Talking With: Elavon's Guy Harris discusses EMV, mobile payments, security
If you really want to get an idea of what's going on in the payments industry, it's probably best to speak to a transaction processor because they've dealt with it all, and then some.
Mobile Payments Today recently caught up with Guy Harris, who is the president of North America for Elavon. Harris discussed a wide-range of topics with us regarding the EMV transition in the U.S., mobile payments, loyalty and upcoming trends.
MPT: Two of the biggest issues merchants are dealing with right now is the ongoing EMV transition, and piggybacked on that is mobile payments. Let's look at EMV first. The transition hasn't been smooth in the U.S. and there's a lot of finger-pointing going in the press about it from all sides, especially when it comes to certifying systems. How has Elavon handled the transition with its merchants?
GH: Elavon leveraged our experience with EMV in Europe and got in front of it quickly. We started the process of certifying equipment early so that we'd have solutions in place for customers far in advance of the liability shift date. By the end of 2015, we had more than 50 percent of our customer base on an EMV solution. We also came up with innovative developer solutions like Commerce SDK that eliminated the heavy burden of device EMV certification. The overarching goal was to make the transition to EMV as painless as possible for our customers. We also had a number of EMV solutions available in the market before the liability shift date – talech (tablet POS), Converge Mobile (iOS & Android), Converge (virtual terminal and Simplify (Micros w/ Ingenico semi-integrated).
MPT: Many industry experts believe we'll see a rise in NFC-enabled mobile payments thanks to contactless EMV terminals, as well as slower transaction times with chip cards. But how do merchants view mobile payments right now, especially with all the options in the market?
GH: There has definitely been a rise in mobile payments over the past five years, but for the last couple of years, it was largely tied to mobile phone operating systems. Most businesses that have NFC-enabled terminals or pin pads now see their customers use proximity-based mobile payments as a normal part of their business day. While these transactions are largely “frictionless,” they aren't doing much for the business owner in terms of consumer acquisition or retention. The larger businesses realize this, and many now have their own branded experience that they have either developed themselves or from mobile wallet providers that offer white-label solutions. Others have developed apps that integrate with mobile phone operating systems' wallets for stored valued cards, loyalty cards, digital coupons and others, such as event tickets or airline boarding passes.
It tends to be a fork-in-the-road decision point. If their mobile payment goals are largely tied to transaction expedience and consumer convenience, a mobile OS integrated experience using NFC will fit the bill. If it's associating mobile payments with their branded mobile application, which could include a mobile shopping cart, embedded loyalty and digital offers, among other features, Apple Pay or Android Pay alone isn't sufficient.
For smaller businesses, most don't have the budget for a branded experience so they'll simply offer transactional convenience through their NFC-enabled terminals or tablets.
A challenge with mobile payments, whether a merchant chooses NFC or a branded mobile payment solution, is getting consumers to use their supported solution. Consumers face the challenge that daily use of mobile payments is still not viable. Many businesses simply don't have a mobile payment solution and some that do are unaware that their terminals can handle specific solutions like Apple Pay or Android Pay. As such, consumers can't use mobile payments frequently enough for it to become habitual use, so it's still largely anecdotal. At the end of the day, millions of consumers and business owners alike are still scratching their heads wondering when mobile payments will become the norm.
MPT: Speaking of mobile payments, loyalty is often linked to that discussion. For Elavon, how has FanFare performed for the company and how can it play a role in the mobile/loyalty area?
GH: We launched Fanfare as a small business loyalty solution targeting customer retention. The solution is linked to payment cards and also incorporates a gift card solution. As the solution is terminal-based, it's designed for customers down to the smallest size.
Fanfare wasn't launched as a mobile solution, but we are transforming the platform and developing a mobile client to target mobile users. In doing so, we are also transitioning Fanfare from a customer retention tool into a customer acquisition platform. We're working with key mobile OS and hardware partners to distribute our customers' offers into their native mobile payment solutions. We want to serve our broadest customer base most effectively. A new and improved customer acquisition and retention solution will be available in the first half of 2017.
MPT: Data breaches are still in the news. We all know they weren't going away with EMV, but how is Elavon helping its customers in this area?
GH: Security is a key area where we are helping our customers solve multiple pain points. The first line of defense is moving payments data away from merchants, tokenizing that data and storing it in a highly secured environment. For example, in 2014 we implemented our Simplify solution for a large regional quick-service restaurant chain. This solution allowed our customer to remove all of their customer payment data from their point-of-sale systems and move it to highly secure servers. In 2015, we introduced Safe-T security solutions with EMV, encryption and tokenization for our smaller customers. We've also implemented tokenization in our Converge, Converge Mobile and Commerce SDK products. We make it a practice to give merchants the ability to remove sensitive payment data from their environment. All of our solutions offer end-to-end encryption as well.
MPT: What are a couple of big trends we might see for the rest of the year?
- More announcements about branded mobile payments solutions, including more bank-branded and retail-branded solutions.
- A continuing rise in use of person-to-person payments solutions. More and more businesses are asking us about these solutions as an option for payment acceptance as they are real time and low cost.
- With the new PayPal VISA and MasterCard deals, we expect to see more PayPal presence, both at the point of sale as well as in mobile and eCommerce.
- Decline (and eventual elimination) of audio jack-based card readers. That means companies are going to have to start working with other hardware interfaces (MicroUSB/Lightning) used for charging and data transmission or move to Bluetooth-based communication with mobile devices.
- Finally, we see businesses continuing to change and evolve operationally based on the rise of consumer mobile payment use. Mobile payments are becoming more widely used, so more and more businesses are looking for innovative ways of leveraging mobile payments technology as part of the customer journey. The key is rethinking how they operate and what the customer journey should be – technological enablement of mobile payments is really the easy part. The operational and/or customer experience transformation takes longer. Examples include setting up payment for a ride before it has begun (Uber), the ability to check out from anywhere in a department store (Nordstrom Rack), or cashless transactions on airplanes (Delta Airlines). It's a paradigm shift happening at a relatively slow speed due to the challenges mentioned earlier for mobile wallet acceptance – it's more evolutionary than revolutionary. The speed of change here should increase proportionate to the adoption of mobile payment use.
Will Hernandez Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.