FIS: Why Retailers Must Put Payments At The Tip Of The Spear

As consumers, payments and channels evolve, many traditional merchants have been holding onto solvency by their fingernails. Most would not call the experience “fun.” But, according to FIS senior vice president Chris Storbeck, the constant change in the marketplace is exactly what makes it interesting and, indeed, fun to be part of the retail industry today.

But “fun” and “challenging” aren’t mutually exclusive, and adapting to the times certainly is a challenge. It is Storbeck’s job to help merchants rise to meet it. Storbeck recently sat down with Karen Webster to discuss some of the most important steps merchants can take to get with the times. Spoiler: It’s not always buying the latest, greatest tech.

Connected Consumers

Like many consumers, Storbeck owns several digital devices — six, to be exact, making him a “super-connected consumer” according to a collaborative study PYMNTS conducted with VISA last spring. The super-connected are early adopters of new connected devices both at home and on-the-go.

Most consumers own around four devices, the study showed, with only 4 percent owning just a smartphone and no other connected devices.

What does this mean for retail? It means creating the “omnichannel experience” everyone’s talking about isn’t just the latest trend or buzzword — it’s something merchants will need to do if they want to meet consumers where they are. That is what they should want, Webster and Storbeck agreed.

Yet, if it’s such a no-brainer, why isn’t everyone doing it? Storbeck said even the best changes are hard to make when you’re fighting inertia.

Fighting Inertia

It’s not that merchants don’t want to get with the times, said Storbeck. It’s that payments and data collection are often seen as, simply, things they have to do rather than opportunities to strengthen their positions.

He said many retailers, especially the mid-size ones, are wrestling with competing priorities and are often driven by the most recent fire they need to put out rather than by strategic decisions around payments and data. If they’re going to come out the other side of the retail revolution intact, however, they are going to have to change their priorities.

“If you don’t have a strategy around payments, you need one,” Storbeck said. It was his top piece of advice for anyone in the payments ecosystem. Second was, “Keep an open mind and be willing to try new things. If you’re going to be a follower, look at what’s really working in the marketplace and develop a holistic strategy in payments that encompasses everything and has senior-level buy-in.”

Beyond that, Storbeck said, scaling up and out, and doing so quickly, will prove a critical strategy play. Webster noted merchants who don’t have plans to scale and have no mechanisms in place to get there aren’t likely to make it — and are probably wasting their time, harsh as it may sound.

“Payments is a scale business,” Webster said, “and it’s hard to reach critical mass. Scale is hard to get, and easy to lose.”

Storbeck noted scaling is one of the top areas in which retailers ask FIS for guidance, along with how to better engage their customers. He believes that both of these come back to payments and data strategies.

A solid payments strategy, by definition, has room for scaling and a plan in place, though this differs by organization. An organization that not only collects data, but also leverages it strategically, therefore, knows its customers more intimately and can prepare to meet them where they are — whether that means simply updating a legacy point of sale system to meet modern needs, or taking the leap to mobile payments and an omnichannel experience.

Making Mobile Payments Appealing

Storbeck fully admits his bias: He loves mobile and believes it’s where retail is going. But, to get there, he said, retailers are going to have to sell mobile payments to consumers, because the system they’re using now isn’t broken — even if it is inefficient at times.

“If the retailer doesn’t add value to their mobile pay, I don’t think customers are going to accept them,” Storbeck said.

While many merchants have stepped back and decided to let others lead in the realm of mobile pay, those who are leading the charge must understand how difficult it is to change consumer behavior, Storbeck added.

Consider the plastic revolution. When the first merchants started placing signs in their windows declaring they accepted VISA, consumers didn’t even know what that meant. Now, everybody pays with plastic — but getting consumers there wasn’t easy or immediate.

If the same is to happen with mobile payments, merchants will have to demonstrate the value to their customers, said Storbeck. Incentivizing mobile payment options by bundling them with loyalty programs, coupons and/or personal offers will likely go a long way toward winning consumers.

“We, as customers, can be bought,” Storbeck said. “We prove it every day. We like value and we like benefits. Loyalty is becoming a more and more impactful part of business today and it’s what people are looking for. They’re coming to the retailer with the expectation of having an offer in hand.”

Rewards, he added, don’t have to be financial. Airlines have been doing loyalty programs for years, and the best prize isn’t always a free trip somewhere. For people who travel a lot for work, that can actually be the last thing they want. Instead, getting to board the plane first and avoid having to check a carry-on are experiences worth more than a free trip to somewhere they don’t really want to go.

Just as rewards aren’t always about money, Storbeck said, mobile isn’t always about the transactional moment. Sometimes it’s about the entire experience and creating the greatest possible value for the consumer.

Imagine a customer is doing his research on a mobile device before heading to a brick-and-mortar store to buy a product. A true omnichannel experience would mean he could arrive in the store and receive a special offer from that merchant, which he could then compare to the value he’d be getting from the same product that’s already sitting in his virtual shopping cart on the retailer’s website.

If Storbeck is right, then tying rewards to a geo-location trigger like this could be the icing on the cake for mobile’s debut in retail.