Beyond EMV, Retailers Need To Adopt Better Payments Tech – Sometimes With Help

Retailers can be stuck in “calcified” ways of processing payments and tracking consumer behavior, often frustrating buyers at the point of sale. Here’s how two executives at software as a service firms working with retailers – Eric Olafson, SVP at Demandware, and Michael Maurer, CEO of Teamwork Retail, see as the driving forces behind tech transitions.

In retail and in omnichannel, the customer is everything. And the focus on the customer is what drives software firms as they partner with retailers to transition to and embrace more efficient payments technology. 

Which is a big departure from the good old days of plastic cards and countertop terminals and shopping only in a physical store.

Which meant that, if you were an ISV, payments wasn’t something that you had to worry much about – since what retailers really needed was specific functionality that was all about retail store operations – inventory, pricing, sales and loyalty. Connecting across silos, and integrating to payments – plastic, mobile and currency-like loyalty programs and points – wasn’t given much of a thought since it wasn’t really necessary.  

That’s the perspective of two technology executives – Eric Olafson, SVP of software solutions for Demandware, and Michael Maurer, CEO of Teamwork Retail – who reflected on the intersection of retail and payments in a recent conversation with MPD CEO Karen Webster.

The consensus was that retailers have their work cut out for them today in seeking, maintaining and accessing consumer data in a way that meets customer expectations for a seamless retail experience – whether that’s online, offline or through a transaction that melds the two.

According to Olafson, who noted that his firm has been “building retail software for chains both large and midsized for years,” the technology needs of a retailer that seeks to expand presence beyond traditional bricks and mortar, or existing online presence to also build in better payments functionality, can be a daunting one.

“Once you click into this it becomes enormously complex … retailers are smart people and when you tell them they should do omnichannel, they just roll their eyes and they say, ‘OK, how do I do this exactly?’ [The key is] how do I deal with this offline and do this in a store?’

Those questions come against a backdrop where the relationship between retail software firms such as Olafson’s have been over the course of several years shying away from focusing on the payment side of the retailer/consumer relationship. That’s because the retailers themselves had been largely in place with their own systems, and usually long-standing legacy ones, including POS systems, where time and effort had been spent developing payment systems that were, as Olafson put it, “indigenous to their products.” 

But such legacy systems have shown their limitations, especially as the consumer has moved beyond solely in-store visits and has embraced online shopping,  too. Today’s consumer expects a tangible trail of their own shopping history across a retailer – including rewards programs and loyalty programs – to help inform a seamless experience. 

In that event, said Olafson, Demandware and other retail software firms must work with its retail customers on payments integration, because, as he noted, “if we are to make software to support the omnichannel experience, then we have to get upfront close and personal with payments … nothing happens easily in a store given the closed nature [of the payments system] that is calcified.”

When asked by Webster whether the push by retailers to move beyond siloed systems has been on their own volition, Olafson stated that the process has been “a consumer-driven challenge,” with businesses needing to know what their customers are doing across the franchise at all times, even as purchases might be very segmented, say by food purchases or much higher-end buys. 

Increasingly important, he said, is the mindset by the retailer and the technology firms that partner with them to ensure that “at all costs the customer’s needs are met,” especially in a continuum where buying may start online yet an item may be picked up in-store.

“It is not a casual thing to rip and replace what you are doing in a store,” Olafson said. “But when the customer speaks loud enough, the retailer reacts.”

Addressing payments specifically, Teamwork’s Mauerer stated that security, and specifically data safety, continue to be among the most prevalent challenges in the retail space. He noted that the U.S. lags its global peers when it comes to EMV; at the same time they must accommodate and integrate alternatives to plastic and traditional payments, spurred by Apple Pay and loyalty programs. 

As such, the issue of liability — which might be thought of as “vinegar” — and increased customer transactions due to satisfying payment options — which he said could be thought of as “sugar” — work together to drive retailers to embrace new software as a service platforms, especially in specialty retail. The focus, said Mauerer, “must be to engage customers no matter where they are,” he said. He further speculated that the expectation and onus on retailers is that they should be able to look up transactions, see that something was bought online or in-store (and even in another retail chain location), and if merchandise is being returned, it should be possible to do an exchange and credit the proper form of payment method.        

Which supports the demand for what is now called “payments as a service” – the providers and platforms that become the single point of contact for software players to leverage that manage the complexity of payments for them. And not only managing it, but keeping on top of what retailers need to be able to accommodate in their stores, while keeping ISVs out of PCI scope (and problems). 

With the emergence of payments in a service capacity, said Olafson, retailers recognize the value that ease of payments can offer and adjust according, becoming “exceptionally interested in the consumer experience in the store,” while being able to “greet them at the [consumer’s] level,” with where items can be purchased online and then picked up in person.  And why, he emphasized, payments as a service providers, are essential. They just make it easy for players like Demandware to give retailers the tools they need to integrate payments into the increasingly integrated and seamless consumer experience that their customers seek.

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