Future payment transactions - not as dumb as paper

Pay by phone, the smart way to pay
(Image from Mobile Marketer)

Mobile payments technology is a hot space at the moment. The ultimate goal is to make small retail payments easy, fast and cheap for businesses and consumers. This means that the solutions have to get away from paper, coins and magnetic swipe cards with huge costs attached to every transaction. Add consumer interest in everything about mobile device apps on iPhone and Android, with location services and the ability for the devices to communicate for themselves (something no credit card can do), and there is a huge opportunity for the company that owns your data to direct your future spending with loyalty programs and offers. It is with this in mind that PayPal announced its acquisition of Fig Card - this story in Mobile Marketer adds some nice commentary.

Now that's not to say there aren't challenges with mobile payments. If it was all as easy as just tapping your phone on a black box to pay a retailer, we'd probably not be carrying cash already. The challenges amount to these, and Fig thinks they know the answers:

• Making the hardware retailers need simple, cheap and secure
• Getting enough retailers interested in doing something different
• Educating consumers on a new approach to payment
• Ensuring that consumers don't need new hardware, just a new app
• Building a secure infrastructure that can capture payments for a retailer without them ever storing consumer's details
• Being able to scale the infrastructure to support a nationwide, then international payment infrastructure
• Putting together value add features such as loyalty programs that offer consumers more and make the service pay for itself

PayPal seems to be in a good position to offer much of this know-how and the backing to make it happen. Fig Card gives them the opportunity to go out and chase the incumbent credit cards with a viable alternative, addressing most, if not all of the challenges above. And they haven't forgotten the appeal to retailers, consumers, and their own bottom-line in the power of information.

If future payment "transactions can be as smart as a computer and not as dumb as paper,” (to quote Mr. Chu, Senior Director of PayPal Mobile), then PayPal could be hot on the heels of more than just the payment card industry. Move over Groupon - if you don't own the payments, you know nothing about potential customers. They may just stop coming to you, when more appropriate offers come to them at no cost.

A post from the Improving It blog

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Not great customer service

We all say that providing great customer service is important to us and our businesses, but how many of us really mean it? Sometimes words and actions just don't align, and I have what I consider a great example. Ready for a short rant? Read on! 

I use a Citibank credit card, so I can collect airline miles for occasional trips to go and see the family in London, and its been fine. How hard can it be? I buy things, pay the bill and Citi credits me with some miles. So this week (despite the date of February 18th) I received this letter, which in summary (and jest) said:

On January 1st, you tried to buy some flowers for you mother's birthday. We rejected your card a bunch of times. You assumed it was the fault of the vendor, as their site stopped accepting any card you owned. That's probably because we were providing merchant card services for them too. Though you can only guess at that. Anyway, almost two months later we are going to remind you of this bad experience and give you vague assurances that it won't happen again. Love and kisses, the CEO (who will claim he never even saw this letter if it comes down to it).

Now, thanks for reminding me of an unfortunate experience with your credit card, which I could have just assumed was somebody else's issue. Doing so, so long after the event is just crazy in my opinion. I'd forgotten about it long ago, and have been frankly more irritated by the incessant calling from your India based sales reps trying to sell me fraud detection services I don't want (to the point that I will dump the card if I see that Citi telemarketing call pop up on caller ID once more this month). Though you kindly reminded me that you can't be trusted to run a decent service, and that I'll receive more calls from Sales than for any useful customer services. And if you are going to send me a really personalized letter (wow - it addresses me by my full name), at least make it sound personal. That letter must have taken at least two minutes less than the time it took me to write this blog post (including the time to get it reviewed by Legal). Maybe you could learn something from my discussion of aligning employee development with business process improvement. You might get a meaningful letter out in a timely manner.


Sorry Citi, but you have no idea how bad the perception of your customers is over annoying telemarketing, and misjudged customer service like this (or maybe you don't care). I am not looking forward to the day when you screw up my bill or block my card due to "fraud detection" and I have to actually try and speak to somebody real to get it fixed. I think on that day all my eggs will be in one basket with Bank of America, who provide me really good service. If you would like me to help with an assessment of why this letter irritated me so badly, and whether other customers feel the same, just give me a call. I'm sure you have my phone number on file as your sales reps are going to wear it out.

A post from the Improving It blog

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Related articles

• Steps to Improve Customer Service (thinkup.waldenu.edu)
• Upgrading Customer Service and Sales With Negotiation Role Play (brighthub.com)

Your phone: pay for more (but not in the usual way)

Image via Wikipedia
So you already think that your mobile phone can do everything? There's an app for this, an app for that, we can email photos taken by pinhole-sized phone cameras, and we can all wonder how its possible for an average teen to walk and text simultaneously. So are you ready to pay for more with your phone? And for once I don't mean this the same as 'pay more', I mean pay for more things, as you would get cash out of your pocket to buy a can of Coke from a vending machine.

FloridaToday.com talks about the rise of contactless payment technology (thanks to Bob Wieseneck at Applied-InfoSystems for sending me this story). It seems that this long discussed, and usually ignored function that has been so popular in Japan, and almost completely ignored in the rest of the cell-phone using world might be gaining popularity.

An interesting stat from the article:

The Smart Card Alliance estimates that there are half a million contactless terminals in the U.S., in 150,000 to 200,000 locations. That compares to perhaps 6 million locations in the U.S. with traditional card readers

Many of these terminals are in New York city taxis, which have the contactless NFC chips. This in my opinion is an ideal location for contactless technology. When in a cab I'm more likely to have easy access to my phone, or its already in my hand. I don't need to grope for my wallet in the dark, dropping $20 bills and my house key on the floor, when I can just tap the phone against the reader and I'm done. Better for the driver, better for me. Its the same anywhere I don't want to be troubled or risk taking my wallet out and flashing the cash and cards. I want to buy a Coke from a vending machine on a busy subway station? Tap and go. The same for parking meters. The benefit is not just speed, it is convenience and security as well.

An interesting point comes when you consider, according to the article:

In stores, phones with NFC could be popular if they do more than merely replace a wallet of credit and debit cards. They could help merchants track and reward loyal customers, replacing both loyalty cards and printed coupons.

What is it that allows stores to do this? Well, the stores are a little restricted with what they can do with your credit card number, and what you will allow your credit card to do (if I can buy thousands of dollars of stuff with a card, you guys aren't getting my permission to mess with it!). The technology and security around credit cards limits the information stores can collect and use at the point of sale. After all, its just a number, and your data and preferences are very separate. Outside the US, chip and pin credit cards have shown the security and anti-fraud benefits of getting away from a swiped card number.

With contactless technology, the stores aren't bound by Visa, Mastercard, Amex or the consumer's perception in the same way. If they can get your permission to use your contactless device to act as a loyalty card and payment card in one, then they start to get some interesting applications. It seems that the humble 2-D barcode I've been chasing for tracking consumer preferences could have a run for its money. You may now have an option: scan or tap to find out more about that enticing offer on the shelves of the local retailer?

I'm ready to pay for more with my phone. And maybe this technology will be led by smaller businesses as they upgrade their point of sale equipment a bit at a time. The large corporate retailers may be too slow to catch up given a need for standardization and mass rollouts of new card payment machines. This could mean that the little guy has a better chance of catching this wave of adoption of contactless payment technology by consumers.

A post from the Improving It blog

Let us help you improve your business today. Visit www.consected.com

Related articles

• Tickets, coupons among uses for tap-to-pay phones (seattletimes.nwsource.com)
• UK: Everything Everywhere announces first commercial NFC rollout during Q2 2011 (intomobile.com)
• You: Near Field Communications: a technology primer (arstechnica.com)

AP: I promise I'll do better next year

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Many people start to wind down a little at this time of year. Calls to customers start to tail off, marketing spend for business-to-business companies slows down, and everybody starts to save their energy for buying a wrapping stuff for the kids. For the poor souls in finance and accounting, this is just the calm before the storm. Financial years come to an end with a flurry of activity, and worse yet, tax season in the US starts to cause pangs of remorse. "Why did I not keep my paperwork more organized through the year?". "What are all these travel expense receipts?". "Can I hide on a small Caribbean island?".

Well, 2010 is almost done. Feel free to spend much of the end of December and all of January running around, finding what you need for your annual reports and IRS filings. But ask yourself, "do I want to be doing this again in twelve months time?". Especially as the new health care reform bill has an impact on the tax reporting of transactions (in the same way that the housing assistance support bill did several years ago), making the accounts payable team miserable. Yes, filing 1099 forms for every vendor that you spend more than $600 with (not just the unincorporated ones)  in the course of the year sounds like running a report or two, then filling in the paperwork - not fun, but not world ending. But wouldn't it be better if you could kill two birds with one stone, fixing your messed up paper and Excel accounts payable and travel expenses processes, and ensure you can meet the 1099 reporting needs more easily?

It seems to be true that despite the hype of the burden on small business, a big chunk of the responsibility for patching up the leaky tax collection problem goes back to big business. The merchant banks, credit card companies, whichever organization handles an electronic transaction, becomes responsible for reporting these transactions. The tax code already demands this, and the requirement appears to have been extended. So, I've been complaining this week that electronic transactions are too costly for small business. Maybe that cost starts to be put into context when I consider the reporting costs in the future if I write a lot of large checks.

Its time to get ahead and start streamlining those accounts payable processes. Its really not going to be that hard, compared with the year end chaos that ensues anyway. And it could make 2011 a more restful and peaceful year, for accounts payable at least.

Remember: I know nothing about tax law or any other regulations affecting your business. So check with a professional before doing, or not doing anything.

A post from the Improving It blog

Let us help you improve your business today. Visit www.consected.com

Related articles

• Wanting to learn why an AP process exists at all? Explaining the Accounts Payable Process (brighthub.com)

Electronic payments - a cost of doing business for SMBs

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Electronic payments such as credit cards, debit cards and PayPal are outnumbering check payments in the US. Debit cards, counted the highest non-cash transactions, at 37.9 billion payments, while checks dropped significantly to 27.5 billion written in 2009. This is according to a short article in Financial Services Technology. 

This all sounds great for businesses, since electronic payments are so much easier to handle, receive and reconcile than checks. But electronic payments come at a cost. 2.9% of the transaction is what a small vendor will pay for merchant processing. Despite the efficiencies involved, this is a big chunk of change, especially if you are dealing in a small number of high value transactions. 

As check usage continues to plummet, and customers start to demand electronic payments from even small vendors, it seems that all the benefits sit with the consumer and the middle man processing the electronic payments. Eeking every efficiency possible out of the use of the electronic payment system is perhaps the only way that small vendors will be able to make up the gap. Process improvement in Accounts Receivable and Accounts Payable become essential areas to focus, especially as the paperwork burden to manage a 1099 for every vendor receiving over $600 in transactions in a year could come into effect.

If small businesses have recommendations of how they receive and pay for large transaction goods and services electronically, please leave a comment.

A post from the Improving It blog

Let us help you improve your business today. Visit www.consected.com

Related articles

• New Study Finds Consumers Won't Tolerate Debit Card Fees Resulting from Finance Reform Legislation; Merchants at Risk If Consumers Revert to Cash (eon.businesswire.com)