First Data is a global technology and payments processing leader, serving approximately 6 million merchant locations, thousands of card issuers and millions of consumers worldwide. Whether payment is made by debit or credit card, gift card, cheque or mobile phone, online or at the checkout counter, First Data aims to provide a service. PaymentEye caught up with Mark Herrington, First Data’s EVP of Global Product & Innovation, to discuss the company’s plans for the future.
What makes First Data different from similar services?
One important differentiator is First Data’s role as an enabler of Universal Commerce— commerce that is integrated, personalised, secure, open and smart. For merchants and financial institutions, Universal Commerce offers an opportunity to thrive by providing a consistent, seamless consumer engagement experience. It is also a key strategy for competing successfully against new entities and co-opting business away from traditional players. This is only possible by partnering with a large vendor solution provider like First Data that has the breadth, depth, technical expertise, and partner relationships to integrate the many facets of a Universal Commerce experience.
Another example can be found from our Insights & Analytics group. While consumer confidence and consumer sentiment indices act as weather vanes showing the direction the wind of consumer attitude is blowing, business leaders need to adeptly navigate volatile consumer spending trends—especially in this tumultuous macroeconomic environment. First Data’s SpendTrend Macro solution provides a more accurate macro-economic indicator that tracks U.S. consumer buying behavior. The SpendTrend retail database acts as radar for consumer spending, which provides real-time transaction-level data to help business professionals gain early insight into monthly consumer buying patterns.
What is your strategic focus?
We leverage our vast product portfolio and expertise to drive customer revenue and profitability. Our strategic focus is on delivering innovations in prepaid, eCommerce and mobile payments solutions, as well as providing payment processing solutions such as fraud protection and authentication solutions, cheque guarantee and verification services and point-of-sale (POS) devices and service.
Who are your main competitors?
Very few companies provide the breadth, depth, technical expertise, and partnerships First Data offers globally to merchants and financial institutions of all sizes and types. However, select competitors include the major card brands, merchant acquiring and payment processing companies, and ecommerce/mobile commerce providers.
Who are you partnering with?
We partner with a multitude of organisations and professionals, enabling us to expand the channels through which we reach and support customers, and the range of products and services we offer. Partner categories include Independent Sales Organizations (ISOs), including ATM ISOs; financial institutions; merchants; First Data Independent Sales Agents; referral and technology partners; payment applications; and OfferWise publishers.
What’s the biggest challenge you currently face?
The biggest challenge we face is continuing to clearly demonstrate the superior value First Data provides across the full spectrum of payments in an industry experiencing rapid emergence of niche payment solutions. For example, as the lines between in-store commerce, eCommerce, and mobile commerce are blurring, consumers expect a more integrated buying experience that is quick, consistent, secure, and available wherever they happen to be, at any time, and through any type of device. We think First Data is uniquely positioned to deliver the flexible technology solutions and partnerships that meet all elements today and in the future.
How much of the challenge is about winning consumer trust?
Consumer trust is, and will always be, a critical success factor for companies in the payments industry whether or not a company’s products reach consumers directly. We see examples of lost consumer trust when data breaches occur for example. First Data is deeply invested in understanding consumer trends and sharing these insights with our merchant and financial institution customers to continue earning their trust.
What needs to happen for contactless payments to hit the mainstream?
Widespread adoption of mobile payments, including contactless payments, has lagged in the United States, primarily due to the greater complexity of its financial and communications ecosystems. A diverse array of handset manufacturers, mobile network operators, financial institutions, and payment networks have struggled to agree on the economics of a collaborative mobile commerce infrastructure, and they have not yet implemented the necessary standards needed for mobile commerce to flourish. Clearly the industry needs a catalyst to break this impasse.
More than any other variable—including age, gender, income, and geography—smartphone ownership is the greatest determinant of shopping, buying and banking behaviors. With nearly half of all U.S. mobile subscribers using smartphones today and the number of U.S. smartphone users expected to reach 138 million by 2015, the continuing importance of this technology in shaping consumer expectations of shopping, buying and banking experiences cannot be ignored.
What are the challenges with contactless payments?
In addition to the reality that contactless payments are not yet available to the mainstream in the U.S., many retailers and financial institutions face a perplexing dilemma when determining how to reconcile consumers’ desire to “have it all” with their apprehensiveness about sharing the personal information that makes seamless multi-channel experiences and personalised offers possible. For example, the First Data Universal Commerce Consumer Tracker revealed consumers would be interested in receiving a store’s special offers or coupons on their mobile phones when they are nearby, but only 10% are willing to let a company track their location through their mobile phone in order to receive those offers.
Overall, more than half of respondents expressed concerns about divulging personal information to receive value in return. And if retailers and financial institutions do collect and then share personal information with other entities, consumers demand complete transparency concerning how, when, and with whom information is shared. The fact is, most consumers say they are not willing to relinquish their privacy, even to receive relevant offers and savings. While 27% are willing to allow companies they’ve purchased from before to send them relevant email promotions, only 9% are willing to let those companies share their purchase history with other companies to receive tailored offers.
Where do you see First Data in 5 years’ time?
We see First Data playing an even bigger global role in the ongoing evolution and success of Universal Commerce for consumers, merchants and financial institutions through innovative products and enhancements. These innovations will both provide consumers with exciting new ways to interact at the point of sale and enable our merchants and financial institution customers to streamline and automate some of their business operations.
As our CEO, Jonathan J. Judge, recently said: “There are tremendous opportunities to continue to grow this business through both mobile payments and emerging markets. With our strong customer relationships, distribution channels, assets and people, we are well-positioned to benefit from the changes occurring in the payments space.”