MAG Insights

When I began my career in payments, I remember the very first meeting I attended was with a collaboration group. The Federal Reserve of Minneapolis hosted it, and the subject was check fraud. Yes, I have been in the industry that long. In that discussion, I was surrounded by all the various people who supported the check infrastructure, but I was the only representative from the merchant payments side. As the conversation went around the room, I heard all the participants weigh in with the various theories on reducing check fraud. To my amazement, the conversation was around the number of assumptions being shared as if it was the merchant perspective. When my turn came around, I spent the first part of my discussion dispelling half of the things that were said with the real experience of the merchant/customer interaction before I could even get to the truth of what might be done to eliminate the fraud.

Fast forward several years to the implementation of EMV in the U.S. and merchants played a much different role. Instead of only one merchant in the discussion, several merchants participated through an equal partnership with the EMV Payment Forum. We even had a merchant leading the steering committee during the implementation discussions. However, merchants still entered the discussion after many decisions about the specification had already been made. One area where merchants had significant influence was in shaping the customer experience and advocating for adjustments on whether a card could only be inserted at the end of the transaction. This led to changes that made the contact chip experience much quicker and more merchant-friendly. 

Today, I see merchants at a much different level than ever before. In many cases, the merchant is driving the technology needed to help enable new customer interactions. For instance, the buy now, pick up in-store experience requires many nuance changes to the payments ecosystem. Merchants have designed and implemented their own interfaces including wallets and orchestra layers. They also have created direct interfaces in some instances to enable real-time payments transactions. 

Another great example of merchant payments innovation centers on the recurring    billing space. Merchants have created complex algorithms to take advantage of when and how to present the payments. They are also building AI tools to help eliminate fraud.

With the new flexibilities that technology brings, tighter coordination among all the industry players is also required. No single party can solely understand the complexities of the payments landscape. A simple change by one party may have significant impact on the overall customer experience. For instance, when network tokens were introduced to the payments landscape through Apple Pay, the unintended consequences included breaking some merchant processes from easily enabling refunds for customers through card number matching.

I am thankful that the industry has realized the importance of coordination. We see merchant representation in many of the standards-setting bodies like X9, EMVCo, and W3C. We have more meaningful conversations between the different players in the ecosystem, like the recent discussions around changes in Google autofill. But there is still more to be done. 

Customer interaction at the time of purchase is still one of the most critical points of the transaction. For it to continue to improve, we need the merchants’ voices to be heard even earlier in the development or change process. For instance, in developing Tap to Pay, we could have taken advantage of the new process to create an enhanced card onboarding experience. With contactless transactions, we could have simplified the support structure needed by the merchants. Or, as we create the path forward with real-time payments, we can reduce the networking requirements to support multiple paths to help merchants adapt to the technology.

I love seeing how far the merchants have come in the role they play in developing the payments ecosystem. The level of involvement and education has grown by leaps and bounds. I look forward to the continuous improvement process, where a coordinated industry will lead to a better outcome for our common customer.