The challenges and rewards of an omni-channel payments solution

While much has been made of the convergence of online and in-store payments to omni-channel payments management, little attention has been paid to the associated challenges and risks. The benefits of simplified reconciliation, decreased friction of the customer experience, and streamlined vendor management cannot be ignored. However, as is often the case with new technologies or business practices, the urge to appear a leader ignores the risks and obstacles. This article focuses on these challenges and offers some insights into how they can be managed.

Obstacle 1: The Toyota Effect. In late 2009 Toyota began a recall for an accelerations issue. By its completion, six models were included, tarnishing the image of the entire company. With consolidation of vendors and platforms, a single problem, which could have been confined to a single vehicle, now spread throughout various products creating the image that Toyota had a company-wide quality control problem. In the world of payments, this could play out in a nightmarish scenario where a breach that would have normally been in a single channel (in-store), now spreads throughout the company, compromising all divisions. The risks of catastrophic failure increase in a single solution environment.

Obstacle 2: Jack of All Trades… The complexity of point of sale is almost impossible to understate. Due to the wide variety of requirements of merchants, many customized solutions exist. Standardization is thus required in order for a single payments solution to work on scale. Hence the notion that an omni-channel payments solution can be a jack of all trades, but a master of none. Where this is particularly clear is at the enterprise level. Consolidation for large merchants often becomes a years-long process costing millions of dollars. For small and mid-sized merchants without such customized needs, this can often be achieved more easily, though significant investment is still required.

Obstacle 3: They’re Everywhere, They’re Everywhere. Perhaps the biggest challenge to creating an Omni-Channel payments solution is not technical, so much as operational. Merchants likely have separate divisions for ecommerce and in-store, perhaps with different teams managing the payments side of both divisions. Also, issues like fraud management become very relevant. A 2015 study indicated that more than 60% of retailers believe they do not have the ability or tools to effectively manage fraud across all channels. While a single solution might seem easier to manage, the very different realities of card-present commerce vs. card-not-present commerce mean that fraud management becomes a real issue. A simple example is velocity checking (which measures how often a customer uses a card within a certain time frame). With a single payments solution, customers will now appear more frequently and the rules need adjustment to be effective. Discovering all the required changes without damaging the customer relationship (or becoming a fraud victim) is a definite challenge.

While the above issues present uncertainty about the path forward, several activities can help smooth out the process:

Have a Plan B. While streamlining the vendor process may please procurement, redundancy creates security. Disaster recovery plans should include fall-back to an alternate vendor to ensure business continuity.

Centralize payments. Most large organizations have a matrix style structure that allows for the consolidation of payments into a single team across channels, while still working closely with distribution, inventory management, etc.

Utilize the three A’s: Analysis, Awareness, and Adaptability. Analyze solutions for their real world suitability, including the ability that any new technology looks both backward and forward – having to re-write all existing software may not have a solid business case. Analysis also includes testing to ensure that it works. Awareness means to build understanding of not only the solution, but the vision behind it. Communicating with front line people along with C-Level executives ensures complete alignment. Finally, adaptability creates the willingness to adjust to reality, rather than trying to adjust reality itself. Projects can take on a life of their own and fail to account for what is actually feasible.

The convergence of online and in-store payments into a single solution is well underway. While the advantages are often extolled and do present opportunities for businesses to simplify and improve customer experience, the challenges are often unaddressed. With careful planning, many businesses can take advantage of the benefits while avoiding the pitfalls.

About Shane Spears

Shane is the Director of Global Payment Solutions at Accertify. When he is not chasing bears off his Montana property, he manages the company’s global payment gateway. Before joining Accertify, he held responsibility for the overall management of the Payment Solutions Group at American Express.

About Accertify

Accertify is a leading provider of fraud prevention, chargeback management, and payment gateway solutions to merchant customers spanning diverse industries worldwide. To complement these solutions, Accertify also offers its customers a best-in-breed portfolio of support, professional, and managed services that empower companies to focus on growing their business, rather than on the underlying technology of their ecommerce systems.