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Peter HallManaging Partner
Intuition International Limited
Context The Acquirer perspective The Merchant perspective Open Forum
▪ What is important to merchants?
▪ What are the cardholder attitudes?
▪ What are the barriers?
Scale• Number and mix of merchant customers / sectors
Technology• Flexible, fast, absolutely reliable
Data• Processing, management and analysis
Execution excellence• Product specification / delivery, service,
relationships
Merchants want better products and serviceMerchants always want lower prices
Margins are tight, scale is criticalCompliance is never ending (i.e. Scheme Rules)
Keeping up to date is expensiveTechnology investment is significantControl cannot be wholly centralYou need the right people and processIts tougher than Issuing!
Does that argument hold true?
Business Area Best Practice
Strategy ATM vs. POS, Issuer influence
Debit targets Define by opportunity and nature of product
Business Fit Develop competency & edge to match targets
Sales Channels Clarify role of sales, branches & corporate banking
Sales Method Define pro-active and reactive methods
Training Multi level, multi channel (F-F & remote)
Revenue/Pricing Model Factor in transaction mix, risk, dispute & incentives
Technology management POS v ECR integration, new applications: PayWave
Merchant Comms Balance statement, direct mail, e-mail and web site
Merchant Promotion Drive usage, offer incentives, analyse data
Merchant Feedback Market research, mystery shopper + sales force feedback
Comparison to cashLower value transactionsHigher transaction frequencyLoyalty to the productConnection to necessity Its my moneyFit to immediate consumptionRegular, habitual payments
Is this what you need from Issuers?
• No need to visit an ATM• Better control of finances• Ability to make a reservation• Pay bills on time• Be safer• Take advantage of promotions and
rewards• Faster transaction• No need to write a cheque
Would this help?
The Basics: fair price, fast payment, technology that works Understanding my business needs Tell me what is new: products, ideas and rules Tell me how I could do better – don’t wait for me to ask Provide help when I need it: reaching someone with
competence/authority Planning for change, i.e. compliance: why, how, what, when,
how much? Information: available, informative, meaningful, actionable Self service: reporting, problem solving, FAQ, training tools Value: performance review, matrix of penalties/ incentives
MarginVolumeThroughputTechnologyAuthorisation QualityService QualityMerchant/Consumer Education
MOST SAFE
Payment on Web Unfamiliar
places
In places (i.e. cafés), where card is taken away
ATM cashIn well-known upscale shops & branded gasoline
Overseas
LEAST SAFE
•“you can’t pay for bus tickets; or in small shops if you don’t have cash with you”
“It’s complicated and takes a long time to pay with it”
“Sometimes payments do not work, even when you have enough money on your card”
“You can’t use it in a taxi or for movies so I always take cash”
The challenge
Cardholder • Withdraw most cash soon after being paid• Unsure when, where how to use cards
Merchant • Locations and merchants that fit Debit are limited • Not convinced of card benefits
Acquirer • Merchant resistance• Transaction quality• Business case clarity• Infrastructure
Issuer• Don’t track debit revenue• Cash Cost unknown• Limited marketing and inefficient returns
Good news: Card spend can be 5 x higher than cash Consumers like debit for making purchases
without carrying excess cash and without having to borrow
And most target merchants: would like to reduce cash because of the risk of
robbery typically have manual acceptance processes with
high labour costs
However some merchants: are reluctant to promote card acceptance because
they lack confidence in POS infrastructure (Deloitte Research)
New customers New business Higher transaction amounts Reduced business cost Faster payment cycle Security Staff safety Payment guarantee
Management information
Access to account balance
Incremental sales Faster throughput Automation International
businessIs the argument strong enough, or is the challenge in selling it?
Business case for merchants:
Problem Solution
Visibility Signage: clean, recent, prominent, available, audited
Training Toolkit, not a manualSpecific, not generic
POS Device Maintain, update, refresh
Authorisation Speed & reliability
Knowledge Cost and risk of cash
Price Education, promotion & performance incentives
Sell benefits, not process Less risk, more business, happy customers
Strategic clarity (i.e. ATM vs. POS priority)
“No brainer” business caseSolutions that fit the sectors
Plug & Play technology Simple processes On tap assistance
Consistent marketing messages