most recently by expanding shopping into Instagram Stories from its historical home on the newsfeed. On the other side of the world, a Chinese parenting platform called Babytree snapped up a $2.19 billion valuation, and investments from Alibaba, as it attempts to build the all-in-one content-and-shopping platform for parents.

In the past, Bishopp noted, there had been an attitude from platforms that expanding directly into the commerce and payments side of things was too risky, too difficult and too expensive. However, these days, those “perceived roadblocks are being eliminated,” as third-party payment-technology solution firms are stepping in to clear these historical hurdles in the way.

That, he noted, is making it easier for marketplaces to get into the game, which is changing the nature of the game itself from the inside out.

Removing Roadblocks

There are, and always will be, challenges and risks when getting involved with payments, simply because of the nature of the business and, particularly in the early days, because “marketplaces often don’t know what they don’t know,” Bishopp noted.

There is a lot of work in those early days to overcome that knowledge gap — firms need to work with trusted advisors, do their research and have a very clear idea of who they want to attract to their marketplaces. That’s all work, he said, but it is very doable, especially with the glut of market resources out there.

What is holding a lot of platforms back, though, isn’t the real difficulty; it’s areas where they perceive there to be insurmountable obstacles that don’t exist, or at least not to the degree it is believed they exist.

Bishopp explained, “They don’t want to do payments because it seems like all of it [is] so difficult — onboarding, installing checks and balances, all of the transactions security risks themselves. They are worried about being on the hook and about being fined, and are not sure what it really means to be responsible for payments.”

However, that is changing, as third-party providers and white-label solutions are proliferating, and the excuses are dropping away. A good provider, he noted, can manage some 90 percent of that dreaded back-end and front-end complexity away — and make it fairly easy for a marketplace to become up and ready to go on accepting payments pretty quickly.

“Lightning strikes” can happen, he added, but it is becoming much easier and more cost-effective for merchants to get a clear-eyed version of likely risks, and how they can be reasonably managed and mitigated. Meanwhile, the service and payout side has gotten faster and less friction-filled, as banks and acquirers have caught on to the fact that they need to move money faster so that people who are providing the goods have more reason to want to enter into the relationships.

“Competition between marketplaces and solutions providers is forcing everyone in the area to want to get good at this, which means the conservative players that continue to hold back aren’t going to win this,” Bishopp said.

The Development Of Marketplaces

The evolution toward the marketplace models that are becoming so ubiquitous today is long in coming, Bishopp noted. The first forbearer is eBay/PayPal in the late ’90s and early 2000s, which kicked off the evolution of the internet payment provider and payment facilitator models. But marketplaces as we understand them now were really developed and had their rules written by companies like Amazon, Uber and Lyft.

“They are not a payment facilitator, but your entire experience is with them, and that is where the difference is now. [That is] when a consumer is working directly with an entity that is really selling nothing, but is bringing suppliers of goods together and a venue to buy it — like Instagram and the other players that are coming up,” said Bishopp.

As the model has worked for those early players, he added, services and service providers have sprung up to make it easier to get a marketplace up and running, without having to develop a full-service stack to manage it all like Uber, Amazon and Lyft essentially did.

Security has also developed robustly throughout the process so that marketplaces can do a better job of policing not only transactions themselves, but the merchant and consumer onboarding. That way, everyone in the marketplace can feel confident about everyone else’s identity.

It’s a more competitive space in many ways, particularly as acquirers are expanding their efforts toward playing directly in the third-party payment provision space, and for fear of being squeezed entirely by technologists and being relegated to commodity status. However, Bishopp noted, it’s also a more cooperative space, as the players involved are increasingly clueing in to the idea that this is necessarily going to be a collaborative effort.

“Acquiring banks realize they are losing market share to the technology guys. They want to play more and so they are making investments, and doing great partnerships and investments, to provide those deep technology plays to marketplaces. And they are all going after this high-growth area of third-party payments or complex payments, or anytime a third party is helping buyers and sellers conduct transactions,” Bishopp said.

It’s a good environment to get into, he said, because there is a lot of growth and room for improvement. The good news is that, unlike the earlier inventing-the-wheel days of marketplace payments, there is also now a large and growing amount of adult payment supervision in this area for when firms want and need it.

Where It’s Going

One of the more interesting things about watching the rapid evolution of the marketplace space, Bishopp told Webster, is the unexpected paths of evolution it has taken. Local chambers of commerce are setting up marketplaces because it makes sense, given their role as a hub for local businesses, and from which local businesses may connect their digital platforms.

Quick service restaurants (QSRs), he noted, make up another area of quick growth because there are a lot of mobile apps and technology plays, like tableside kiosks that these restaurants often use. These services are all white-labeled so that, from the front end, the consumer always feels like they are interacting with the food vendor of choice. However, on the back end, there is a complex third-party process that routes the payment from the mobile app or kiosk back to the store where the sale was made.

Bishopp said, “A lot of the good marketplace platforms are very behind the scenes, and very white-labelable to make sure that the goods and services being conducted are what the brand is front and center.”

The Coming Evolution

As there get to be more marketplaces, Bishopp and Webster noted at the end of their conversation, and as it gets easier and more efficient to build a solid and secure one, oversaturation in the market becomes a problem. Bishopp likened it to the earlier days of mobile wallets, when it seemed every brand that could find a way to affix “pay” to the end of its name rolled out a product.

Too much saturation eventually breeds consolidation because consumers don’t want to navigate too many options. In fact, oversaturation damaged adoption overall, since consumers get caught up in the paradox of choice and find it hard to select anything.

The change, he noted, is already afoot in the industry: Acquiring banks are buying up technology plays as they are working to hold their place of relevance and importance in the payments value chain. The space is evolving quickly, he noted, and is going to continue to do so as payments are turned on in more environments, and as consumers are enjoying more contextual interactions.

“I think you will see more change for the financial institutions [FIs] sector, of really helping merchant[s] enable payments through a marketplace [in] some form or fashion. You’ll see them in the conversation more than you do today,” Bishopp said.

He also believes the players there will begin to play better together — with banks collaborating with each other to build marketplace networks to service very specific vertical plays.

“Kind of like how we saw them come together for P2P payments,” Bishopp explained, “I think they will look to come together to lead a marketplace platform because they realize no one institution can do it themselves.”

As for where to look for those large alliance plays, with or without acquisitions, Bishopp noted that hospitality and healthcare are the two most likely candidates, as they have the biggest and most front-facing consumer positions in the market.

“There’s two big needs there, and no one bank can do it. But marketplace[s] and banks together are well-placed to pull that together,” Bishopp said.

We’ll check back a year from now to see if he was right.

The post The Coming Consolidation Of Marketplaces appeared first on PYMNTS.com.

Synthetic identity fraud, as readers of these virtual pages know, is the practice by which criminals take information from various sources — and people, of course — and create new identities to open accounts, buy goods and get loans on someone else’s dime and reputation. No one is sacred or safe — not even children.

The problem is costly for firms, resulting in losses of as much as $6 billion in 2016, roughly 20 percent of card losses. Beyond the hits to businesses’ bottom lines lies the long-standing harm to consumers, who may see their credit reports decimated, with debt collectors dunning them for things they never bought and all sorts of desperate battles waged to clear their good names. They may not even be aware that they’re being victimized until months or even years later.

In the latest Topic TBD, Karen Webster and GIACT EVP of Product David Barnhardt delved into just how widespread the problem is becoming, why firms are consistently taken for a ride by the fraudsters and what can be done to stanch their efforts. Turns out nothing less than a sea change is needed in how companies vet who is on the other side of transaction.

A Global Problem

If you needed any reminder, there’s a gold mine of data out there, and data is the brick-and-mortar of constructing a synthetic identity. Everything’s fair game, it seems, from names and Social Security numbers (SSNs) to account data, and even info gleaned off social profiles (more on this in a minute).

Equifax may have its place as a watershed hack in the annals of data breaches, but it stands as only one of many. Consider the fact that, just this past week in Singapore, a massive data breach touched the information of a third of the city-state’s population. As many as 1.5 million people have been affected, stretching back three years, and the criminals made off with the “non-medical” details, spanning names, addresses and identity cards. The Singapore event shows how breaches (and targeted information) are becoming global in scope, said Barnhardt.

“This isn’t just a U.S. problem,” he said “This is a global problem. And I think the more we see breaches in these foreign countries, as well as stateside … my thoughts are ‘when are the fraud guys going to really start to cross-pollinate?’”

Cross-pollination brings with it new threats, it seems, as the data is, well, out there (perhaps exponentially so with each large breach), ripe for the picking and there to cobble together to create new personas.

How The Bad Guys Do The Bad Stuff

With so much raw data moving through the dark undercurrent of the web, and the billions in losses incurred by firms, the question remains: Why have companies been lagging in their anti-fraud efforts? The status quo is what doesn’t work, with entrenched processes, of course. All too often, companies rely on limited data for enrollments and payments, Barnhardt told Webster.

Relying on limited data points is a dangerous game. Barnhardt stated that fraudsters are fleet and nimble in formulating new concoctions from disparate data sources. They may use a “correct name” as matched to a Social Security number, but that data may be paired with an email address that has never been associated with that individual, or was recently created. The fraudster may also enlist technology of the tangible sort in their effort, with a prepaid cell phone or a brand new device that has been recently activated and has no history tied to it.

Email and phone are the primary means by which the individual communicates with a financial institution (FI) or retailer, he stated. Now, virtual accounts mean that paper statements are never mailed to the real person. Conceivably, then, an individual can be a victim of fraud and never know it until they’ve been mailed a statement of overdue payment or gotten a collection notice, Barnhardt said.

“They are mixing it up now,” said Barnhardt of the sorcerers behind synthetic identity fraud, “and they are trying to see what they can be successful with.”

To sum it up, the bad guys find the corporate blind spots and exploit them.

A few new wrinkles are emerging, he said. Among them: Fraudsters are taking on fresh Social Security numbers — the ones issued to children, the most vulnerable victims. That’s because criminals can get away with their schemes a lot longer — for years. As Barnhardt stated, credit profiles take shape over a period of years. These youngest victims will not be actively checking their reports until they do things like (legitimately) apply for loans, credit cards or mortgages.

The bad actors behind synthetic identity fraud are also “hopping” onto legitimate accounts. There’s that wealth of data again, which allows the criminals to gather info from social media (high school, mother’s maiden name, dog’s name), along with traditional data, and gain entrée into an account. Presto, change-o: They lock the real user out by changing passwords and drain the account. They can even add themselves as authorized users on accounts.

Don’t Look To The Law

Webster noted that a law signed by President Donald Trump in May mandates that the government — specifically the Social Security Administration — help FIs verify applicants and Social Security numbers via the database that already exists, cataloguing those very same SSNs. At present, the practice that requires applicants’ signatures and verification takes weeks. Now, that response can be rendered in real time.

Barnhardt noted, however, that such efforts really verify only one piece of data — albeit an important one. The number of stolen SSNs far surpass the number of stolen credit and debit cards. The difficulty with synthetic identity, especially for retailers and FIs, is “they look like a legitimate customer if you are not cross-checking the data,” he said.

Marking The Time(stamp)

The key is to cross-check traditional and non-traditional data carefully, said Barnhardt. With those efforts, FIs can start to build a consumer or business profile that is essentially the digital DNA of that party.

“When you bring all this together with the facts, coupled with time stamps of the association of each piece of data,” he said, “at that point, synthetic identities stick out like a sore thumb. … This is what gives users the ability to pause and further investigate because, I can tell you, more and more companies today are seeing [that] one or two pieces of secondary information are mismatched or not really associated — and when they investigate, they find this is, in fact, a synthetic identity.”

In other words, a bit of advice from Barnhardt to the firms seeking to separate legit users from poseurs: “You’ve got to manage the lifecycle from login to logout. Today, you have to verify and authenticate everything your customer wants to do — if they want to order a new debit card, order checks, change their address, change their email, their phone … everything has to be authenticated.”

When verifying so many disparate actions, Barnhardt stated, single-point solutions are ineffective. He noted that his own firm seeks to help create the digital DNA, coupling, say, bank account information with cell phone carrier data, eliminating the aforementioned blind spots.

The problem is pervasive, the battle permanent. And, per Barnhardt: “We just have to keep fighting the good fight.”

The post Battling Synthetic ID Fraud, Clearing Up FI Blind Spots appeared first on PYMNTS.com.

Another scenario: A driver has their kids in the car. Back in the booster seats, the little angels are channeling a little bit of, well, fire and brimstone. Wailing and gnashing of teeth is biblical in its intensity. Does that parent want to stop to get water, toilet paper and milk — and unbuckle the kids from their restraints? Nah. Didn’t think so.

Fortunately, the connected car is a savior to frictionless commerce — at the pump and beyond.

In the latest Topic TBD, CEO Donald Frieden of mobile commerce firm P97 told Karen Webster that the marriage of journeys — the literal ones across daily commutes and errands, and the journeys of payments and transactions moving from digital wallets to merchants’ tills — are blending seamlessly. So much so that P97 will go live this week with one of the largest fuel retailers in the United States, across 10,000 U.S. gas locations in tandem with one of the country’s largest auto manufacturers. The firms are eyeing a confluence of mobile commerce, digital marketing and ease of payments.

Simply put, said Frieden, the car now “becomes an extension of the consumer’s home” across retail, fuel and convenience stores.

The Available Data

The data is out there, said the executive, with unprecedented access to drive patterns, the number of fill-ups that a consumer conducts in a given period of time and other buying behaviors. Even these can be broken down, granularly, to the vehicle type, customer demographic and grades of fuel consumed. Add the cloud into the mix and the data between the dashboard, wallet, pump and rewards programs flows seamlessly and in real time — giving merchants insight into what consumers/commuters need, including the where and when.

“We call these companion apps,” he said of the mobile conduits, which are gaining traction and being deployed by Frieden’s firm. “So, these will be the apps on the phone. These have particular use cases already. For instance: finding my car in the parking lot or I want to start my car, or I want to unlock my car.”

In a commerce continuum, the mobile app allows the consumer to, in essence, “extend their car” as one exits their auto. These consumers want the same rich experience powered through tech if they are, for instance, going into a convenience store or brick-and-mortar retailer.

Hands-Free Commerce

The biggest driver for the connected car, said Frieden, is recognizing the importance of the millennial market and the technologically-enabled ways that millennials buy what they need.

“So, if we look at millennials,” he said, “they have $400 billion in buying power today. And these merchants and retailers are recognizing that, over the course of the next two to three years, that $400 billion is going to inflate to something like $1.2 trillion.”

For P97, efforts have evolved beyond initial fueling activities, with a goal of true hands-free commerce.

“It’s about the journey and all the things that get done during the day,” he said.

The company is taking a cue from Netflix, he stated. “By taking traditional content rails, and then injecting them with new tailor-made content, we see ourselves fast becoming, sort of, the Netflix of value-added services for … fuels, lubes [and maintenance] convenience, and just general retail.”

By way of illustration: Consider that the car, sensing it is getting low on fuel, will do far more than just flash a yellow light. It will notify the driver of the nearby preferred station. When the driver arrives at that station, P97 will — using geolocation services and geofencing — recognize that vehicle and initiate the fuel purchase.

“This includes the pre-authorization for the payment, done literally in seconds now … we can actually activate the fuel dispenser, which included this pre-authorization, request and look up accounts for that consumer, and applying the [payments] discount,” he told Webster.

Consumers can redeem offers from the car or have orders delivered right to their trunk (the milk and toilet paper described at the beginning of the article). Frieden said, “This is how brick-and-mortar is going to compete against two-hour delivery from Amazon.”

Establishing The Binding Connection

As for the movement beyond fueling to buying goods and other services, Frieden explained that the company establishes preferred locations by a concept called binding.

“We try to minimize the number of decisions made during the driving process — ideally, we’d like to minimize that to the number three,” he told Webster. In this instance, they would “bind” consumers to three different fuel brands, keeping individuals informed of discounts and promotions, which, in turn, can be accessed with voice commands or dashboard controls, underpinned by artificial intelligence (AI).

With AI, he surmised, “not only can we know when they wash their car, but … let’s just say that they went online and bought their movie tickets. So, it’s going to be a date night. And wouldn’t it be nice if my car says, ‘Hey, it’s date night. Here’s a car wash for close to you’?”

Car maintenance? Integrating the data with service providers (such as garages) means that cars can be directed to optimal locations, based on shorter lines — Frieden likened it to using crowdsourced data. As for security, the executive noted that P97 has been working with the card networks to create a transaction cloaked in tokenization, a vital line of defense — which, along with multi-factor and geolocation services, can blunt skimming efforts.

The benefits of connected commerce can accrue up and down the retail chain. Frieden noted that quick-serve restaurants (QSRs) and the ubiquitous drive-through experience can be streamlined, too. As described by Frieden, “They are constrained not by their kitchen capacity. They always have much more kitchen capacity and they have point-of-sale [POS] capacity.”

Frieden said QSRs have been constrained by drive-up windows or POS lines within the store. However, when we now start moving to connected cars and in mobile commerce, we really just opened up a third channel, which is this curbside delivery … with almost no incremental cost to a QSR merchant. It can increase and leverage capacity by as much as 30 or 40 percent more.

In the end, he said, the connected commerce experience, as wrought by P97, “is really about powering prompts during your daily activities or daily driving, and using crowdsourced notifications in these connected cars and mobile apps.”

The post The Connected Car: An Extension Of The Consumer’s Home appeared first on PYMNTS.com.