Phillips 66 Co., which has long been a leading player among petroleum companies in digital payments, has taken a step into in-car commerce in a tie-up with Honda Motor Co. Inc. that will allow customers to find the nearest station, claim a pump, and pay for gas from the infotainment system in their cars.
The new arrangement, under development with Honda Developer Studio, is expected to work at stations flagged under the Houston-based petroleum company’s three brands, which in the United States include 76 and Conoco as well as Phillips 66. Some 7,550 independently owned outlets in 48 states sell the company’s products.
The company also said it will continue rolling out its My Phillips 66 mobile app, which launched last year and works in-store as well as at the pump with both Apple Inc. and Google devices. Google is a unit of Alphabet Inc. The app integrates Mastercard Inc.’s Masterpass wallet. In 2016, Phillips 66 was an early player to announce it would accept JPMorgan Chase & Co.’s Chase Pay mobile wallet.
The company’s latest move is part of a larger trend toward bringing payments capability to the latest generation of infotaintment systems installed in automobiles. Honda has been an early exponent of this trend. Two years ago, the automaker worked with Visa Inc., pump maker Gilbarco Veeder Root, and parking-meter manufacturer IPS Group Inc. to demonstrate a mobile app that allowed drivers to pay for parking and fuel.
“We understand consumers want to fuel up, pay, and quickly be on their way,” said John Barbour, manager of payments and card services at Phillips 66, in a statement related to the partnership with Honda.
Honda Developer Studio is situated within a unit called Honda R&D Innovations Inc., which is based in Mountain View, Calif., and concentrates on self-driving technology as wells as in-car payments.
As consumers grow more attached to mobile devices for e-commerce and payments, fraudsters are intensifying their focus on handsets with new phishing, vishing to SIM-swap tricks.
Payment providers are looking for broad, new approaches to fighting fraud. The hunt for a new, universal digital ID will reach a critical point this year, in combination with innovations in artificial intelligence and biometrics technology.
But fraudsters are also working hard to stay ahead of these developments — and come up with new tricks of their own.
1 Mobile risk on the rise
As more banks rely on mobile devices as a second factor of authentication, fraudsters have shifted their sights to the cell phone providers that control that channel.
SIM-jacking and SIM swap fraud — which allow scammers to take over a phone number and/or intercept text messages sent to it — will increase in 2019 as crooks figure out new techniques. It’s still a relatively heavy-handed exploit, but anyone in possession of something hackers want will be a target, according to Adam Levin, co-founder of Credit.com, who was previously a director of the New Jersey Division of Consumer Affairs.
The South African Banking Risk Information Centre in October 2018 said the number of SIM-swap fraud incidents more than doubled in South Africa over the past year, and other global regions are seeing rising incidents. Also known as Port-Out scams, or SIM splitting, this technique targets the weakness in two-factor authentication where the second step triggers a call or text message to a mobile phone. In doing so, fraudsters can approve high-risk transfers long before the bank or customer is aware.
Further undermining device security is runaway spam call volume, which is expected to soar in 2019 to about half of all calls. Spam calls undermine consumers’ discipline in checking suspicious activity on their phones, and hurt payment providers’ ability to police and block fraud. Solutions requiring collaboration between financial services providers, device makers and wireless carriers — such as the carriers’ own Project Verify — could gain traction this year.
2 Bigger data breaches ahead?
Major data breaches have been a threat to the payments industry for more than 13 years, according to credit bureau Experian’s recent risk forecast.
The data breach of a rival credit bureau, Equifax, was said to be one of the biggest in history, but even bigger events could be ahead in 2019, Experian warns. A major wireless carrier, for example, could be attacked with devastating effect on iPhone and Android devices loaded with payments and financial data, possibly disabling wireless communications.
It’s also a matter of when, not if, a top vendor of cloud data storage will be hacked, Experian predicts.
Biometrics are a big area of innovation to make payments more secure, but it’s not without its own unique risk factors.“Biometric data is considered the most secure method of authentication but it can be stolen or altered, and sensors can be manipulated and spoofed or deteriorate,” Experian said in its report.
In online gaming forums, fraudsters can pose as gamers and gain access to the computers and personal data of trusting players, the company said. “Some regulation and oversight are necessary to strip away the total anonymity of players,” Experian said.
As identity theft has become rampant and passwords have become virtually useless in blocking fraud, companies across the technology spectrum in financial services, healthcare and government are working on streamlined, consumer-friendly approaches to verify their identities.
Mastercard and Microsoft’s recent announcement about plans to collaborate on a decentralized digital ID approach is the first of a wave of cross-industry partnerships for identity verification and payment authentication that will take different forms.
But the biggest risk is one of incentives — the companies best positioned to control digital ID are the ones least motivated to benefit from it. Collaboration will be vital to making a digital ID system that is both trusted and secure.
One possible approach is designing a way for federations to work as a mechanism for transferring a consumer’s ID credentials from one point to another, suggests Sunil Madhu, co-founder and chief strategy officer of Socure, which offers a digital ID verification solution to protect against payment fraud.
“ID requirements should be contextual, so there would be no need for 100 percent of everyone’s ID information for 100 percent of all actions, which is the approach some organizations are heading for now,” Madhu said.
But don’t expect a single digital ID solution to appease all users. “It’s unlikely, and there’s no need for one solution to rule them all,” Madhu said.
4 Don’t overlook AI
The prevailing wisdom in battling payments fraud for years has been layering solutions over one another, but many organizations have reached their limit in supporting multiple tools to fight fraud. And there’s a risk in relying too much on disparate solutions rather than adopting technology that can see the full picture.
Strategies are gradually changing to smarter use of machine learning and artificial intelligence with existing tools, said Amit Bhute, senior vice president and global head of payments at Virtusa, a global I.T. consulting firm based in Southborough, Mass.
“Artificial intelligence will play a growing role in tackling payments fraud, with the predictive abilities of machine learning helping detect hidden flaws and reacting to fraud faster,” Bhute said.
5 A higher price for privacy
Privacy and security in payments will become a premium feature.
Consumers are already paying for password-management services, ditching companies and apps they don’t trust, and seeking out companies, products and services that promise to protect privacy and data.
Shane Green, CEO of U.K.-based Digi.me., is building a company focused on user-centric data solutions that put consumers in control. “A number of new companies are creating more decentralized and ethical approaches that deeply value the data and privacy of individuals,” Green said.
Because of real risks and ongoing data breaches, the era of consumers blithely sharing their data in exchange for free services will eventually fade, said Credit.com’s Levin.
“Europe’s GDPR gives consumers the right to be forgotten, and we’re going to see more requirements like this for consent and disclosure, and new rules about how data is stores and shared. Canada has a tough new privacy law, Australia has gotten tougher on privacy and China is following that trend,” Levin said.
While cross-border payment demand rises, barriers to the flow of information could rise and impede that growth.
“Increased legislation will make the web less ‘worldwide,’ and today’s global sites will become more fenced-off in areas in what used to be a comparatively location-less internet,” he predicts.
Four Things To Do To Feel Confident About Your Business’s Future
POST WRITTEN BY
The future can be a source of tremendous anxiety for business leaders. There are just so many things to worry about: your competitors, your customers and, most importantly, your own business. Will you still able to work hard and come up with new ideas over the next few years? What will your industry look like? Concerns like these are perhaps the main reason that more and more businesses are increasing their utilization of data. They want to acquire as much information as possible so they can anticipate major changes before they take place.
But as vital as data can be, I’ve found through my experience as the CEO of an alternative business financing company that looking at numbers isn’t the only way to prepare you and your team for the future. What really used to worry me was my inability to answer just a few questions about the people who have the biggest impact on my business’s success: my competitors and my customers. Here are four things to do to give you a clearer picture of your business’s next steps and dramatically increase your confidence in the process:
1. Know your competitors.
At first, keeping tabs on your current competitors’ strategies along with new contenders sounds like a recipe for panic. But it actually does the opposite. Think about it: You probably wouldn’t have started your business if you didn’t believe you could do something better than anyone else in your industry. You likely knew exactly what kind of people you would target and why they would choose your business over a competitor. Well, monitoring your competitors shows you how to get even better at what you do and which strengths to emphasize to potential customers.
Yes, many of your competitors are probably very successful and are only gaining more traction. But they’re not you. This undeniable fact tells you that in the eyes of your target customer, your competitors aren’t doing at least one thing right. Rather than pointing out your flaws, studying your ongoing and new competitors will most likely remind you of what the majority of your industry doesn’t understand about your target customer and why you’re still the best at serving them.
I can attest that the majority of my newest competitors seem just as clueless about my target customers’ needs as my oldest competitors. This allows me to see which subjects my company should address in our marketing efforts as well as what we should improve to keep our customers and get referrals.
2. Know what your customers like and dislike.
Countless successful businesses were started when their founders noticed increasingly common complaints about popular industries. The same concept applies to growth and your business’s future. In order to continuously satisfy your target customer, you must learn their general opinion on your competitors. The answer usually isn’t so obvious, because the actions of your competitors don’t always produce the desired result.
For example, in my industry, some of our biggest competitors have made their small-business loans increasingly easier to obtain. But after speaking with numerous clients of theirs, I discovered that some of my competitors are apparently supplementing their looser requirements by offering lower loan amounts. This information opened us up to a new group of potential customers. We now serve myriad borrowers who were short-funded.
3. Know you’re getting information from the right source.
You may have noticed an influx of articles recommending the guidance of a mentor. This isn’t exactly a surprise because a major benefit of having a mentor is knowing that this individual’s advice isn’t likely to steer you wrong. Without the certainty that a source is entirely credible, the information provided cannot be fully trusted. It’s safe to say that business leaders would be a lot less nervous about their future if they knew that they were only receiving credible information about their industries.
One can reasonably assume that one of the keys to being a successful news writer is relying on credible, up-to-date sources. All business leaders must do the same when it comes to gathering information about their competitors and customers. Once you’ve ascertained that the information you’re consistently receiving is coming from the right sources, you won’t have to question whether one of your competitors knows something you don’t.
4. Know your own business.
As you can see, a common theme here is using information about other things to know your own business better. Anxiety about the future is often rooted in a business leader’s lack of awareness about the true value of his or her company. In the first section of this article, I mentioned being able to do something better than anyone else in your industry. It can be easy to lose track of what that thing is over time. When you look deeper into what’s brought you the most success, you might find that your top skills have changed and/or multiplied.
If your response to this suggestion is “What I do well will only be relevant for so long,” you’re not looking deep enough. Successful businesses are often built on skills that transcend time because they can be applied to multiple types of tasks or initiatives. This is why I believe that accessing the true depth of what you and your team do best can protect your business from being left behind.
8 Essential Google Analytics Metrics You Need to Know
By Syeda Fatima, Manta Team – October 24, 2018
Do you know what your current bounce rate or who your digital audience is? These are metrics that can be measured and should be monitored via Google Analytics. Here’s a complete list of SMB essentials to watch.
It’s no doubt that Google Analytics is an excellent free tool to measure the ROI of your digital marketing efforts especially for checking metrics of your website. It’s easy to get lost in the wealth of data this tool has to offer. Here are some of the google analytics you should be tracking on your website:
#1. Bounce Rate
This is a crucial metric to measure because it tells you how many people leave your website after viewing just a single page. In this case your visitor isn’t looking at other pages of your website or completing a goal such as signing up for that freebie you may be offering by leaving their email or clicking on a discount you may have. It is important to pay close attention to the bounce rate because it may indicate which landing pages are working best and which are driving your users away from your website. This could help identify a deeper problem with your website such as low page speed, poor website design, irrelevant content and/or more.
#2. Average Session Duration
This metric shows you the amount of time your visitors spend on your website on average per visit. It is very likely your visitor may not reach goal completion; however, it is still vital to track the amount of time your visitors spend on your site. A session is recorded each time someone visits your website ending after 30 minutes of activity and your visitors can have multiple sessions. Ideally, we don’t want this number to be too high or too low. If your website is engaging and relevant, then this number shouldn’t be too low. However, too high of a number could indicate that you may have too much information on your landing pages and your visitor may have to muddle through a lot of information to complete an action. It is important to analyze this as a standalone number depending on the context and goals of your website and its landing pages.
It is not only important to track new visitors but also returning visitors. Tracking returning visitors helps you better improve the content, design and other aspects of your website which can then spur these visitors to convert. Getting returning visitors can be a challenge, however, returning visitors are more likely to convert. A growth in new or unique visitors is always a successful sign of your digital marketing or even traditional marketing efforts. However, it is important to remember to pay even more attention to returning visitors because they can give you more insight about the various aspects of your website.
Not only is it imperative to measure the growth or decline in traffic to your website, you also need to track the sources of your traffic. You can get traffic to your website from a variety of sources such as through organic efforts, paid advertising campaigns, social media, email, guest blogs and more. It is important to track these to best invest in your marketing and advertising efforts to increase more traffic and gain leads. The incoming traffic sources breakdown can also help you see which type of traffic is giving you the most goal completions or conversions. This can also help you better the user experience of your website.
#5. Exit Pages
Another aspect of your website analysis that can help improve the user experience is tracking the exit pages. As the name suggests, the exit page is the last page the user views before leaving the site. If the exit metrics are high for a page, you may need to analyze the page to identify the reason why your audience is leaving from that page. Your exit page could possibly be a landing page with a pushy sales message that could be turning your audiences away from your website or it may just be the last page of the website, and you may not need to worry. However, unless you take time to track the exit pages you won’t know where and how you lost a possible lead.
The goal of all your marketing and advertising efforts is usually conversions whether that is making a purchase, calling your store, signing up for your e-newsletter or anything you’ve set up as a goal you want your visitors to complete. You can track different types of conversions using Google Analytics. For example, if you’re offering various discounts at various times, by tracking conversions you can check which discount managed to convince your visitors to make a purchase. Conversions are the true mark of how successful your digital efforts have been and where you need to improve.
#7. Top Pages
While this may seem like an obvious metric to track but it’s often overlooked. The web pages that are performing the best on your website need to be analyzed very thoroughly to understand how you can apply the same type of design, content, layout, call to actions and more to your other pages. This analysis will help improve the pages that are not doing so well, especially the exit pages. This can ultimately help reduce your bounce rate, improve the average session duration and ultimately lead to conversions.
Analyzing your website’s audience including their demographics, behavior, interests and more can help better evaluate your audience and visitors for better targeting. This helps you create better, more targeted content that will appeal to the kind of audience you are looking to attract to your website. By analyzing these metrics, you have a higher chance of more successful targeted marketing and advertising campaigns. You’d be surprised how many valuable takeaways you can get from this type of analysis.
Analyzing data in the world of digital marketing is a given but knowing which metrics to track and how to best use them is the key to success. Analytics can be very complicated; however, Google Analytics is an easy to use tool to track even the most advanced analytics. Click here to start measuring your success!
6 Signs You’re Ready to Take the Leap and Start a Business
By Meredith Wood, Fundera – October 22, 2018
You have a concept you’re excited about and have put in a lot of thought to starting up. That doesn’t mean it’s the right time in your life or the right idea. Here are some signs you may or may not be ready.
In some respects, it’s easier than ever to start a business. There’s a wealth of information available for aspiring entrepreneurs and lots of emerging industries that need people to open great companies within them. Plus, as online small business lending continues to grow, and early-stage venture funding flowing from VCs, there are funding options available, too.
Before you hand in your resignation—politely, of course—make sure you’re ready to start your business. Just because you have a concept you’re excited about, or simply want to, doesn’t mean it’s the right time in your life or the right idea to pursue at all. These four signs are tell-tale.
1. You’re all in. No hesitations.
Starting a business is an all-or-nothing decision. If you don’t go all in, your business isn’t going to succeed, and you won’t have any rewards to reap. At the same time, you’ll have to fully understand that with all of the great stuff about being a business owner (and there’s lots!) also come the unavoidable bad things, too. There’ll be months that are unstable, and periods where you’re bringing in lower-than-comfortable revenue. There’s even the chance of failure.
But, if you’ve turned over the upsides and the downsides in your head lots of times, and you’re not hedging or hesitating about their possibilities, then that’s a great sign that you’re ready. You need that true buy-in from yourself before you can go any further.
2. You’re not acting on impulse.
Many of the best business ideas come from a genuine need: an entrepreneur sees something they wish existed, so they build it. That could be something as simple as a dog grooming operation in a neighborhood that doesn’t have one, or as sophisticated as a new kind of software built on the back of emerging technology. Whatever the idea is, it’s usually not born and built overnight.
You’re ready to start your business if you’ve sat on your idea for a while, and still decided it’s a worthwhile venture that you’d be excited by for a long time. You’ve thought, Hey! This is something I could want to do with my life, and realized it’s not a fleeting interest. You’ve run your concept by other people, and let them play devil’s advocate.
Perhaps most importantly, you’ve also given your idea some time to future-proof. Lots of businesses that monetize against short-term trends don’t have any staying power once the wave passes. If you’re going to quit your day job and invest savings into a new company, make sure you can see long-term viability.
3. You’ve laid your practical foundations.
In all of the great stories about companies that started in dorm rooms or kitchens, the part that founders often gloss over are the unsexy details about getting things off the ground. And there’s a lot of it: looking into business entities and corporate structures, applying for business credit cards and making sure your personal credit is in good standing, determining product-market fit, doing competitive research… you get the idea.
All of the groundwork can feel like glorified homework. But it’s so, so important.
You’re not ready to start a business until you’ve really done a lot of legwork on your potential business and your personal financials. The last thing you want to do as a business owner is start from a disadvantaged position, because you’ll be playing catch up forever. Take the time now to lay your business’s foundations.
4. You have a plan.
Now that you have the basics down, it’s important to make sure your business plan is solid. After all, if you’re giving up a steady career for a future of hustling, you want to be sure you’ve laid out your overall vision and plan for growth. A business plan is not only useful to help align your long term thinking, but it is also key if you ever plan to apply for business financing or seek out investors.
A business plan doesn’t have to be extensive—in fact, it should be concise and to the point. No one wants to read an endless business plan full of technical jargon. Instead, stick with universal terms and language to make it as accessible as possible. Expect your business plan to be always changing as you grow your business, but you should have the basics down before you set out.
5. You have developed a network.
Sure, you may be able to make it without anyone’s help—but having the right people in your court will make it endlessly easier. If you already have experience in your business’s industry, you likely have a network of former colleagues, business partners and clients that you can reach out to. If you haven’t spent time in the industry, consider getting a side gig or moonlighting in the field before you set sail.
If you don’t have one, finding the right business mentor can be make the difference between making it big and striking out. Studies show that business owners who have a mentor (especially the right mentor) often see higher revenue growth and stay in business longer than those who don’t. If you’ve found someone you trust to offer advice and guide you when it comes to big decisions, you’re one step closer to success.
6. You trust yourself.
This one’s easier said than done. But, if you think about it, small business owners generally have incredible discipline and presence of mind. That’s because running a business isn’t for everyone and only those who are in it for the long run can succeed.
To make it as an entrepreneur, you have to be able to depend on yourself. You’ll be structuring your own time, making sure you balance work and play (and stopping yourself from overworking). You have to keep yourself motivated on the days when the last thing you want to do is work. You have to push yourself to keep learning things that you never thought you wanted or could, and that you didn’t even know you didn’t know. And you have to trust that you’ll find solutions—or seek the people who will.
But knowing yourself on that level is a privilege. That’s why many small business owners never want to go back. It’s not just having your own schedule and not working for anyone else—which is great, too.
Owning a company changes your life, and yourself, in amazing ways. But it’s important to be sure you’re ready for everything that comes along with entrepreneurship before you take the leap.
I’m standing at the counter of a Vietnamese restaurant in Berkeley, ordering a pork bun. There was a time when I knew exactly what would happen next. I’d hand over my card, the cashier would swipe it, a little receipt would curl out of a machine, I’d sign it, and I’d crumple the bottom copy into a pocket. Easy.
Now all kinds of things can happen. I might stick my card directly into a point-of-sale (POS) system. Maybe I swipe; maybe the cashier does. Perhaps a screen is swiveled at me. I could enter my pin on a little purpose-built machine; I could sign with my finger on a screen; I could not have to sign or enter a pin at all. I could tap my phone on a terminal to pay. Usually, there’s a chip reader for my no-longer-new chip card. When I put the card in one of the machines, sometimes it takes four seconds; other times, I have time to pull out my phone and stare at it, which means I forget about the card until the reader begins to beep at me, at which point I pull it out, mildly flustered, as if I’d caused too much ice to pour out of a soda fountain. Ah! Okay. Sorry.
The act of paying for stuff is undergoing a great transformation. The networks of machines and code that let you move your imaginary money from your bank account to a merchant are changing—the gadget that takes your card, the computer that tracks a restaurant or store’s inventory, the cards themselves (or their dematerialized abstractions inside your phone). But all this newness must remain compatible with systems that were designed 50 years ago, at the dawn of the credit-card age. This combination of old and new systems, janky and hacky and functional, is the standard state of affairs for technology, despite the many myths about how the world changes in vast leaps and revolution.
If some areas of financial technology, or Fintech, promise a new elegance, the point of sale serves as a reminder of the viscosity of the everyday technologies on which most Americans rely. If you want to divine the future of transportation, you’d probably learn more thinking about the bus than the rocket. If you want to know how money is gonna change in the future, you need to look at the cash register as much as the blockchain.
But the most powerful and ambitious companies in the world have tremendous incentive to take interest in the cash register. It’s there where the two great data streams of the modern world flow together: what people do on their phones and what they buy in the physical world. In the first stream, the tech one, the rule is that data becomes money, after it is fed into machine-learning systems tuned to show you better ads. In the other, the data is money. If these two streams fully merged, a company could have a perfect ledger of what you saw and then everything you bought. The ads would get better, so you’d buy more stuff, and in buying more stuff, you’d make the ads better. Online, Facebook (and others) can already track all kinds of activity. But about 90 percent of purchases are still made IRL. Imagine the vast sums of money that could be made if every transaction became part of the ledger. Unsurprisingly, the big tech companies want a piece of this action—as do the banks, as do many start-ups and established, niche players.
So Americans are living through what Bill Maurer, the director of the Institute for Money, Technology, and Financial Inclusion at the University of California, Irvine calls the “Cambrian explosion in payments.” The “point of sale”—once a poky machine or just a person with a calculator or a pencil—is now a computer like everything else, tied deeply into the operations of the restaurant or store. The labor of making a payment could fall to the cashier, as in the old days, or to me, the customer, but we’re both accessing a complex, evolved system of reckoning between banks and their attached remoras, feeding on whatever money ends up in the water.
For your average fast-casual restaurant or mom-and-pop store, new point-of-sale systems promise easier bookkeeping, strategic business insights, and the kind of synoptic view of operations that is irresistible to managers. But to get all those analytics, those efficiencies, requires becoming part of the Silicon Valley world, with all the potential and pitfalls that entails. Players such as Square and Toast are fully technology companies, thinking about payments as a “stack” of different pieces of hardware and software, and they want to capture more of those layers than the banks and hardware makers of yore. Apple and Google and Amazon see locking people into their ecosystems and accumulating payment data to be as valuable as any transaction fees that can be wrung out of consumers.
Which is why the biggest trends in technology—platformization, data hunger, iteration, venture-capital-backed disruption, hype—have made their way to payments. Point-of-sale systems used to change slowly, with restaurants upgrading over years or even decades. Now they can be an app on an iPad with a new UX as often as engineers can push the updates.
Even the literal way that the machines plug into one another has changed. A credit-card reader almost always used to be a standalone brick of a machine, a Verifone or an Ingenico perched on a countertop. Maybe it was tied to a point-of-sale system. Maybe it sat there alone, next to an electronic cash register or someone with a big-buttoned calculator. The Squares of the world seek to internalize all the components of a transaction into a sleek screen mounted on some futuristic enclosure. The legacy companies such as Northstar and Cayanhave tried to keep pace, and new systems are proliferating as quickly as salespeople can harangue merchants into upgrading.
In payments, everything is categorically more convenient than in previous decades and yet also sort of broken in new ways, which I guess makes them pretty much like everything else that has been touched by technology in recent years. The last time things changed this much, Richard Nixon was president.
Take out your credit card, the piece of plastic. Run your finger over its embossed characters: your name, the expiration date. The embossing is a holdover from the earliest days of charge cards, an early-20th-century invention that was generally issued by a retailer, say a department store, and looked basically like a dog tag with raised figures enumerating your account. Stick one in an imprinter, with some carbon-copy paper, and it could create a receipt for a customer as well as one for the store. When the merchant brought the receipts to the bank, they got funds deposited in their account. It was simple, but laborious.
In the mid-century, banks came to take over issuing credit cards. To know if a customer’s account could be drawn on to make a purchase, the merchant had to call the bank. I mean this literally: They had to pick up the phone and dial, according to David L. Stearns’s history of the development of payment systems. And the cards only worked within one bank’s system, which meant that every bank had to sign up the merchants who would accept their card. Banking was much more tightly regulated back then too, so in some states, there were only local banks. If you left the zip code, your card wouldn’t work. One 1950 charge card only worked “in a two-block radius” of its issuing bank.
California was a little looser with its banking regulations, which made it possible for Bank of America to scale up the highly successful BankAmericard throughout the populous state. It used its many retail locations to sign up merchants and sent cards to people’s homes unsolicited. What they lost in fraud and unpaid bills, they made up for by taking a hefty cut from merchants for the ability to accept cards.
By the mid-1960s, other banks began to launch widely used credit cards. But what would happen if the bank issuing the card was different from the merchant’s bank? There wasn’t a way to exchange those funds. And what about traveling to different cities, let alone states or countries? The banks knew they needed a way to authorize transactions and exchange money with each other. So they developed new systems of cooperation, which became known as Visa and Mastercard. The card networks allowed someone whose bank was in San Francisco to use their card in Los Angeles or Louisiana or La Paz. This is so basic to how money works now that it seems like it always existed. It is such an ordinary miracle, like photosynthesis, that it’s only when you slow down to explain it, as if to an alien or a child, that it becomes striking, even amazing.
The prophet of this new system was Dee Hock, then a local banker whose branch had become a licensee of the BankAmericard. Hock became a central figure in knitting together the banks, not just technically, but through the organization he helped create, Visa.
Hock believed that Visa was the embodiment of a new type of decentralized organization, one that would help usher in what he called the “chaordic age.” He realized, he wrote, that “everything was changing with accelerating speed” and the world needed a new kind of institution on the same level as the “nation-state, corporation, and university.” The answer, as he saw it, was in the “chaord,” “the behavior of which harmoniously blends characteristics of both chaos and order.”
To create the “chaordic organization,” core notions and oppositions would have to be discarded, Hock contended. “What if the very concept of separability (mind/body—cause/effect—mankind/nature—competition/cooperation—public/ private—man/woman—you/me) is a grand delusion of Western civilization, epitomized by the industrial age; useful in certain scientiﬁc ways of knowing but fundamentally ﬂawed with respect to understanding and wisdom?” Hock wrote.
Hock was not a philosopher, a countercultural icon like Stewart Brand, or some theorist at the Santa Fe Institute (although he did speak there). He was the first CEO of Visa, which he called a “transcendental organization linking together in wholly new ways an unimaginable complex of diverse institutions and individuals.” It did this by emptying out the old idea of money as “hard” currency, bills and paper checks and gold, subbing in a new definition of money: “alphanumeric data in the form of arranged energy,” bits in a computer. And using this idea, Visa built a new standard for computers to talk about money—now known as ISO 8583. Like Internet Protocol or containerization, this low-level agreement on how to move things around the modern world came to organize vast swaths of economic activity. Put all three of these late 1960s innovations together and you have the infrastructure of globalization.
“Visa provides an infrastructure … in which multiple competing financial institutions can cooperate, just enough, to provide a service that none could have realistically provided alone,” Stearns wrote. “In short, Visa makes money move.”
Visa wasn’t the only such organization. A different consortium of financial institutions banded together into Master Charge, which became Mastercard. Then those systems learned to work together (perhaps too well, according to retailers who have long-running antitrust litigation against the companies).
But there was one other key step in creating the modern point-of-sale system. Flip your card over now. Take a look at the magnetic stripe toward the top. It’s what made your card machine-readable. The system was developed by IBM in the late 1960s, and according to one of its architects, “The original information standards—the way the data is physically laid out on the mag stripe—has survived every migration of transaction media, from mag-stripe cards to smart cards, from smart cards to smartphones.”
The stripe itself is not unlike the tape in the cassettes you put in a boom box. But instead of encoding music in a form that can be played back from your shoulder, that little strip of iron oxide contains your account number. Swiping it through a reader plays it back. That’s why Square’s original card reader was designed attached to the headphone jack: The whole device merely sent the signal from the audio read head to the mic input, and then the app could take it from there. (Some beautiful nerds took advantage of this capability and converted the Square reader into a kind of instrument.)
“The payment card is merely an access device, a means for identifying the cardholder to the vast electronic financial network that lies behind it,” Stearns wrote in an essay in Paid: Tales of Dongles, Checks, and Other Money Stuff. Your card is a fob for walking into the vast digital storehouse where the “alphanumeric data” formerly known as money is kept.
From the very beginning, American credit cards have been relatively insecure. If Square can build a dirt-cheap way to read your credit card, so can fraudsters who built devices called “skimmers” which can steal the data off cards, reencode it onto a new one, and, voila, someone is swiping their way around with your account. You might think your signature is a security measure, but it’s basically theater. The only real security in the system is on the network level, where banks process transaction data to look for “suspicious activity.”
Chip-card technology—known as EMV in the industry—is more secure. The data can’t be easily skimmed from the chip, as it stores important information in an encrypted format. For these reasons, it’s been standard in Europe for more than two decades. But not in the United States.
Some of that was timing. One, if you installed a brand-new system in the 1970s, you probably didn’t want to buy all new hardware in the 1980s. Two, swiping is super fast and super easy. “Swiping is a really good experience,” said Jesse Dorogusker, the head of hardware at Square. “It sets a really high bar for convenience and speed.” Even if Square can spend the development resources to get its chip-card processing down to three seconds, other systems might take much longer—try counting, you might get to 10 or even 12 sometimes. “It makes for an inconsistent ecosystem,” Dorogusker said. Three, IBM, the developer of the mag-stripe card, was in the database business, so promoting more back-end data processing seemed like a good idea to them.
And so, authorization and fraud detection took place in the bank’s mainframes, while the reader and the card were basically dumb access devices hooked up to a network. This was convenient for customers, but if you were a merchant, not only did you need a special account with a bank that allowed you to transact with cards, but you also had to deal with the whole front-end to that system. As Lana Swartz, a media-studies professor at the University of Virginia and the co-editor of Paid, said to me, in the era before anyone was on the internet, accepting cards required “putting a modem in your shop, maintaining this dial-up thing, maintaining swipe equipment, dealing with errors.”
This gave rise to the POS industry as we now know it. The banks were not going to develop and service the ecosystem of hardware and modems necessary to accept credit cards, and so a whole constellation of businesses rose up to offer these services to mom-and-pop players. Over decades, Ingenico (mostly in Europe) and Verifone (mostly in the U.S.) came to dominate the actual payment hardware, and different point-of-sale hardware and software systems took over different niches. Then middlemen called Independent Sales Organizations, or ISOs, popped up to simplify the complexity of this world for someone who just wanted to sell futons or run a hamburger shop. They created whole packages of card-processing machines, POS systems, and accounts, which they’d roll up into a “solution” for individual merchants, and they also become responsible for assuming the risk of bad transactions. In other words, the ISOs are the complex, sometimes essential, sometimes shady layer between your corner bodega and the world of global finance.
The point of sale, to this day, is shaped by what these companies offer. Philip Parker, who runs cardpaymentoptions.com, has dedicated the last decade of his life to figuring out what a merchant should do, faced with these realities. When he was in college, he got hired by an ISO, and when he started going into stores, he’d get run out by merchants angry at the last ISO guy who screwed them. “These business owners would be yelling at me, ‘I’ve already been burned by you guys one time!’” Parker told me. Basically, if you got laid off from the used-car-sales lot, this industry might be your next gig.
Parker has now reviewed dozens of different card-payment systems from all kinds of different companies. There is huge variability in the fees that merchants have to pay, he told me, not just based on their systems but the cards that customers use. According to Cayan, a provider of point-of-sale equipment,there are “more than 700” different rates for different cards, transaction types, retail environments, and other factors. “My belief is that the confusion and complication are there on purpose because it allows these financial institutions and ISOs to make more money and charge more without anyone understanding what’s happening,” Parker said.
It’s dizzying. The contracts ISOs have merchants sign also slow down the speed at which restaurants upgrade their equipment. They can get locked into multiyear leases on the one hand, and on the other it can be such a hassle to get the point-of-sale equipment set up that once it’s working, they don’t want to mess with anything.
Josh Bays, a San Francisco resident, has worked in retail and restaurants for the past decade. One place he works uses Square. The other uses a legacy system that runs off Windows 95. “It runs about as slow as you’d expect,” Bays told me. “It’s a four-hour ordeal to add potato salad to the menu.”
But the owners don’t want to change that system out for something new and potentially better. “They know it will continue to work for as long as the hardware does,” Bays said. Whereas with a new system, they’ll be on the hook for a lease. “It’s kind of analogous to how Adobe doesn’t sell Photoshop anymore. They sell a license,” he said. “You never actually own anything.”
Even the chip readers, which would presumably reduce fraud, don’t always seem worth the investment to small-business owners. “There is nowhere I’ve ever worked where the management says, ‘I want to invest in infrastructure,’” Bays said. So they do it when they have to or when they finally get around to it.
There are now dozens of point-of-sale systems offering different kinds of payment integrations and experiences. At their best, they integrate a whole restaurant’s or store’s business. They make it possible to take online orders and simplify accounting. They can keep track of important customers and offer them incentives. At worst, they present unwanted complexity, new problems, and the disruption of systems that worked.
“It’s all kind of a complete mess,” said Maurer, the anthropologist. “There are so many different systems. So many different POS manufacturers each promising different services. So many different payment systems and protocols.”
It’s not just outside scholars who have taken this position. The Aite Group, a financial-services research firm, found in a 2017 report that the POS is moving from “a highly concentrated industry” into one that’s wilder, a “new reality of an open ecosystem facilitating innovation and competition.”
Even the legacy industry-standard POS system for restaurants, NCR’s Aloha, would like to be known as something more. “The way we’ve been talking about Aloha in the last few years is as a platform of sale,” said Jon Lawrence, a senior director at NCR. “It’s more than a play on words: If you think about what Facebook has done, or Uber or Airbnb, these are software platforms that have helped transform industries.”
This is a crazy world that requires hundreds of thousands of small businesses to work through hundreds of vendors to reach thousands of banks. Every company is trying to extract some bits (of data, of money) from every single transaction, building fortunes out of pennies. That’s why Google Pay and Apple Pay didn’t take off like Facebook or Uber. There are just too many human hands reaching for pockets that need to get on board.
And it’s into this environment that Silicon Valley companies—and other VC-backed start-ups like Boston’s Toast—have plunged. Square could hack the technology of the credit-card reader, but the greater system’s complexity affords no elegant solution.
So, the next time you’re waiting for the chip-card reader to beep at you, consider that money has been data for a long time, arranged energy, but like every other part of the world that software is digesting, the gap between the mega-trend and the lived reality is where the money is made.
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By Brooke Preston, Manta Contributor – April 22, 2018
The SBA’s annual celebration is your chance to share with customers what it means to be a small business owner.
More than 50% of all Americans either own or work for a small business, according to the U.S. Small Business Administration, and they create two out of three new jobs in this country. Now that’s something to shout about! The SBA’s annual National Small Business Week — April 29 to May 5 this year — is your chance to celebrate the big impact small business owners have on the economy, the job market and your customers’ daily lives.
Here are three easy ways your business can participate:
It’s a simple step with a big impact: Shop at locally owned small businesses, hire local contractors, and support your peers in the local business community. Not only will you be helping their businesses, every dollar you spend in your own neighborhood gives your local economy a boost, which can only help your own business.
Spread the Word
Let your followers know it’s Small Business Week with relevant posts to your business’ social media accounts. Get creative! You can host a live Twitter chat with your customers; post an update on Facebook saying how much it means to you to be a small business owner in your community; or offer a special sale or promotion to your loyal local followers. Tell your social followers about other small businesses you partner with or love—they’re likely to return the favor! Don’t forget to use the SBA’s official hashtag, #smallbusinessweek, so your social media content shows up in user searches.
Sharpen Your Business Skills
Whether you participate in one of the week’s official events or sign up for a local workshop, use Small Business Week as an opportunity to learn about the trends, technology and marketing tactics that can help take your small business to the next level.
If an official event is not being held in your town, consider hosting your own open house or networking get-together for your local peers. It can be hard to step away from the daily demands of running a small business — use Small Business Week as an excuse to take a little break and connect with fellow small business owners.
Credit card signatures are going away. You may have seen many articles delivering this news, and might wonder if it matters to you as a merchant. Ultimately, the decision on whether or not to accept signatures is up to you, so it’s important to understand the benefits of each option. In this article, I provide some insight into how and why credit card signatures are being phased out. Let’s start with the basics.
Effective in mid-April, it will be optional for merchants to capture a signature on receipts in card-present retail transactions. This means that merchants won’t need their customers to sign any paper or digital receipts to complete a transaction. The rules vary by card brand, but they generally apply to transactions on the Visa, Mastercard, American Express and Discover networks.
This may raise several questions for merchants:
Why are card brands doing this?
The payments industry has been re-examining the value of signatures for several reasons.
Over half of card-present transactions are already being processed without signatures under small-ticket card brand programs. For higher ticket items, the original idea was that merchants could compare the signature on the card with the signature on the receipt to validate that the cardholder is the actual owner of the credit card. This put an unfair onus on merchants, as they are not handwriting experts, and customers often sign in a hurry on credit card receipts, making comparisons unreliable.
As technology advanced with options such as electronic signature capture and NFC/contactless on customer-facing devices, managing both paper receipts and digital signature images became cumbersome and problematic for merchants. Over time, it became clear that this unreliable and inefficient process was not meeting the needs for which it was intended.
How are the card brands implementing this?
Before we get into the “how” question, let’s look at what purpose these signed receipts have for both the customer and the merchant. The customer’s signature on receipts serves two functions:
1. For the consumer, it is an acknowledgement that the merchant’s receipt is accurate.
2. For merchants, the signed receipt provides “insurance” against a potential chargeback from the card issuer in cases where the consumer disputes the transaction.
All the card brands are implementing this in slightly different ways. American Express is removing signature requirement all over the world, whereas Visa is making it optional only in the U.S. on chip-enabled devices. Mastercard on the other, is only removing signature requirement from U.S. and Canada and Discover is eliminating signature requirements in U.S., Canada, Mexico and the Caribbean.
The card brands are also removing the ability for issuers to chargeback based solely on signature validation. Other chargeback reasons remain unchanged.
Can merchants still collect signatures if they want to or if needed for other business reasons?
Yes, merchants can still collect signatures if they need to for any other business reasons. Some merchants, such as lodging, car rental and dining businesses, as well as merchants that integrate sales contracts into their receipts, may choose to continue collecting signatures. However, they no longer have to accept them specifically for chargeback protection.
Do merchants have to change their payment applications?
In the long term, merchants should update their payment application to allow the option of not printing or displaying a signature line on receipts. In the short term, they can just tell customers they don’t need to sign.
Starting a business requires many steps, and it certainly doesn’t happen overnight. As an entrepreneur, you must be willing to dedicate most of your time to the process.
“The first thing to do when contemplating starting a business is to understand the commitment required,” said Todd Rhoad, managing director of BT Consulting and partner with Peachtree Recovery Services Inc.
To make sure you’ve covered all your bases before opening your doors, Business News Daily asked experts for their best advice on starting a business.
1. Do your research.
You want to make sure you understand the industry you’ll be involved in so you can dominate. No matter how unique you might think your business idea is, you should be aware of competitors, said Ian Wright, founder of British Business Energy.
“Just because you have a brilliant idea does not mean other people haven’t also had the same idea,” said Wright. “If you can’t offer something better and/or cheaper than your competitors, you might want to rethink starting a business in that area.”
You should also consider your target demographic, which will be the driving force in each decision you make. You can’t earn a profit without your consumers, so make them your priority.
“It is crucial to make sure you are delivering what your customer wants, not what you want,” said Sonia F. Lakhany, attorney at Lakhany Law. “This will give you insight into your customer’s buying decision and save you lots of experimenting down the road.”
2. Take care of the legal aspects.
One of the first steps you should take in starting your business is choosing its legal structure, said business attorney Mason Cole of Cole Sadkin LLC. According to Cole, the most common structure is a limited liability company (LLC) because of its flexibility and the protection it provides owners from personal liability.
“It will dictate the taxes, paperwork, liability of the owner(s) [and] other legal aspects, as well as whether or not the company can have employees,” he said.
Additionally, you should acquire proper registration from the government to open your business.
“This means the entrepreneur will need to create the articles of incorporation, obtain an employer identification number and apply for necessary licenses, which will vary by state and industry,” Cole added.
3. Map your finances.
Starting a business requires money that you likely won’t have right away, which is why it’s encouraged to seek capital.
“Most entrepreneurs start a business with a very limited amount of capital, which is a large hurdle to many,” said Cole. “However, there are plenty of options available to a budding business owner. The first and most common place to seek capital is with friends and family. If that is not enough, expand the search to angel investors and venture capitalists. Should these options not provide the amount needed, then apply for business loans through banks and small business associations.”
You don’t want to start your business with poor credit. Make sure your score is as high as possible, considering it won’t be once you open your company.
“You will probably get into a lot of debt starting out,” said Marc Prosser, small business expert and co-founder of Fit Small Business. “So, you’ll have to be able to finance [your personal life] through your own savings. If your credit score isn’t so great, you’ll [only] be able to borrow less money at higher interest rates. If you want to start a business, increase your credit score so you have a [greater] ability to borrow as much as you need.”
Travis Sickle, certified financial planner of Sickle Hunter Financial Advisors, advised entrepreneurs to be organized with taxes and fees. There are multiple payments you’ll need to make, and you don’t want to file late for any.
“You have to figure out how much your payroll is going to be in order to make your tax payments timely,” said Sickle. “The timing can vary depending on your payroll. You also have to figure out other business taxes, such as city, county and state.”
4. Hire help.
Starting a business should not be an independent journey, no matter how tempting. Hiring help along your journey will set you up for success. Ben Walker, founder and CEO of Transcription Outsourcing, said that the No. 1 piece of advice he’d give business owners is to have a coach or mentor.
Another smart hire is an accountant. It’s nearly impossible for one person to handle every aspect of a company, and above all, your finances should not be put at risk.
“I had a full-time job as I considered starting my own business in 2009, but I did a lot of groundwork before I started, and bringing on an accountant was an important step,” said Sarah Burningham, president and founder of Little Bird Publicity. “It helped me understand what I needed to do to make this work from a profit standpoint, [as well as] the ins and outs of state, federal and local taxes.”
It’s important to have assistance on the legal side of the business especially, ensuring you are protected and going about the process the right way.
“We often make the assumption that legal counsel is for when we get ourselves into trouble, but preventative and proactive legal preparation can be the very best way to set your business on the path to long-term success,” said Katy Blevins, co-founder and CEO of Modern Femme. “When you call on legal counsel after you’ve run into a problem, it’s often too late or could critically impact your business in both the short and long term. Investing in their insight at the start of your business can pay a huge return later on by keeping you out of trouble before you even get into it.”