An RS2 White Paper How Retailers Can Profit From Their Acquirer: An Introduction To Merchant Web Portals
Introduction In the current economic climate, merchants are increasingly looking for ways to both manage their costs and optimise their businesses to give a much more positive outcome to their Profit and Loss statements. Understanding this need, innovative acquirers are empowering even the smallest of merchants to stay ahead of the game and effectively manage their resources through the introduction of innovative Merchant Web Portals. The purpose of this White Paper is to look at: The Current Situation The Capabilities and Opportunities for Acquirers and Merchants What The Future May Hold Table of Contents: Introduction Page 3 The Current Situation Page 4 Key Capabilities Page 5-6 The Opportunities for Acquirers Page 7 The Future Page 8 The Outlook Page 9 About RS2 Page 10
The Current Situation Acquiring banks in the merchant acquiring business have for many years provided payment processing services to merchants. This, in turn, has allowed merchants to offer greater payment methods to their buyers therefore increasing their chance of a sale. Currently, the key functions of Acquiring banks are as follows: The Contracting of Merchants Merchants sign up with the acquirer as a way of processing their credit or debit card payments. Typically, merchants are given a line of credit and the acquirer will normally provide the Point-Of-Sale (POS) equipment and any other services outlined in their agreement. Payment Guaranteeing The acquirer is responsible for passing transaction authorisation details to the merchant gained via communication with card associations and issuing banks. Clearing/Settlement The acquirer is responsible for passing funds dispatched by the issuing banks on to the merchant (after the deduction of various fees owed to network services). Dispute Management The main source of risk to any acquirer is through fund reversals Chargebacks, Refunds and Reversals. Thorough risk assessments are undertaken by the acquirer on reversals, as a high ratio of chargebacks can lead to fines for the acquirer from card associations. However, merchants are understandably always looking for new ways to cut costs and increase profits. In a time where online payments and mobile are increasing, merchants understandably want access to more data than ever. They want to be able to deal with real-time data, with regards to sales, disputes, and general purchase trends. In many cases, the merchant can get some information from their PSP, but what they need is more complete data from their acquirer. The fact is that many acquirers still do not have the capabilities in place to offer this to their merchants. Both sides are losing out financially. The result of implementing a well-designed self-service portal is evolving from a cost-cutting measure to a true profit center. Godwin Schembri, Chief Technical Officer, RS2 Merchant web portals enable the acquirer to provide merchants with the answers they need. A web portal gives more power and data to the merchant, giving them for the first time the ability to access more granular data, simplify admin processes and in some cases the flexibility to improve their payment costs and cash flow. Furthermore, there are numerous possibilities for acquirers to charge for service Add-Ons, meaning that it is not only the merchant that stands to gain. 3
Key Capabilities The capabilities of these portals provides ways for acquirers to help their merchants cut costs, increase profits, and most importantly, reduce the risk of reversals. This, in turn, lessens the risks for the acquirer in terms of a merchant s solvency. The increasingly sophisticated data analytics that merchant web portals can provide enables merchants to partake in accurate and immediately relevant targeting of potential customers and prominent repeat customers. The key capabilities of these portals can be summarised as follows: Providing a merchant with an overview of all card/alternative payment based turnover enabling the merchant to look at trends in card type and expenditure, and better plan their business operations. The graphical presentation of potential trends making it easier for the merchant to identify these trends, and empowering them to better predict staffing requirements, stock levels and potential sales, avoiding the inherent issues involved in day-to-day business. The ability to view turnover statistics for both individual stores and the entire chain larger merchants, from a top level or central perspective, are able to choose an overview of their chain as a whole, or to focus in on individual stores and identify more localised trends. Automation - Reports can be configured to pre-filter, meaning merchants can obtain the information they need, when they need it, with no hassle. These reports can be automated to generate the exact information that the merchant requires. A report that tells a retailer who their most valuable customers are is a fine example of an add-on that the merchant can purchase from the acquirer. Self-Help Efficiency The ability for a merchant to get a quick answer, from their own reports, means that the portal remains as fully-operational as possible at all times. 4
Key Capabilities - Continued System Alerts Early responses are paramount to the successful running of a business. Timely responses to chargebacks and disputes are imperative. System Alerts can make sure that reversal situations are cut-off as early in the process as possible. The ability to take away the necessary information to go over in greater detail when time allows though the export and download all search results and statistics, means decisions can be made away from portal access when necessary. The ability to search on transaction types and more means that the merchant can search for, and find, the answer to their queries in real time. Systems to ease information changes merchants can make the changes they need, and then be alerted when the changes have been completed. No need to wait around for the fix. Merchants raise a ticket and receive a notification when the change has been made. Document exchange Merchants can upload scans of documents to gain faster responses to any disputes that arise. This is also an effective tool for the passing of contracts. Ease of use The portals are fast, secure and highly efficient, whilst at the same time not overlycomplicated to use. Merchants are able to easily create their own users, eliminating reliance on the acquirer s assistance. The portals are also easily accessible via tablet or smart phone. 5
The Opportunities Web Portals Present Acquirers It is not realistic to believe that acquirers can grow or even sustain their share of the market just by reducing prices and/or promising to offer the best customer service. New ideas are what is needed, which may be either new product offerings or the use of technology to create integrated solutions for POS systems and electronic cash registers. When looking at possible acquirers in their bid to run a successful business, merchants will make their decisions based on whether they can get access to the data they want, in a digital format, in real-time. The opportunities for acquirers comprise 2 main areas: Costs/Profit and Risk. Saleable add-ons - The acquirer has an advantage over the merchant alone as more often than not the merchants cannot efficiently collate information from all channels - mainly, in-store POS and online. Even the larger merchants may struggle to mesh the two together, particularly if their online is through a different company to their POS. The acquirer has access to both and can utilise their knowledge of the basic card data, combined with email, delivery addresses etc. to create a report that allows the merchant to see it all. This report would understandably be of great use to a merchant, regardless of their size, and so becomes a very valuable potential add-on. Risk reduction - The ability to deal with reversals in a more prompt manner, than the previously mentioned manual processing approach, means that potential issues can be resolved before they have the ability to cost the merchant and acquirer money. Less reversals can mean less risk to the acquirer. A more attractive proposition to merchants over other acquirers When merchants look to join with an acquirer, understandably the more attractive the proposition the better. Acquirers that are able to offer merchants better access to data and from there, improved chances of successfully highlighting trends are more likely to sign up the merchant. Reduction of Overheads Acquirers can benefit greatly from the movement to online for the dealing with reversals process. No more letter sending, faxing and manual processing. The information can now be dealt with faster, and more importantly, more cost-effectively. With the ability of the merchant to self-heal many issues that may arise, the costs of merchant maintenance are reduced. As the costs for the acquirer are reduced they are able to offer lower, more competitive fees. The portals also offer an effective way for ISOs to monitor their deals, allowing them to log in to the portal to track their commissions. This, in turn, makes the acquirer much more attractive for the ISO to work with. 6
Capabilities Opportunities An overview of all card-based turnover Potential trends graphically presented Turnover statistics for both individual stores and entire chains Report Automation Self-Help Efficiency System Alerts Export and download all search results and statistics Search on Transaction Type Systems to ease information changes and exchange documents Ease of use Saleable add-ons Risk reduction More attractive proposition to merchants and ISOs Reduction of Overheads Lower costs, more competitive fees The Future? Acquirers will have the opportunity in the future to open up an API to let app developers in. This will lead to merchants having greater access than ever to their data. But most importantly, without the overheads for the acquirer in improving their product. The more real-time data available, the better merchants can react to improve their business. As the merchants demand increases for data, so do the possibilities to create saleable add-ons that will provide both value to the merchant and increased revenue to the acquirer. This is the first step in empowering non-traditional payment players and the merchant/end user to get access to data which has been kept within old payment eco-systems. A good example of this being the Apple App store, where APIs and data have revolutionised an industry. With API access added to portals, people can customise their experience and build apps which harness the power of data and the functionality. For example: A merchant can build a chargeback mobile app for store managers or integrate payment processing tasks and functions into their own back office systems. 7
The Outlook Merchant web portals are an effective way for acquirers to provide merchants with the tools to stay ahead of the game, cut costs and increase profits. This, importantly, can be done through the provision of saleable add-ons. Acquirers can provide real-time data, which enables merchants to be able to self-service information instantly. This not only can help the merchant s bottom line, but more importantly, can decrease the risk for the acquirer in terms of a business s success and solvency. Merchants are looking for enhanced customer experience, and Portals provide Acquirers with just that competitive advantage. Godwin Schembri, Chief Technical Officer, RS2 8
About RS2 RS2 Software P.l.c. is a global provider of Payments Software and RS2 Smart Processing Ltd, a 100% subsidiary, is a focused leading Payments Processing Services company. RS2 customers are major international and domestic Banks, Processors, Oil companies, and other specialised payments service providers around the world. RS2 Software p.l.c. was established over 25 years ago and is today a publicly listed company. RS2 s flagship solution, BankWORKS, is a powerful portfolio offering designed to meet current and future requirements across the payments industry. Core functionality includes Card Issuing, Merchant Acquiring, Transaction Processing, Clearing, Settlement, Reporting, Dispute Management and Internet Services. Please find further information at www.rs2.com 9