Approaching Consumer-Facing Programs

“Do my consumers really want this? Will they use it?”

This is one of the most fundamental questions any merchant must ask when venturing into a new consumer engagement or payment program. It is also a huge lesson to be learned from both the successes and failures from some of the recent entrants the retail industry has seen. Any consumer facing program must consider that the merchant is looking to change the consumer’s behaviors. At its most basic, merchants are trying to get existing consumers to purchase more, while also enticing new consumers to try the brand; if the program does not support one of these two outcomes, the organization must reconsider its strategy.

Whether allowing the consumer to pay with a new tender type with incentive value attached, or engaging the consumer via mobile device through which constant communication is available, there are a number of ways to support the objectives of customer retention and acquisition. Looking back to one of the most heavily talked about retail programs, the Merchant Customer Exchange, it is possible to see where the strategy missed the mark.

“…providing merchants large and small with a cost-effective entry point into the mobile payments movement…”1

MCX originated with the idea that a mobile wallet program based on proprietary payment programs could be utilized to drive down the cost of acceptance stemming from credit and debit interchange fees. In a vacuum, it makes so much sense. Accepting credit cards are expensive and the card brands hold all the, well, cards. Finding a way to usurp those fees by bringing multiple retailers together seemed so logical.

However, there was one major problem. Consumers don’t care about cost of acceptance. If there is one basic tenet of any consumer program it’s the following: incentive drives adoption. Helping the merchant is just not an incentive for the consumer unless there is something tangible that goes along with it. MCX promised cross-brand access and offers but that simply was not enough to convince consumers to move away from the methods of payment they knew and trusted.

“So what can be learned from all this?”

With any new program, it is imperative to understand the consumer base and what constitutes value to the consumer. For example, in the gasoline and convenience industry, having the ability to mark down price of fuel not only brings tangible value to the consumer but also meets the overall direction of the industry. The next step is to understand where the margin exists to provide additional consumer incentive for increased basket size, while offsetting the base margin given up. Staying with the gasoline and convenience example, utilizing in-store products with a higher margin to incent consumers to purchase beyond the forecourt balances the highest volume activity with the highest margin product base. Finally, make the incentives easy to understand for the consumer. One of the quickest ways to turn off a consumer is to implement a program so complex that a consumer can’t figure out when they are eligible for rewards.

It is easy for a merchant to look at their own needs when introducing a new program. However, relevance and engaging interest to both current and potential new consumers must be central to the strategy to accomplish a successful program in the market.

 

For further discussion, contact Boyd at bfarrish@wcapra.com.
  1. “Retailer-owned payments venture MCX unveils CurrentC brand”. NFCWorld. www.NFCWorld.com. 3 September 2014

Where Do Fraudsters Go?

There are undoubtedly hundreds of cybersecurity and fraudulent attacks being committed at this very moment. While merchants have invested time, resources, technology, and hundreds of millions of dollars to protect sensitive company and customer data, fraud continues to rise at an exponential rate.

Fraud is Migrating

While the U.S. continues enabling EMV technology to combat Card Present fraud, this solution only blocks one avenue for fraudsters. Though Card Present was historically the easiest path for fraud, fraudsters are becoming more technologically savvy.

Using global networks and mechanisms such as social engineering, account takeover, and stolen credentials sold from data breaches, fraudsters continue to find new clever ways to cheat the system, and they’re beginning to target the Card Not Present (i.e., digital) channel.  This migration into the digital space is inevitable; these fraudsters make more money than most honest working Americans, and we cannot be naïve and believe they’ll have a reason to stop.

Why Target Digital?

Digital commerce is becoming more and more of the norm in our everyday lives. Starbucks allows customers to order, pay ahead and skip the line to grab that caffeine fix that many Americans feel they will die without. They were one of the pioneers in this endeavor, and many of their competitors in the QSR space have followed suit.

Consumers want to order from their watch, their car, their phone or from any number of IOT devices with the least amount of friction as possible. That’s where the fraud starts…becoming frictionless.

Many of the digital applications in the marketplace are ripe with vulnerabilities that fraudsters look to capitalize on. Consumers have come to enjoy and expect the “One Click” checkout experience gained from digital outlets like Amazon. The combination of these two factors creates a breeding ground for fraudsters.

Defending Fraud: What’s to Come

To give consumers a frictionless checkout experience requires merchants to know your customer (KYC). There are many ways that merchants perform KYC checks, including ID/Device fingerprinting (first time registered vs. repeat) and order history (e.g., shipping location, etc.). The merchants that have been most successful in combating fraud have been tracking and mining this data for years.

While we are not there yet, moving to a model where anonymized transaction data can be shared across merchants only helps us fight fraudsters. There will be no silver bullet to stop Card Not Present fraud; effective defense will require a panel of processes, tools, and risk calculation to accurately address fraud.

As you think about the seamless experience consumers love, remember that there will always be someone on the other side, working to exploit the system. Remember, they have the advantage—while a merchant must protect data from 100% of threats, a fraudster only has to break in once to be successful. While this is a somewhat doom-and-gloom outlook, this is a reality in the world of commerce that we all live in.

 

To discuss effective fraud solutions further, contact Clint at ccady@wcapra.com.

SIEM Without Limits

The following presentation from W. Capra’s Joe Piggeé Sr., along with the associated article below, has been re-posted from Information Security Solutions Review. You can find the original posting here.

Security Information and Event Management (SIEM)  solutions are an essential part of the enterprise security toolkit, but they’re also some of the most complicated products on the market.

Information Security professionals, CIOs, and CISOs trying to push their organization into the modern era of SIEM need to conduct extensive research to correctly plan, assess, and deploy the right solution for their organization.

In this 51-minute presentation, Security Solutions Engineer Joe Piggeé Sr. takes us through what, exactly, a SIEM is, and is not, why you need one, and the most popular use cases.

From a business perspective, Joe shares the best practices for implementing SIEM technology and highlights some of the differences between many of the big players in the SIEM arena.

Watch this video is you want to:

  • Understand what SIEM is.
  • Learn what a SIEM can do.
  • Know what to expect of a SIEM
  • Learn how to get more for less from a SIEM
  • Avoid common pitfalls with the deployment and maintenance of a SIEM

For additional questions about SIEM, contact Joe at jpiggee@wcapra.com.