The pandemic changed us all, and continues to do so. As we all stayed home and kept our distance from each other, new and alternative payment solutions have slowly become not-so-new and somewhat mainstream. Things have changed, and we’re not going back.
Now that more consumers are using new ways to pay, it’s time for merchants to keep up. To remain competitive in a post-pandemic world, merchants will need to adopt these new payment technologies and give their customers what they want.
Where is the payments industry headed? What does this digital transformation really mean to businesses? To find some of the answers, PaymentsJournal sat down for a podcast with Jarrod Newman, Director of ISV and Channel Partnerships at Blackhawk Network; Dan Coates, Solution Evangelist at ACI; and Don Apgar, Director of Merchant Services Advisory Practice at Mercator Advisory Group.
Delivering seamless solutions in a hectic payments world
Payments technology had been advancing at a steady pace for years. But when the pandemic hit, the adoption of touchless, digital wallet and online payment technologies went into overdrive. “I’m seeing an overall season of disruption that’s happening within the market,” said Coates. Buy Now Pay Later, cryptocurrency and other alternative payment methods have become the stars of a continuously-changing world of payments. With the growth of these technologies comes an increased focus on safety and security-and a resurgence of the QR code.
With so much growth and movement, no one can say what the next big change will be (or, at least, with any certainty). “I think everybody, now, is wondering, what’s next,’” suggested Apgar. “But it doesn’t really matter what’s next. What matters is, ‘How fast can I get it to market?’” And the secret to making a new payments technology available for consumers is having the architecture to support both the new product and the consumer rollout-at least, in the short term. Apgar told us to expect an increase in blended payments experiences, a continued transition from physical to digital markets among the younger generations, and a substantial shift towards removing friction through biometric identification.
Delivering that technology to retailers-seamlessly and easily-was the idea behind the new Blackhawk Network alternative payments products, Newman told us. “It’s why we’re working with partners like ACI to bring an alternative payments product to market, and allowing merchant partners to engage younger customers with whatever payment product they deem essential,” he said. “Blackhawk and ACI are obviously on the leading edge of that revolution.”
Taking everything to the next level
While the old guard payments kingpins-card brands and big banks-are still going strong, digital-only payment solutions like PayPal and Venmo are gaining serious ground. As a result, FIs have been snapping up fintechs to become more diversified. “They want to continue to be big players, but they are also recognizing that their bread and butter-the standard card payment-is decreasing,” Newman pointed out. “They are trying to be everything to everybody, and making their bets now.”
Coates tells it like he sees it. “My view is that credit cards have already peaked.” One example that supports his view is that BNPL is siphoning away major shares of the credit card market. Younger generations seem to like the transparency and customer experience, and merchants like the higher confidence in payments. ACI is taking advantage of this trend with their PayAfter product, which takes BNPL to the next level.
“It turns out that 30-50% of people who apply for Buy Now, Pay Laters don’t actually get approved,” explained Coates. “We’re offering the ability, through one single application, for them to apply for multiple BNPLs, and whatever the best one is that they can be approved for is the one that they’ll get an offer for. This enables greater approval rates for merchants, greater satisfaction with the customer, and overall is driving up number of visits and basket size.”
But what’s the APM that’s generating the most buzz? “It’s crypto, hands down,” answered Newman. Cryptocurrency, he tells us, is held by 20% of consumers. Although it is still not well understood by most people (including some of those who hold it), consumers are interested and want to get involved. Merchants that offer and accept crypto payments will make themselves standout from their competition. Blackhawk Network’s new payments solution offers all of these alternative payment methods, plus a live digital wallet, Buy Now Pay Later (making its in-store debut), with crypto and digital payment offerings currently in development. And since independent service vendors and technology providers such as ACI are also making a big splash, any partnerships with Blackhawk Network should lead to a multitude of exciting payment offerings.
Getting technical, and getting it done
One thing to remember: Any new payment technology integration will have its challenges. Consumers are starting to choose to shop based on what payment types are offered, so payments must be part of any retailer’s strategic planning. You want an enormous advantage in terms of time to market and lower integration costs? Leverage an existing payments platform. Thankfully, there are ways to make it easier, particularly with the help of ACI and Blackhawk Network.
The Blackhawk Network solution allows for multiple alternative payment methods in a single integration, and ACI has done the heavy lifting on behalf of their customers by engaging in this partnership. “It’s not just the credit card brands anymore; you have to have a payments platform,” Coates emphasized. “Otherwise, you’re going to spend all your time and resources and effort building all these different connectors, and it’s going to be a very high barrier to entry and a high barrier to exit because you’ll have invested so much.”
Here are just a few of the features ACI uses to make the payments integration process easier:
- Normalized APIs
- Point-to-point encryption
- Flexible support for a variety of tokens, including their own omni-token
- In-store use of PayPal, Venmo and SKUpay
- Next-generation digital coupons
Merchants will also have access to Blackhawk Network-driven services, such as:
- The new alternative payments solution
- Private label gift card activations and reloads
- Third-party stored value activations and reloads
During the podcast, one thing was clear: The partnership between Blackhawk Network and ACI is a natural fit for both parties, and any business would find all kinds of benefits in their mutual offering. “Multiple studies show the value of these new payment methods are really going to start coming to the forefront of the payments ecosystem in the very near future,” concluded Newman. “Blackhawk Network is very excited to be working with ACI to make that happen.”
Listen to the podcast
To learn more about the latest in payments and payments technologies, listen to the entire PaymentsJournal podcast here.