Cash’s reign as the chief payment method has been on the downslide for a while. The rise in the use of debit and credit cards and alternative payment options, like digital wallets, is changing the payment landscape for small businesses.
This change in the way consumers prefer to spend money is forcing many businesses to rethink the payment options they provide for their customers. Recent research from PCWorld revealed that nearly half of small businesses say customer demand is their driving force behind considering new payment options, with 37 percent looking to invest in accepting mobile payments over the next year.
As the CEO of the Electronic Transactions Association, Jason Oxman knows more than most about the changing payment preferences of consumers. The ETA is a trade association for the payments industry. It represents more than 500 companies worldwide involved in electronic transaction processing products and services. Prior to joining the ETA, Oxman served as a senior vice president with the Consumer Technology Association.
We recently had the chance to speak with Oxman about the electronic payment industry, how the marketplace has changed and how it will continue to change. In addition, we asked him some rapid-fire questions about technology, his career and the advice he has received over the years.
Q: Some businesses have already stopped accepting cash. Do you see this trend continuing?
A: Going cashless is becoming increasingly popular among small and medium business owners who want to streamline their checkout experience, reduce the risks and costs associated with accepting cash, and provide payment options that best fit the needs of their customers.
I believe this trend will continue as options like mobile payments and contactless cards approach ubiquity. In 2017, 12 percent of consumers surveyed by the Boston Federal Reserve Board said they had not used cash at all during the last 12 months. And debit cards narrowly edged out cash as the most frequently used consumer payment method. Additionally, one-third had made a mobile payment in 2017, compared to just one-quarter in 2015.
Ultimately, owners should prioritize the wants and needs of their customers when considering payment options.
Q: When accepting cashless payments, what steps should businesses be using to ensure they are keeping their customers’ information safe and secure?
A: Protecting customer data is of extreme importance to merchants and their payments industry partners. Regardless of individual options, payments technology companies prioritize data security, so making sure you’re up to date on your merchant service provider’s security offerings can help business owners stay protected from the threat of fraud.
The acceptance of EMV chip card payments is an important step for a business to fight fraud. Chip cards contain advanced technology that protects consumer information during a transaction, plus they protect merchants from counterfeit card fraudsters. Additionally, businesses should invest in point-to-point encryption in their payments systems, which secures the sensitive customer information from the threat of breach.
Accepting payments from mobile wallets like Apple Pay and Google Pay also gives consumers the safest and most secure way to pay as well, through the tokenization of sensitive data and requiring a unique biometric key like a fingerprint to authenticate the transaction.
Q: Have chip cards and card readers made paying by credit card a more secure process?
A: According to recent data from Visa, EMV cards – or chip cards – have reduced counterfeit fraud at the point of sale by 75 percent since their introduction in the U.S. EMV cards are exceptionally secure against being copied, making it virtually impossible for a fraudster to use a copy of a card at a merchant that accepts chip payments.
Each time the card is dipped into a terminal, the chip on the card transmits a one-time code to the terminal; without that code, the card data is useless. It’s important to remember that consumers are always protected from liability when their payments information is used in a fraudulent purchase.
Q: Venmo recently started offering business-specific payment tools. Do you see these types of payments becoming more common options retailers offer? Do you see other types of online payment options expanding to in-store retailers?
A: ‘Venmo’ is a verb in the modern lexicon. Most Americans have more money in their PayPal wallet than physical cash in their wallet. By 2020, 450 million people will use a mobile wallet on their smartphone to pay.
Having an omnichannel strategy – one that captures as many potential ways to pay offline and online – is critical to merchants and their payments technology providers. Merchants benefit when consumers have options, so I expect that we’ll continue to see online payment solutions apply to brick-and-mortar commerce, and vice versa.
Q: Are businesses that don’t accept alternative payment options, like Apple Pay and other contactless payments, hurting their chances of increasing their customer base?
A: Absolutely. A business doesn’t just lose potential users of mobile wallets by not providing them their preferred option, they are also losing out on other benefits to their business. A recent study from Auriemma found that users of mobile wallets tend to spend more than non-wallet users; plus, mobile wallets give merchants an opportunity to integrate things like loyalty programs, rewards and coupons into the payments experience.
Ultimately, consumers care about saving their time and money, and mobile payments help them do that.
Q: How can businesses best learn about the different payment options their customers prefer?
A: Business owners should talk to their payments partners – specifically their acquirer or their acquirer’s sales representative. Payments technology companies are investing billions of dollars in providing solutions to their merchants that drive sales and maximize security at an affordable price. ETA also offers resources to merchants about modern payments technology. Visit TransactionTrends.com to keep up to date on mobile payments, EMV acceptance materials and more.
Q: How are cashless payments impacting the way businesses are run? For example, with the introduction of self-checkout, are fewer cashiers being hired?
A: Cashless payments primarily lower the costs of cash handling and the risk of loss that are inherent in cash payments, like transportation and theft. There are too many variables involved to accurately estimate whether stores are hiring fewer staff members as a result of transitioning to cashless payments.
While high-tech cashier-less stores capture headlines, for most businesses, the biggest change that accepting cashless payments such as contactless cards, mobile payments and chip cards brings is the chance to offer more payments options and drive sales.
Q: What piece of technology could you not live without?
A: Because we have Apple, Google, Samsung and Amazon as ETA member companies – and my own background is in technology – I am lucky that I get to use devices in my daily life that enable payments technology. So, between my multiple mobile devices, smartwatch and voice-activated speakers, I engage in retail and e-commerce using our members’ technology every day.
Q: What is the best piece of career advice you have ever been given?
A: I learned when I first came to work in Washington, D.C., in the 1990s that although you may be on the opposite side of an issue or a business matter or a political battle today, you may be on the same side with that very party tomorrow. It’s always a good idea to disagree respectfully and focus on facts – it makes for better debates, and it also keeps the door open for future opportunities.
Q: What’s the biggest mistake you have made?
A: Trying to change too much too quickly when coming on board in a new organization. Even though I may think something is being done suboptimally, things may have been done the same way for a long time for a reason. I’ve learned that it’s important to pause and understand the history and the dynamics before making a change.
Q: What’s the best book or blog you’ve read this year?
A: I recently finished Ron Chernow’s excellent biography of Ulysses S. Grant. (The history major in me leads to a focus on such books.) Grant was deeply flawed in many ways – and naive about much of human nature – and so it was fascinating to read a more positive portrayal of his leadership skills, and his political activities and presidency, which often take a back seat to stories of his war years. Our American experiment has been through many periods of tribulation, and we always come out better.
Q: What’s the biggest risk you’ve taken professionally? Did it pay off?
A: I made the leap from being a ‘real’ lawyer to the world of trade associations, where I was able to engage in new areas of business that challenged me to expand my skills and take risks in my career path. It led me to my first trade association CEO position, which has been the best job of my entire career – so it definitely paid off.
Q: What’s the one thing you want to make sure you accomplish this year?
A: My kids are in middle and high school and will soon be leaving the nest – I want to make sure to balance being a good CEO and leader with being a good dad. I am a big believer in work-life balance and make sure to focus my team on living that way – I need to make sure to do it myself too.