Nick Corrigan
President and managing director of UK & Ireland for Global Payments, Bira’s payments partner.
The biggest challenge facing independent retailers is the rise of online businesses. Customers now enjoy the convenience of shopping online and have access to a greater range of suppliers and providers, so it’s vital that independents adapt.
By tapping into new and existing technologies, they can offer the same hassle-free shop-ping experience as online retailers. Nowadays, customers demand a tailored shopping experience. Analysing customer spending behaviours – whether that’s the average value of the shopping basket or postal code heat maps – is a great way for independent retailers to tailor their approach based on ever-changing customer habits and expectations.
Another significant change is the introduction of Strong Customer Authentication (SCA). This requires a cardholder to authenticate themselves before a transaction is completed - whether face to face, online or over the phone - using at least two independent factors. These factors can be something the customer knows (i.e. a unique passphrase), something the customer has (i.e. a fingerprint scan) or something the customer possesses (i.e. a mobile phone). A chip and PIN transaction in-store already adheres to SCA and a contactless transaction is exempt from the regulation, but has increased security on the frequency of use, so independent retailers need to understand this change and ensure they are compliant ahead of the 14 September deadline.
Callum Godwin
Chief economist at CMSPI, an independent global payments consultancy that advises retailers on payments arrangements
The changing payments mix will present both opportunities and challenges for independent retailers.
Of course, cash usage is declining and the cash machine closures prompted by changes to ATM interchange fees will accelerate this. Retail-ers need to ensure the cost of accepting cash falls as cash spending falls by considering areas such as CIT (Cash in Transit) scheduling, managing ATM estates and potentially even cash office technology.
On the other hand, card payments continue to grow – driven by contactless – and retailers are seeing rising card fees from Visa and Mastercard.
In future, we hope open banking leads to more competition in the very concentrated payments industry by introducing new and innovative payment methods, but it remains to be seen if and when retailers really start to see a benefit.
We expect retailers to be affected by regulation. The European Commission is reviewing interchange fee regulation and this could result in lower fees for all retailers. Meanwhile, the UK Payment Systems Regulator is running a merchant-acquiring review that is targeting blended card fee structures. The majority of independent retailers are still charged using blended fees by their acquirers, which means that fees are not transparent and often means they are higher than they should be.
Finally, Brexit of course introduces a lot of uncertainty. At the very least, it looks likely that retailers will see fee increases on transactions from EU cardholders.
Paul Rodgers
Chairman of Vendorcom, a membership organisation for the European Payments Community.
Most merchants were looking elsewhere when the first consultations on the Regulatory Technical Standards for Strong Customer Authentication appeared three years ago. Now they are now reeling, GDPR-style, in the chaos banking sector and regulatory negligence has precipitated!
To avoid a similar outcome, the horizon is filled with other topics to be aware of:
Cash: Regardless of how the fintech world might try to hypnotise merchants with their “Cash is Dead” messages, cash is not going away. The reality check is in the Access to Cash Review-Final Report on accesstocash.org.uk.
Card Acquiring Services Review: The Payment Systems Regulator is conducting a market review into the supply of card-acquiring services. Have your say on their merchant survey via psr. org.uk/psr-publications/consultations.
Telephone-Based Payments: The PCI (Payment Card Industry) Security Standards Council published new guidelines in an information supplement in November 2018. Expect to see these requirements have a big impact in the coming months. See pcisecuritystandards.org.
There are so many more challenges looming and you can keep up to date at the Vendorcom Small & Independent Merchants Special Interest Forum.
Jeff Moody
Commercial director, Bira
More and more legislation is coming in to reduce the risk of fraud. Two-factor authentication will cause a headache as retailers don’t know enough about this yet.
There’s bound to be an increase in the number of issues, especially if customers don’t know their PINs. The service sector, where you receive goods like a meal before you pay for it, will present particular challenges. Once three-factor authentication comes in, there will be even more problems.
To support you through this process, Bira has created a toolkit with our partners, to offer you advice, including some till point notices so that your customers are aware too.