The rapidly growing subscription market is providing more options for consumers to pay-as-they-go instead of buying ownership, creating another challenge for subscription providers to retain subscribers and keep them engaged and active.
In this session, Mike Rogers and Steve Mountz with ACI Worldwide will reveal insights from a series of recent studies, including market research conducted with Mastercard, that asked consumers and subscription providers about their payment and communication preferences. We’ll also cover the challenges subscription providers face in providing the payment and communication options desired by their subscribers.
Join the session to learn how consumer subscription payment preferences differ from how they pay their other bills, and whether security, cost, or system integration is the biggest payment challenge for subscription providers.
Actionable topics to be addressed by our panel in this on-demand replay include:
- Understand consumer preferences on payments & communications
- Learn how payment & communication preferences evolve over time
- Understand how to tackle payments fraud in today’s changing payments landscape
- Learn how to create value for your retention strategy through the mobile wallet
Attend this session for insights that will immediately help your organization adapt to ongoing uncertainty and future opportunities.
On-Demand Playback
Presentation Slides (PDF)
Click here to download the slides.
About Our Experts
About Mike Rogers, Vice President, New Business Development, ACI Worldwide
Mike Rogers serves as Vice President of Business Development at ACI Worldwide where he helps billers and merchants achieve their market share, revenue, customer experience & cost savings goals. Mike currently leads a vertical team focused on Subscriptions, Telco/Cable and Bill Pay R&D. He also directly leads many of our key relations with the Card Networks. Mike has served the payments industry for the past 25 years introducing numerous payment innovations. On the Bay Area baseball fields, he is known as “Coach Mike.”
About Steve Mountz, Product Marketing, ACI Worldwide
Steve has been in the billing and payments industry for almost 25 years, with a primary focus on consumer research and marketing. He worked for several large corporations including GE Capital, InterContinental Hotels Group and Fiserv before landing at ACI Worldwide. Steve managed marketing programs for private label and rewards-based credit card portfolios for many years, and then moved on to focus on electronic billing and payments in 2010. Steve currently resides in the Atlanta area but was born and raised in Michigan and will forever be a Michigan State Spartan.
About Kathy Greenler Sexton, CEO, Subscription Insider
Kathy Greenler Sexton is the CEO & Publisher of Subscription Insider, a media company uniquely focused on the business of subscriptions. Subscription Insider reports on daily subscription economy news and delivers best-practice information, training and research through memberships, training events and conferences. Subscription entrepreneurs and executives representing all sectors of the subscription economy depend on Subscription Insider to improve decision making, team skills and business profitability. Learn more at qa.subscriptioninsider.com and www.subscriptionshow.com.
Transcript
Kathy Greenler Sexton:
Hello and welcome everybody. This is a Subscription Insider webinar, Retention and Payments in 2020, How You Can Combat Changing Priorities in Changing Times. Hello, my name is Kathy Greenler Sexton, and I’m the CEO and publisher of Subscription Insider and your host for today’s event. I’d like to welcome you to our webinar today.
Kathy Greenler Sexton:
We’re going to dive into the topic of Recurring Revenue, Retention and Payments in 2020. Mike Rogers and Steve Mountz with ACI Worldwide are going to reveal insights from a series of recent studies including market research conducted with Mastercard. They ask consumers and subscription providers about their payment and communications preferences, so we’re going to cover all of that and cover the challenges that subscription providers face in providing the payment and communications options desired by all of our subscribers.
Kathy Greenler Sexton:
Our webinar today is scheduled for an hour, and I would like you to use the chat if you have any questions. We’ll absolutely get to them at the end of the webinar because we have reserved time to do that. With us today, I have some official welcomes. Mike Rogers. Mike Rogers serves as Vice President of Business Development at ACI Worldwide where he helps billers and merchants achieve their market share, revenue, customer experience and cost savings goals. Mike currently leads a vertical team focused on subscriptions, teleco, cable and bill pay R&D. Mike has served the payments industry for the past 25 years including numerous payment innovations.
Kathy Greenler Sexton:
And if you happen to be in the Bay area and on a baseball field, you might know him as Coach Mike. Welcome Mike.
Mike Rogers:
Thanks Kathy. Great pleasure to do this with you again.
Kathy Greenler Sexton:
That is great. Steve Mountz. Steve is responsible for product marketing at ACI worldwide, and he’s been in the billing and payments industry for almost 25 years with a primary focus on consumer research and marketing. He’s worked for several large corporations including GE capital, InterContinental Hotels Group and Fiserv before working with ACI Worldwide.
Kathy Greenler Sexton:
He currently resides in the Atlanta area and was born and raised in Michigan and will forever be known as a Michigan State Spartan. Welcome Steve.
Steve Mountz:
Thanks Kathy. That’s right. Go Green and so happy to be participating with you and Mike today on this Subscription Accelerator webinar.
Mike Rogers:
Thanks again, Kathy. Welcome everybody to the Retention and Payments in 2020 story. I have to tell you a couple of things unique today out here in the Bay area. One is the sun is out and the smoke is down, which is incredible for us with 30 days of smoke. Secondly, I’m actually working from an office today. No kitchen. No dogs. No kids. Progress is happening out here somehow some way. Looking forward to the Subscription show and then someday getting together with all of you to talk about these really important changing priorities and changing times.
Mike Rogers:
Go ahead, Steve. Let’s jump in. All right. I don’t know how much all of you know about ACI Worldwide. Certainly everybody knows Mastercard and Advisors as a group within Mastercard that does research. ACI Worldwide is a universal payments company. We’re not going to talk about it at length, but in summary I just want to let you know that as a payments provider for the greater banking merchants E-commerce and biller world globally, we always want to have our finger on the pulse of what’s happening today with consumers around the world.
Mike Rogers:
The Advisors Research Group, we do an annual survey with them, and we thought it was super important to focus on subscriptions this year. So the research that Steve and I are going to talk about today actually is a distillation of 341 pages of research, which I think we’re going to try and cover in 18 slides here. Hopefully, there’s lots of questions, but more importantly we can get you access to all the data to drill down further as a followup. I do want to thank my colleagues in marketing that brought the survey together, thank our friends at Mastercard as well, and then some of the other surveyed data we’ve done over the last six months.
Mike Rogers:
One last thing before we jump into the data. This is one of my favorite slides in presentation almost no matter what the presentation is about. I think in this case what’s interesting is we’re going to talk to you a lot about research, and there’s really good research here. Remember, R&D includes the development part. Development is not quite as straight lined. The research might tell you one thing, but putting it into place is something entirely different. We want to not only teach you a little bit about some things that are going to impact retention as it relates to payments, but also eventually help you understand how to put some payment solutions in place that will actually help you impact your retention, which are customers.
Mike Rogers:
It won’t be a straight line, but we definitely if we have test, test, test and constant process improvement, we’ll get you to where you need to go. With that, I’ll pass it over to my friend Steve Mountz who has mountains of data he’s going to present today. Thanks.
Steve Mountz:
Thanks so much, Mike. As Kathy mentioned earlier I’m originally from Michigan, and that’s actually where I’m coming to you all from today. I’m up here dealing with some family stuff. Believe it or not, we’ve seen kind of that orange haze in the morning here as well. The smoke has traveled. I’m just outside of Detroit. I’ve noticed it here too, Kathy. You’re not alone.
Kathy Greenler Sexton:
It’s really amazing how pervasive it’s gone right across the country.
Steve Mountz:
Kind of crazy. Everybody on the West Coast hang in there. You’re in a beautiful part of the country, and hopefully this will all be behind us soon. Moving on to research. Mike mentioned the ACI Speedway Pulse Survey. Just so you know, we do that twice a year. Our fall survey is actually going to go out to consumers later this week. We’re going to have updated data to review with you guys at a later time.
Steve Mountz:
Here’s a look at some statistics from our spring survey, which was in market in late March of 2020. According to this study, about 70% of consumers report paying for one or more subscription services. Of those that do, the majority have about two or more active subscriptions. Not surprisingly, media and music subscriptions are the most popular with consumers. But we did find in the survey that older generations are a lot more likely to subscribe to new services.
Steve Mountz:
Moving on. Some subscription providers they don’t allow multiple people to access the same account, but others do allow multiple profiles to be set up. Each person can customize the subscription experience based on their own taste and preferences. We all see this every time you log into Netflix for example. Our survey with Mastercard shows that about 36% of consumers share access, so one or more subscriptions, yet only 23% share the cost of the subscription with others. Part of this might be due to the low cost of the particular subscription, Basic Netflix is $8.99 a month. But another reason might be the effort required to split that cost. We believe if you provide consumers easier ways to split the cost of the subscription like an alternative payment method like PayPal or something it’s going to increase customer satisfaction and might encourage them to upgrade or add on to the service that they have with you today.
Steve Mountz:
Moving on to this slide. Our survey with Mastercard also asked consumers how they prefer to pay their bills in general and how specifically they prefer to pay for their subscriptions. For regular monthly bills consumers lean towards ACH drafts from usually their checking but sometimes their savings account. We found that if the amount billed is the same from month to month consumers are much more likely to set up an automatic payment. However, when it comes to subscriptions, people are much more likely to use a credit card. I think there’re several factors that play here. Most folks can locate their credit card very quickly but struggle to remember where they put that checkbook.
Steve Mountz:
Another big factor is rewards. Two out of three consumers in our Pulse Survey said they pay with a credit card to earn those rewards whether it’s cashback, airline miles or points or whatever. American Express has a card out there today, The Blue Preferred Card, that offers 6% back on select streaming subscriptions.
Steve Mountz:
I know I use my Delta Sky Miles Amex all the time for my payments and for my Netflix payment. The miles do add up, although I’m not sure when I’m going to be using those miles to book a flight. They’re a driver for me. They’re a driver for my card choice for my subscription.
Steve Mountz:
We also ask providers, “How do you like to get paid?” Payments by credit card are also popular with the providers out there despite the expense. With interchange, network and other fees, this can add up to 3% or more of a cost to accept those reward cards. Accepting payments by ACH is a lot less expensive. So why are credit cards preferred over ACH payments? The answer in most cases is speed. While card payments can be disputed later, the funds are received by the provider a lot sooner than they would get them from an ACH payment.
Steve Mountz:
This is especially key for box of the month type providers that have a hard cost associated with sending out goods versus a media service that might provide a few streaming movies or songs before the payment posts or fails to post. However, alternative payment methods, while they’re not used much by consumers or as much by consumers, they are the top way to get paid according to the providers out there. You again we think from the speed of the payment, the speed of the funds being deposited.
Steve Mountz:
Now moving on to our first poll question. We’ve seen credit card payments are popular with consumers and subscription providers despite the cost. But what are your headaches or pain points in accepting payment? Is it the cost? Is it the speed in which the funds or the data is received or is it the challenge of integrating all these different methods with your others? Are security concerns keeping you up at night or could it be exceptions in chargeback processing? Please take a minute and answer this poll question. We’re eager to see what’s keeping you all up at night.
Steve Mountz:
It looks like we’re getting the results in here. Thanks everybody for answering.
Kathy Greenler Sexton:
It was very interesting actually. Everybody seems to be coalescing on three of the five. Very interesting.
Steve Mountz:
It looks like system integration is a big headache for a lot of folks as well as that exception process. Your chargebacks are broad and your return. For other folks it is an issue of cost or speed. Mike, this is one of the questions we asked in the Mastercard survey. We talked with several hundred subscription providers. Shall we share what the results were from our survey to kind of compare and contrast those to our real-time survey this afternoon?
Mike Rogers:
Absolutely. What’s interesting here is speaking of realtime, we actually made a real time change relative to the Mastercard survey. You can see the Mastercard survey here, lack of speed a big deal, cost. The results are a little bit different than in the survey we just did. As you can see there’s actually a fifth option in the survey that we just did because we found by talking to our clients and prospective clients and partners that really exceptions was a much higher percentage than Mastercard even found in their survey.
Mike Rogers:
It’s a good example. Research is only one of many data points that you want to use to be able to ultimately serve your customers right place right time. Any payment solution, we’re going to talk about it, has to not only handle the good payments and the good customers but the exceptions and the customers that we want to find out that are fraud or whatever. Really, really not surprising here, but one that we want to address through talking specifically regarding chargebacks fraud, return and other payment exceptions.
Mike Rogers:
We’re here to talk about retention. Let’s face it, especially with COVID-19 with lots of questions about what’s going on in the economy and jobs and so forth, there’s no question that we’re all at risk in retainer customers and getting customers to pay whether it’s a bill or a subscription merchant in the various flavors of subscriptions. People do have to sometimes cancel or pause subscriptions just because of tight money, so forth, et cetera.
Mike Rogers:
We’re here to focus on the 23% and really the voluntary payment issues that we can solve for. We can’t necessarily solve for job loss and some of these other things. We certainly can and should put in place things like suspending or pausing payments for customers to keep them as a customer. But let’s focus on the payments and what we can do there.
Mike Rogers:
All right. This is where I wish we could have an interactive group would be in person, and I could ask one of you specifically as we’re on stage or something. But, really, at the end of the day none of these reasons for a missed subscription payment are valid. We, as providers, need to address each and every one of these to help our consumers, our members, to be able to stay with our subscription. Lack of reminders. When you talk about payments, you also have to talk about presentment, and reminders are a form of presentment that your payment is due or that your card is expiring or all things that need to remind the customer to make sure that they’re making good payment. Good payments, forget password, et cetera, et cetera. Ultimately, we can’t let payments be an excuse for churn.
Mike Rogers:
So let’s drill down even further. When we talk about about alternative payment methods, it sounds like something cool and hip that we’re maybe trying to respond to Gen Z or Gen Y or whatever. But, really, alternative payment methods have value to both the consumer and the provider. Believe it or not, PayPal is still considered an alternative payment. I’m not sure why, but it is. It’s a highly used alternative payment. Reason is is not only is it convenient and easy to use, others are using it, but there can be less exceptions with these other payment types. That’s the key is is we want to solve for the customer experience, but we also want to solve for reducing exceptions to make sure that we’ve got a good customer for a long time.
Mike Rogers:
This is fascinating. I think it ties in with the survey results actually a little bit. Providers want to provide APMs and customers want to pay with APMs. One of the challenges with alternative payment methods is turning them on. It is not as simple as adding a widget to your website and it’s done. Unfortunately there’s back office integrated treasury management solutions, there’s consumer adoption obviously, putting the selection in the right place to be able to make sure people know that you’re offering the ATM, so forth, et cetera.
Mike Rogers:
It is not quite as easy as you’d think, but the value in serving your customer and gaining some of those benefits as a provider that we identified there is worth the effort.
Steve Mountz:
Absolutely, Mike. This is one of the really surprising findings for me that 90% of the providers say they offer these methods, but one in eight consumers is actually using them. I think it’s maybe difficult for consumers to find these options. A lot of that can be solved with improving a webpage or maybe putting those higher up in the payment methods when the consumer establishes their service. Really surprising.
Mike Rogers:
I think the light bulb is going over Kathy’s head as we’re talking about alternative payments.
Kathy Greenler Sexton:
I think it’s really interesting. I’m just curious the motivation for the consumers, is it to help the consumers manage their subscriptions or are they just not finding? What’s the trigger for the consumer to really use those?
Mike Rogers:
I love this slide because it talks a lot about some of the data that came through the Mastercard research, which is this. The payment types that you see here are either truly faster or are perceived as faster and easier to use than other payment types. If you look at a Venmo or a Zelle, for example, a PayPal, the peer-to-peer payment solutions that we use every day with our kids and friends at this point, people are saying, okay, I like that. I want to use that in other parts of my financial planning.” I want to pay my bills. I want to pay my subscriptions with those same tools that I’m using every day for sharing a restaurant bill or paying a landscaper and so forth, et cetera.
Mike Rogers:
To me, it’s just a logical extension of what’s been literally happening over the last 10 plus years, which are new payment methods, used for specific use cases like peer-to-peer payment that then infiltrates into other payment types.
Mike Rogers:
All right. Good transition. Thanks Steve.
Steve Mountz:
It’s our next poll question. For those of you out there we’d appreciate it if you let us know, do you accept alternative payment methods today? Do you offer several? Do you offer just a couple and you’re looking to add more? Is this on your roadmap for the short term, the next six to 12 months? Or are you just not considering these quite yet? It looks like we’re getting a number of votes in here.
Kathy Greenler Sexton:
Yeah, we are.
Mike Rogers:
I’m liking the 46%.
Kathy Greenler Sexton:
It is fascinating. I can’t see it yet, but maybe about half the people have voted so far. There’s a question that came in, which maybe we’ll address at the end. In regards to this, it’s about the cost of working with these alternative payment providers compared to other methods.
Mike Rogers:
It’s a great question. I’m actually happy to answer it. There’s two components. One is the integration. While it is a lot of work doing integration, doing QA, user acceptance testing and so forth, ultimately it’s not a big install. You just want to make sure you get it right so that it works for your consumers. Then, secondly, with your payment providers they should have an enterprise solution that effectively you turn on the different APMs. Now, where it gets really complicated quite frankly is if you’re a US based subscription company and you’re going global, and all of a sudden you want to offer alternative payment methods in Malaysia or other parts of the world, that provider should have gateway solutions that that’s an option to turn those on and/or integrate with another provider that will get you the payment methods in those various countries around the world.
Kathy Greenler Sexton:
It’s tough.
Steve Mountz:
Interesting survey results. Kind of not surprising that most folks accept a couple of alternative payment methods but they’re looking to add more. I know as a consumer I’ve had PayPal like you mentioned forever. I use that to send my mom money and vice versa occasionally. I’ve been using Google Pay a heck of a lot more as a contactless method at the point of sale. I’m starting to adopt that more. My landscaper takes Venmo, so I’ve set up Venmo so I can make sure I can send him a payment. I think folks are maybe using multiple methods for different types of payments. It’s important to offer multiple methods to folks.
Steve Mountz:
There’s alternative payments, how about real-time payment? Mike, tell us what you know about real-time payments as far as what we’re hearing from consumers?
Mike Rogers:
Well, we’re probably the payment geeks in the room. Maybe there’s a few others out there, hopefully so. Real-time payment has been a long time coming in particular here in the US. Real-time payments have been the back end for banking solutions literally countrywide solutions for the last 10 plus years, but not present quite yet in a material way in the E commerce world and the subscription’s world in general. The US sadly is a little bit late to the party.
Mike Rogers:
The good news is is it’s coming, and it’s coming in the form of disbursement. It’s coming in the form of real-time payments to debit card like the way that Uber drivers and Lyft drivers get paid today. Then it’s working toward acceptance, acceptance for one time E commerce payments and then subscription payments as well. Why? Well, you see the results here. Real-time payment is truly the fastest payment. It’s sort of the best of both worlds somewhere between ACH and card. It’s a lower expense payment than card, but it’s a good funds payment. It’s a little bit more expensive than ACH, but, again, it’s a good funds payment with less exceptions. So ultimately there’s value to both the provider and the consumer when you go to a real-time payments methodology.
Mike Rogers:
I don’t know if any of you have done business pay by bank in other parts of the world. Real-time payments will be similar to that only using biometrics and other authentication tools to make signing up for that solution and payment solution much easier even than pay by bank. If we drill down a little bit further, again, speed is the number one driver here. I do think it started with some of the peer-to-peer solutions. If you’ve heard of the Clearinghouse or Zelle or some of these solutions, they’re all sort of in bed together. Real-time payments as a part of Venmo the back end of that solution will be used in subscriptions and bill payments and others in the very near future here in the US.
Mike Rogers:
We want to make sure that US providers are ready when that time and place comes. Anybody that’s an early adopter, I think, will get the benefit from a consumer standpoint to be customer satisfaction oriented similar to the way Venmo and others have done.
Steve Mountz:
Well, thanks, Mike. I actually mentioned earlier-
Mike Rogers:
It’s quite a transition from the exciting new way of real-time payments to the scary, hard payments fraud. You can take this one, Steve.
Steve Mountz:
Okay. Hey, it’s something that we need to talk about, not only retaining your customers with different payment methods but preventing fraud up front. Regardless of the method, there’s always fraud looking behind the scenes or the screen as you see here. While providers want to make it easy to pay, they also need to make sure that payment is legit. Here at ACI we do a lot more than processing bill payment. We’re also trusted by a number of large merchants to manage payments and their fraud prevention.
Steve Mountz:
If you think of Domino’s pizza, Nintendo or Adidas, those are a few of our big clients. Our fraud experts have found the key to effective fraud prevention for multiple layers of profiling, rules and other screening. Here on this slide we cover just a few of these layers like machine learning. Our models can detect almost half of the fraud in the retail sector and about 40% of it in the gaming sector. We also implement realtime and multilayered rules. They’re often based on a machine learning score. They include custom [inaudible 00:28:08] rules, and they can be enhanced with positive profiling.
Steve Mountz:
As far as positive profiling, what we do is we use intelligence from the thousands of merchants that we work with across the globe to profile customers. We’ll check things like the average spend tied to a particular email address over a set time period. We will review links between the card history and the email history to help us detect a potential account takeover. We can also apply a VIP rule set for loyal long-term customers to allow more flexibility and more conversion from them.
Steve Mountz:
As far as global fraud intelligence, we bring in data from partners and third parties to increase the performance of our models. On the retrospective screening, we’re looking at those chargebacks and representments and other trends to feed more data in our models in realtime. Of course, you’ve got to balance fraud prevention with conversation rates on the front end and retention rates on the back end. It’s very important to look at, but you’ve really got to fine tune those screening and those rules to make sure you’re optimizing conversion while reducing that fraud.
Mike Rogers:
I think we want to focus on retention of the right customers making good payments. Right? I want to just say all of us in the fraud business that participate in the merchant risk council and so forth, et cetera, are constantly sharing information. It does need to be an environment of one plus one equals three to make sure that we’re trying to stay one step ahead of the bad guys because it impacts everybody in the ecosystem in particular. Historically, this is point of sale issue and E commerce and bubbling into subscriptions. We need to make sure that we’re sharing all the information from all those environments and collectively as an industry to help you to fight fraud.
Steve Mountz:
That’s perfect. All right, Mike. We looked at a lot of payment related issues whether it’s an expiring card, a card number that’s changed. You can lose customers that way, but you really don’t have to. These issues can be solved. Then as you mentioned, these alternative payment methods and real-time payments, they’re going to have benefits for both subscribers and the providers, speed and convenience.
Steve Mountz:
So a lot of good stuff out there as far as helping to retain and keep your customers by solving some of these payment issues.
Mike Rogers:
What I would add is, again, some of the focus is on retention, and there’re some things that as good partners and payments that we can help. There’s no reason that your current payment provider or other payment provider shouldn’t be proactively reaching out to you with things like 3DS and account update or ACH validation and all of the tools that would minimize exceptions to keep your customers as happy customers. Ultimately, that is the job of the market in general and ACI is certainly one of the important players in helping you minimize payment exceptions to maximize retention.
Mike Rogers:
Going forward, it’s very exciting to see how some of these alternative payment methods including real-time payments will go ahead and actually do both, improve customer satisfaction and reduce exceptions to improve retention.
Steve Mountz:
Absolutely, Mike. On the real-time payments, it’s not just the speed of the additional data that comes along with that payment. To our point that’s where we’re going to help, I think, solve some of these problems going forward.
Kathy Greenler Sexton:
I also want to make you aware of a great, great E book provided by ACI. You can see the URL on your screen, ACIworldwide.com/subscriptions. It’s the Recurring Success E Book. Anything else on that that I missed before we dive into the Q&As?
Steve Mountz:
That E book, Kathy, is going to include some of the stuff we went through today, but it’s going to include other information from our research, so make sure you check it out. We’ve got lots more data as Mike mentioned at the beginning of the program.
Kathy Greenler Sexton:
Perfect, perfect.
Mike Rogers:
Check it out.
Kathy Greenler Sexton:
Check it out. Okay, so we are ready for Q&A. I had a question that came in actually, which… Sorry. Mike, do you have a question?
Mike Rogers:
I am so excited to answer Laya’s question. Did you see it?
Kathy Greenler Sexton:
I did see it, so why don’t you jump in and answer Laya’s question.
Mike Rogers:
I don’t know if everybody saw it, but it was a question about would cryptocurrencies be considered in APM? I would say absolutely yes. In the real world it is truly happening today. The complexity of the currency part we’re not going to get into today because we don’t have time to. But the block chain portion, the general ledger if you will, is real, and it’s happening today. If you’ve heard of Ripple bank-to-bank transactions, it’s happening. If any of you have read about our partners in Visa with their B2B connect, you know what I’m talking about. Truly, Visa created another set of rails for B2B payment.
Mike Rogers:
Initially, it was sort of bank to bank, but the application most definitely could be used in business to business and ultimately business to consumer. That is a block chain solution. It doesn’t have a cryptocurrency component to it or a digital currency, but it is absolutely an ATM and a very valid upgrade to some degree to the world of wires and so forth. So a really, really important payment methodology that you’ll see more of coming up here soon.
Steve Mountz:
Great question.
Kathy Greenler Sexton:
It is a great question and really just underscores how quickly evolving the payment landscape truly is. It’s really interesting. There was a question about the data. Is the data from the survey US based consumers and merchants or was it beyond the US borders?
Mike Rogers:
Our surveys are primarily US based, Kathy. That’s a great question too.
Kathy Greenler Sexton:
Yep, just to understand that. Okay. I have another question here, which is what’s your recommendation in terms of reducing the number of credit card payments and promoting other payment methods?
Steve Mountz:
That’s a great question. I alluded earlier to real-time payments being a hybrid between card based payments and ACH payments. But there’s actually sort of a precursor or another option if you will, which some providers have, and I think it’s very valid. We call it ACH Plus, which is basically if you combine ACH with an authentication tool, think Plaid, think Yodlee, MicroBilt, so forth, et cetera, where you’re validating that the account is good. You may be validating funds. ACH Plus is a way in which to potentially get a little bit of the best of both worlds. Certainly a more expensive payment than ACH, again, but with the validation should have the good funds model that you’re looking for and at a lower cost than card payment.
Steve Mountz:
We think that it’s not for every customer within a customer base, but for the right customers a segment of your portfolio, if you will, it makes a whole lot of sense. Steve showed the delta, a huge delta, between “billers,” bill pay, which has a high percentage of ACH and subscriptions which has a relatively low ACH rate. We think that ACH Plus could be a valid solution that way.
Kathy Greenler Sexton:
Interesting. Anything else on that you wanted to add, Steve? I have a couple other questions here if you don’t.
Steve Mountz:
Kathy, I would just mention, again, it’s a consumer experience. Mae sure that it’s easy to find whatever alternative payment methods or emergent payment methods that you’re adding. If they’re below the fold on the screen or on the mobile device, consumers might just not be aware.
Kathy Greenler Sexton:
Yep, an education process for them. Absolutely. Speaking of alternative payment methods, I have a question on what is real effort? You touched on that a little bit, Mike. What’s the effort involved in setting up APMs like a PayPal?
Mike Rogers:
It should be a configuration with your existing provider or if your persisting provider doesn’t have the option, then you can have multiple providers. It is more difficult quite frankly, potentially depending on your relationship. If your payment provider is a gateway or if they’re a payment facilitator, how many current relationships do you have and so forth? Overall, adding PayPal it should be an extension of what you’re doing from an overall payment standpoint. It should be a month or less implementation with the right provider.
Kathy Greenler Sexton:
Okay. Good feedback. I’d just like to remind everybody submit your questions via the chat or Q&A. We’ve got everybody monitoring that. We’ve had a couple of questions about payments in Asia. We’re going to follow up with those directly because they were very specific questions. Please, if you can, make sure we have your email so we can follow up because I think one of them at least asked the question anonymously. We want to make sure we get the right info to you, so if you could do that.
Mike Rogers:
It’s a really important question because there’s so much growth in subscriptions in general in that part of the world. It is definitely a more complicated environment but one that companies like ACI have a presence there on the ground in those places and love to get the specifics.
Kathy Greenler Sexton:
Absolutely. If you can help us with that, that would be great. Going back to real-time methods, Mary Ann has a question. We see that fraud is less apparent than other methods. Does realtime have less fraud than with credit cards?
Mike Rogers:
I don’t think that there’s a comparison yet for true real-time payments because, again, in today’s world it’s still primarily a bank to bank or a business to business, treasury group to treasury group. In those environments, there’s less fraud. They’re not at the big volumes that you see in card at this point. What I can tell you is real-time payments are less revocable, so there will be less exceptions. I think over time as it becomes more prominent the real-time payment networks are going to have to create their own versions of chargebacks and returns and so forth because there is validity to those solutions.
Mike Rogers:
But in general real-time payments will bake in fraud as opposed to fraud being a standalone solution. Really, any payment methods at this point should have some layer of fraud tools built into them, whether it’s authentication, in transit or back office to ensure you’re doing everything you can to avoid fraud. It’s being built as a part of the solution with real-time payments because it’s relatively new.
Kathy Greenler Sexton:
Okay, that’s good. We’ve got some things coming in Q&A and chat, which is fabulous.
Steve Mountz:
Great.
Kathy Greenler Sexton:
With PSP providing a solution for APM, do we get the full payment info from the PSP when we terminate the contract with that PSP?
Mike Rogers:
Great question. I think if they’re participating in an ecosystem of which us payment geeks we know all the other payment geeks even at our competitors. I think it’s sinful to hold a client hostage with their data. Now, everybody has standard operating procedures of how you offload a client and there’s work to be done there for sure. But ultimately, I think if you’re serving a marketplace, you should serve the marketplace in its entirety, and you should be willing to compete and provide the data back to the client if they’re migrating some or all of their business away from you.
Kathy Greenler Sexton:
Interesting, good.
Mike Rogers:
I hope that answers the question. It’s not an easy one.
Kathy Greenler Sexton:
Yeah, we need to stay on top of everything there. Quick question on the research timeframe. Steve, on the data that you provided and presented today, you did mention that you’re about to start a new survey. When did you collect the data for the survey that you presented?
Steve Mountz:
Great question. The Pulse data was collected in late March. We collected the data with Mastercard in late April, mid to late April. So they were both around that same timeframe.
Kathy Greenler Sexton:
Really interesting. Early pandemic phase.
Steve Mountz:
Yep. It will be fascinating to see what comes out of our Pulse survey that’s going out like I said later this week and next week to compare and contrast that with what we saw earlier in the spring. Stay tuned for more details on that.
Kathy Greenler Sexton:
I can’t wait.
Mike Rogers:
I have to tell you the card networks in general sort of across the board, Mastercard in particular in this case, have really been fast to react to the marketplace at hand. COVID, social injustice, fires, just about everything in this crazy world that’s going on today. They have been very proactive partners. They’re doing real-time research, not necessarily sponsored by ACI in this case, literally on a weekly basis because they know how much things are changing during this timeframe. Very proactive.
Kathy Greenler Sexton:
Yep, they have great teams, and they have been very, very proactive.
Mike Rogers:
And they’re going to be at your show.
Kathy Greenler Sexton:
They are going to be at our show. I am so excited. We are sitting down. We’re doing briefings and fireside chats, and it’s really going to be a great opportunity for people to learn directly on what they are doing with recurring revenue to integrate in merchants. I’m so excited to see and participate in all of that with them. If anybody does need to reach out to Steve or Mike, you can see their email addresses right there. As we wrap up the questions today, I have a question for both of you, which is looking at all the data. You are in data day in and day out, reading the tea leaves for retention and payments, what are your predictions and views of what we need to be preparing for in 2021?
Mike Rogers:
Steve, I’ll let you kick us off.
Steve Mountz:
Again, Kathy, I’m in the data every day, all day, and then I’m also a consumer too. Our consumer Pulse survey, it showed that use of mobile wallets to make bill payments double year over year. I think consumers such as myself I’m using my phone a lot more in contactless way to make payments at the point of sale. So I’m getting a lot more engaged in that channel, and I see that acceleration just continuing. Mobile wallets driving these alternative payment methods, I see that acceleration just continuing into 2021 and beyond.
Mike Rogers:
I would add… And it’s not necessarily a part of this presentation. I think it would be a nice extension for Subscription show 2021. Whenever we talk about retention, we talk about loyalty. The way you get to loyalty obviously first and foremost is with great products and services that everybody provides here. But ultimately let’s reduce the payment exceptions to make sure we’re keeping customers happy. Don’t let payments get in the way that way. Secondly, as we go to faster payments, what you’re going to see is a closer tie between payments, marketing, product offerings and so forth and ultimately loyalty and rewards programs.
Mike Rogers:
I think you’ll see those. Right now, they’re sort of loosely tied together. Obviously card issuers have great point systems and have forever. I think you’re going to see more and more tying together with subscription providers and merchants between loyalty rewards and payments.
Kathy Greenler Sexton:
I think that’s really interesting, and we can check in to see how these predictions go next year. I will say we are actually going to be addressing loyalty and retention on the voluntary side from that first touch with your subscribers and your members on how to really create that loyalty from that first touch because it’s critical especially with so much noise and competition in the marketplace. Subscription 2020 will be touching on that too.
Mike Rogers:
Great.
Kathy Greenler Sexton:
With that, Steve and Mike, thank you so much for your time today. Really interesting data. Thank you.
Steve Mountz:
Thank you, Kathy.
Mike Rogers:
Thank you for the opportunity.
Steve Mountz:
Absolutely.
Kathy Greenler Sexton:
Great to have you today and to chat and to hear all this interesting data. To everybody attending today, thank you for your time. If you have any questions, you can still put them in the Q&A, and we’ll follow up with you directly. Until next time, thank you so much and have a great day.
