Summer is here at last – the time of year when temperatures go up, the days get long and the pace of almost everything slows down to a more relaxed level. Almost everything – but not the payments and commerce ecosystem, as Karen Webster and Featurespace Founder Dave Excell agreed upon when they sat down for The Week In Payments conversation.
As it turns out, payments and commerce don’t believe in summer vacation, and are never short on developments to discuss and this week was no exception, as the mounting ransomware problem, Prime Day action and consumers’ relationship to the connected economy all took center stage.
“It’s been an interesting week,” Excell noted. “We saw that for consumers, time is one of the most valuable assets. I don’t want to read the fine print—I just want to hit ‘accept’ and go on to the next thing.”
The Rising Tide of Ransomware
The rise of ransomware made the headlines this week, though thankfully not because a major incident has damaged America’s critical infrastructure – a la the Colonial Pipeline hack – but because the FBI director was speaking at a Senate Budget and Appropriations Committee hearing, asking for additional funding to beef up the agency’s cybersecurity investigations.
As ransomware attacks are on the rise, Excell told Webster, we’re encountering one of the unfortunate side effects of the widespread digitization of the economy. As the systems that we rely on for our day-to-day activities have become automated and are running in the cloud, they have become more vulnerable to hackers.
“It’s also been interesting to see some of the policy that’s gone through in terms of identifying our critical infrastructure and how to protect it,” he said.
Excell noted some of the more extreme proposals in play to motivate companies to take that protection seriously – such as a plan to fine companies half a percent of their annual gross revenue for every day they fail to meet security compliance. The trouble with those draconian measures, he noted, is that most firms don’t lack the willingness to secure themselves against ransomware, but there is “a huge skills gap in making sure all organizations have the technology in place that can really protect themselves from the types of attacks that are taking place.”
Battling against ransomware has become the new cost of doing business in the digital space, said Excell, as hackers are unlikely to ever abandon a method that enables them to access ill-gotten gains.
It’s an expense, he said, that must be top-of-mind for everyone – governments, businesses and even individuals themselves. In so many cases, it’s a human clicking the wrong link in an email that is the point of weakness that cybercriminals look to exploit. Humans are part of every chain, and potentially one of the weakest elements in every system, Excell noted.
“When we used to think about encryption, maybe 10 years ago, it was something that everyone had to go and implement and make sure it was there. [Ransomware protection] is the next layer of protection and sophistication that an organization needs to do,” he said.
The Prime Day Pop
Prime Day and the ancillary summer sales of its rivals has come and gone for another year, with its earlier-than-usual run bringing in over $11 billion in online sales, according to estimates.
That flies in the face of estimates that Prime Day participation might be moot this time around, as consumers clearly showed up ready to shop and spend. But as Excell noted, this was an interesting year in that unlike previous Prime Day runups, he wasn’t inundated with advertisements for sales – a reflection of how differently consumers have been trained to handle their online shopping experiences around deal hunting.
“I think we’ve seen a large emergence of sites that now track the prices of different goods, so you can actually look and say, ‘well, this is more expensive than what it’s been in the past, so I’m just going to wait and maybe track that price until it drops down to the level at which I’m willing to pay for it,’” said Excell.
That newly empowered consumer is less likely to go running just because they hear the word “sale.” Moreover, given the year of supply chain complexity the market has faced, along with tight inventory in stores, merchants have less desire to place a lot of their goods on sale, Excell noted. When looking at something like next-generation gaming consoles, they are in such scarce supply that they aren’t being made available for Prime Day and the clone events it sparked.
Prime Day still remains an impressive feat of strength that Amazon pulls off annually, however, and one that benefits the entire retail ecosystem as more players leap onto the bandwagon each year.
“So it’s providing more power to the consumer, which is a good thing,” said Excell.
Super-Apps and the Control Conundrum
And speaking of providing more power to the consumer…
Recent PYMNTS data indicates that consumers do feel there is some advantage to having multiple activities consolidated into a single ecosystem – a super-app – for shopping, ordering food, buying groceries, booking travel and leisure activities, and so forth. The data shows that consumers believe that it will be a good thing because they don’t like having their information stored all over the web.
However, Excel noted, with all of that convenience comes the requirement for consumers to surrender a lot of control to that super-app ecosystem. “If you’re only going to one spot, maybe it’s very convenient, but you may not be getting the best value for service,” he explained.
The concern about saving one’s personal information over a host of internet databases is a legitimate one, said Excell – and it bears asking why all of that information needs to be held in each of those different databases and websites.
“Here is a way to think about flipping that around: I have my own identity that I hold in my device, and I enable those sites to access that information. So I’m in control of it rather than them holding the control, and I have the power to turn access to data on and off as necessary,” Excell said.
What the customer wants, he said, is speed, efficiency, safety and control of their transactions. Super-apps are one way to get there, but with inherent risks. Another way is to give consumers more direct control of sharing data and then pulling back access at their discretion. And giving consumers more control and choice, regardless of the headline of the week in payments and commerce, is always the cover story.
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