News Archives | PYMNTS.com https://www.pymnts.com/news/payments-innovation/2024/gain-without-the-pain-nuvei-head-of-ecomm-on-whats-driving-payments-optimization/ What's next in payments and commerce Wed, 14 Aug 2024 02:09:01 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.1 https://www.pymnts.com/wp-content/uploads/2022/11/cropped-PYMNTS-Icon-512x512-1.png?w=32 News Archives | PYMNTS.com https://www.pymnts.com/news/payments-innovation/2024/gain-without-the-pain-nuvei-head-of-ecomm-on-whats-driving-payments-optimization/ 32 32 225068944 Gain Without the Pain: Nuvei Head of eComm on What’s Driving Payments Optimization https://www.pymnts.com/news/payments-innovation/2024/gain-without-the-pain-nuvei-head-of-ecomm-on-whats-driving-payments-optimization/ Wed, 14 Aug 2024 08:02:28 +0000 https://www.pymnts.com/?p=2052084 Payments represent the lifeblood of business success. And business success, like payments, is inherently complex. This inherent complexity, arising because today’s payments sit at the intersection of technology, finance, regulation, and end-user behavior, can impede businesses’ ability to maximize revenue. “The payments industry has moved faster, technology has changed, consumer needs and experiences, and innovation […]

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Payments represent the lifeblood of business success. And business success, like payments, is inherently complex.

This inherent complexity, arising because today’s payments sit at the intersection of technology, finance, regulation, and end-user behavior, can impede businesses’ ability to maximize revenue.

“The payments industry has moved faster, technology has changed, consumer needs and experiences, and innovation have all changed significantly, not just along the last 20 years, but in the last three to five years,” Laura Miller, chief revenue officer and global head of eCommerce at Nuvei, told PYMNTS.

Miller said the complexity of payments, payment analytics and risk management represent the three “most significant” pain points that businesses must overcome to unlock revenue potential through payments optimization.

But navigating the labyrinth of options, regulations and risks composing today’s payments landscape is far from easy, even for the most sophisticated and forward-thinking firms.

Managing the Complexity of Payments

One of the most significant hurdles in payment optimization is the sheer complexity of the payments industry. Over the past few years, particularly accelerated by the COVID-19 pandemic, consumer expectations have evolved. Customers now demand the ability to pay anywhere, anytime, in a safe and secure manner. However, with this convenience comes a host of challenges.

“The payment experience can be daunting for consumers,” Miller said. “From error messages to internet stability, and the vast array of payment options, each of these factors can either enhance or hinder the customer experience.” The proliferation of global payment methods adds another layer of complexity, making it imperative for businesses to approach the payment process holistically.

Nuvei recognizes these challenges, Miller said, noting the company has developed pretransaction tools such as smart routing and adaptive approvals to streamline payment transactions. These tools not only reduce complexity but also improve transaction success rates, with some clients seeing a 5% increase in successful transactions.

At the same time, the vast array of payment options available today presents a double-edged sword for businesses. While offering multiple payment methods can attract a broader customer base, it can also lead to confusion and inefficiencies. Striking the right balance between choice and operational efficiency is crucial.

“There’s always a trade-off,” Miller said. “The more choice, the more confusing it can be for consumers.”

She added that by embracing a localized approach and identifying the optimal alternative payment methods for their specific markets, businesses can present the right payment options to the right consumers, enhancing the overall customer experience.

Power of Payment Analytics

In the digital age, data is abundant, but leveraging this data effectively remains a critical issue for many businesses. According to Miller, nearly a third of businesses report that limited data visibility is a missed opportunity to boost revenue. The key lies in using this data to improve payment processes and, ultimately, customer satisfaction.

Risk management remains a cornerstone of payment processing. As the industry evolves, so do the risks, particularly in the form of fraud. “Businesses face substantial financial losses due to fraud, which can amount to billions of dollars annually,” Miller warned, noting that fraud not only impacts the bottom line but also erodes customer trust and loyalty.

Looking ahead, Miller highlighted three key trends that are set to revolutionize payment optimization: artificial intelligence (AI) and machine learning, biometrics and contextual payments.

AI and machine learning are already playing a role in enhancing fraud detection and personalizing payment experiences. By automating processes, these technologies enable businesses to realize revenue faster and with greater accuracy. Meanwhile, biometrics, particularly in authentication, promises to simplify and speed up payment processes while enhancing security.

Perhaps the most exciting development is the rise of contextual payments, which Miller described as a way to enable and automate payments during personal moments.

“Contextual payments create an emotional connection for consumers, making them feel confident in their purchases,” Miller said, citing as an example an end user watching their favorite show and instantly purchasing items featured on screen, or seamlessly paying for services through a mobile device while on the go. This trend has the potential to transform the way consumers interact with businesses, she added, making payments a more integrated and intuitive part of everyday life.

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Optimizing Bank Relationships Challenges the Real-Time Treasury Executive https://www.pymnts.com/news/b2b-payments/2024/3-ways-banking-landscape-has-elevated-treasury-function/ Tue, 13 Aug 2024 20:42:23 +0000 https://www.pymnts.com/?p=2052011 A strong treasury department sees its banks not just as service providers, but as growth partners. Against that backdrop, the digital transformation of the banking sector is increasingly reshaping — and enhancing — the operations of traditional treasury teams. The global banking landscape has seen several changes in recent years. Regulatory reforms, the rise of […]

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A strong treasury department sees its banks not just as service providers, but as growth partners.

Against that backdrop, the digital transformation of the banking sector is increasingly reshaping — and enhancing — the operations of traditional treasury teams.

The global banking landscape has seen several changes in recent years. Regulatory reforms, the rise of FinTech and the accelerated digitization of financial services have all redefined how banks operate and interact with their corporate clients.

Traditional banking relationships, once characterized by face-to-face interactions and manual processes, are increasingly being replaced by digital platforms that offer treasurers real-time insights, automation and a broader range of financial products.

This shift has implications for the entire enterprise function.

An important part of treasury management has always been maintaining the optimal number of banking relationships. However, the definition of “optimal” is changing. In the past, having too many banking relationships could lead to inefficiencies, higher costs and complexity in managing multiple accounts and counterparties. Today, the concept of redundancy in banking relationships is being redefined to focus on strategic flexibility and resilience.

From real-time insights to intelligent cash flow forecasting and automated payments and reconciliations, the digitization of the banking landscape provides corporate treasurers — and their organizations — more opportunities to capture growth and mitigate uncertainty.

Read also: Treasury’s Digital Migration Creates Greater Synergies With Finance Function

The Future of Enterprise Treasury Is Redundant — in a Good Way

Redundancy is no longer just about having backup banks in case of a counterparty failure. It’s about creating a network of banking partners that can provide different capabilities and services, which can be tapped into depending on market conditions, regulatory changes or business needs.

This approach allows treasury teams to diversify their risk, access a broader range of financial products, and ensure that they can continue to operate smoothly even if one banking partner faces difficulties.

Where treasurers once relied on a few banking partners for a limited set of services, they now have access to a wider array of banks, FinTech providers and digital financial products. This expanded ecosystem allows for greater flexibility and customization in how treasury functions manage liquidity, hedge risks and optimize working capital.

For instance, partnering with banks that specialize in different areas, such as trade finance, foreign exchange or digital payments, can help treasury teams optimize their operations and tap into growth opportunities.

“Many treasurers are thinking, ‘Well, how can I extract that last ounce of juice from my financial ecosystem?’” Ambrish Bansal, global head of Liquidity and Cash Concentration Products for the Citi Treasury and Trade Solutions business, told PYMNTS this month.

“I see the role of treasury becoming more central to [the enterprise’s] business strategy, to the growth strategy, to the expansion strategy — and quite frankly, to the sustainability strategy,” Bansal added. “The treasury team plays a pivotal role.”

See also: Unlocking the Critical Role of Treasurers in Corporate Decision-Making

From real-time payments and innovative settlement solutions to artificial intelligence-driven cash forecasting and supply chain financing platforms, treasurers now have access to tools that can enhance their ability to manage cash flows, mitigate risks and support business growth.

Treasurers today must be more agile in decision-making, Claudia Villasis-Wallraff, head of data driven treasury at Deutsche Bank, told PYMNTS in June.

“Companies need to adopt new technology,” she said. “And with this, I not only mean adopting API connectivity, but also cloud functions and artificial intelligence.”

“Shareholders and the C-level are going to start asking more and requesting more from their treasury teams,” she added.

Looking ahead, the ability to create operational cash flow forecasting without manual intervention will be a game changer for treasury teams, she said. This automation can streamline treasury operations, allowing treasurers to focus on more strategic tasks.

One of the most impactful innovations across the corporate back office has been the rise of real-time treasury management systems. These platforms integrate with multiple banking partners and financial products, providing treasurers with real-time visibility into their cash positions across accounts, currencies and regions. By using real-time data, treasurers can make more informed decisions, optimize liquidity management, and work to reduce the cost of borrowing.

With this knowledge at their fingertips, forward-thinking treasurers will be expected to act as strategic advisors to their organizations, using their insights into the financial markets and their understanding of the company’s financial needs to drive growth and operational efficiency.

This view is supported by the latest PYMNTS Intelligence, which found that 77% of treasurers said at least one department in their organization would benefit from closer collaboration with them.

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.

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Sage Expands AP Automation Product to Businesses Worldwide https://www.pymnts.com/news/b2b-payments/2024/sage-expands-ap-automation-product-to-businesses-worldwide/ Tue, 13 Aug 2024 20:21:33 +0000 https://www.pymnts.com/?p=2051972 Business management software firm Sage is expanding its AP automation offering. The company, which makes accounting, financial, HR and payroll products for small and medium-sized businesses (SMBs), announced the expansion Tuesday (Aug. 13) as part of a series of enhancements and updates for customers of its Sage Intacct offering. “As part of this major expansion, Sage Intacct is rolling […]

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Business management software firm Sage is expanding its AP automation offering.

The company, which makes accounting, financial, HR and payroll products for small and medium-sized businesses (SMBs), announced the expansion Tuesday (Aug. 13) as part of a series of enhancements and updates for customers of its Sage Intacct offering.

“As part of this major expansion, Sage Intacct is rolling out AP Automation globally,” the company said in a news release.

“In the US, businesses are already processing over 10,000 bills per month using this innovative tool, which utilizes AI to halve the time taken for accounts payable processes while saving organizations over $100,000 per year.”

According to the release, AP Automation streamlines financial workflows by automatically creating draft bills from uploaded documents, and spotting issues such as duplicates, while reducing data entry efforts and costs.

Dan Miller, executive vice president of Sage’s financials and ERP division, said the company is the first mid-market solution offering AP automation outside the U.S.

“What’s more, our ongoing global expansion and the achievement of significant certifications, showcases our commitment to providing globally compliant, secure, and robust financial solutions that meet the diverse needs of businesses everywhere,” Miller said.

Sage is using artificial intelligence (AI)-powered accounts payable (AP) automation at a time when, as noted here last month, AP is “being recognized for its potential to become a growth engine for businesses.”

But as Melissa Johnson, head of operations at Ottimate, told PYMNTS, many companies are still relying on outdated and fragmented systems, leading to inefficiencies, as well as the increased risk of errors and fraud.

“First and foremost, eliminating that manual data entry is key. It’s expensive, probably more expensive than companies realize, as well as being error prone, inefficient, and having a high risk of fraud,” Johnson said.

“A lot of finance leaders are unfamiliar with the latest AP automation technologies,” she added. “They might have looked at the technology a few years ago and found it not quite ready. But the landscape has changed dramatically, and those who adopt automation often don’t look back.”

At the same time, adhering to a “less is more” philosophy can help companies move closer to unlocking growth via their AP functions. PYMNTS Intelligence data has found that nearly 60% of large firms are using at least five different AP systems, “a setup that is far from ideal.”

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.

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Ahold Delhaize Exec Says Digital Convenience Can Mean Fewer Loyal Shoppers https://www.pymnts.com/news/retail/2024/ahold-delhaize-vp-says-digital-convenience-erodes-shopper-loyalty/ Tue, 13 Aug 2024 19:03:09 +0000 https://www.pymnts.com/?p=2051936 As consumers, especially younger generations, grow accustomed to having their needs met at a rapid pace, Ahold Delhaize is seeing shoppers be less loyal to specific brands. In an interview with PYMNTS, Bobby Watts, SVP executive lead at the grocery giant’s AD Retail Media arm, spoke to how both the current economic climate and the […]

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As consumers, especially younger generations, grow accustomed to having their needs met at a rapid pace, Ahold Delhaize is seeing shoppers be less loyal to specific brands.

In an interview with PYMNTS, Bobby Watts, SVP executive lead at the grocery giant’s AD Retail Media arm, spoke to how both the current economic climate and the rise of digital are eroding grocery shoppers’ loyalty.

“They’re not as brand loyal as they used to be. … I think it’s [because of] two things. I definitely think that economic pressures are causing consumers to make choices … based on price or promotion or value,” Watts said. “But we also see … the younger generation has grown up in a world where everything is instantaneous, and things are moving at such a fast pace, that they’re willing now to experiment more and test different brands, whereas the other demographics may not be as apt to do so.”

Indeed, consumers are making changes to their grocery purchasing habits in response to cost pressures. PYMNTS Intelligence data show that 36% of consumers have traded down from their go-to grocery products to cheaper versions of them in response to inflation.

In fact, grocery shoppers tend to show considerably stronger affinity toward merchants than products. PYMNTS Intelligence research shows that 53% of grocery customers say that they are more loyal to merchants than products, and only 35% are more loyal to products than merchants.

Getting Personal

One of the ways that brands are looking to win consumers’ loyalty is through personalization, but not all such initiatives are successful. Shoppers increasingly expect tailored offers and recommendations that align with their preferences and purchase history. However, many find themselves underwhelmed by the generic nature of the promotions they receive.

“We want to make sure that we’re … using first-party data to create value for them, and we do that through personalized offers,” Watts said. “We want to make sure [there are] things in offers that are relevant to them based on their purchase history.”

PYMNTS Intelligence’s study “Personalized Offers Are Powerful — But Too Often Off-Base” finds that 83% of consumers are interested in receiving personalized offers, but only 44% find the ones that they are currently receiving to be very relevant to their needs.

By analyzing consumer purchase patterns and engagement metrics, retailers can deliver more relevant and timely offers, enhancing the overall shopping experience and fostering deeper customer relationships.

‘What’s Old Is New Again’

Ahold Delhaize is seeing 90% of purchases come through its brick-and-mortar stores.

“What’s old is new again,” Watts said. “We seem to be taking things back in store.”

Watts highlighted that the integration of retail media with physical stores is part of this resurgence of in-person, with on-site digital interfaces in these stores creating a hybrid retail media space. Retailers are combining these technologies with analog brand signage and mobile app integrations to engage consumers at multiple touchpoints within the store environment.

Additionally, the omnichannel behavior of grocery shoppers has been significantly shaped by the pandemic. The rise of click-and-collect, expedited pickup windows, and third-party delivery services such as DoorDash and Instacart demonstrate the flexibility and immediacy consumers now demand.

Watts observed that shoppers are not confined to a single mode of shopping; instead, they seamlessly navigate between digital and physical channels based on convenience and availability.

The PYMNTS Intelligence study “2024 Global Digital Shopping Index: U.S. Edition,” created in collaboration with Visa Acceptance Solutions, found that roughly a third of U.S. consumers are Click-and-Mortar™ shoppers, preferring shopping journeys that combine the digital and the physical.

Looking ahead, as the retail media network aims to understand shoppers’ behavior across digital and physical channels, Watts expects artificial intelligence (AI) and machine learning (ML) to play a key role.

“One of the things that we’re working on is, how do we think about bringing a generative AI layer over top of media planning, so that you have all the signals coming from the multitude of channels that we offer,” Watts said. “Leveraging generative AI and ML to create the loop that takes the wonderful first-party data and measurement capabilities we have as a retail media network … to build a media plan based on mission objectives.”

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Citi Digital Assets Exec Shobhit Maini Reportedly Leaving Bank’s Market Unit https://www.pymnts.com/news/2024/citi-digital-assets-exec-shobhit-maini-reportedly-leaving-banks-market-unit/ Tue, 13 Aug 2024 19:02:18 +0000 https://www.pymnts.com/?p=2051891 The head of digital assets for Citi’s markets unit is reportedly stepping down. Shobhit Maini, who has held that job since 2021, is leaving the banking giant after more than 14 years, Reuters reported Tuesday (Aug. 13), citing an internal memo. That memo, from Lee Smallwood, Citi’s head of markets innovation and investments, said Maini […]

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The head of digital assets for Citi’s markets unit is reportedly stepping down.

Shobhit Maini, who has held that job since 2021, is leaving the banking giant after more than 14 years, Reuters reported Tuesday (Aug. 13), citing an internal memo.

That memo, from Lee Smallwood, Citi’s head of markets innovation and investments, said Maini is leaving to follow an entrepreneurial opportunity in the digital asset sector. Deepak Mehra, currently Citi’s international lead for the markets’ units strategic investments, will now also oversee digital assets for the markets unit, the memo said.

Citi’s digital asset efforts include a partnership earlier this year with Wellington Management and WisdomTree to explore the tokenization of private markets.

As PYMNTS reported, this collaboration successfully completed a proof of concept on the Avalanche Spruce institutional test Subnet, showing the potential of smart-contract capabilities to provide new functionality and operational efficiencies.

“Private markets, which represent a $10 trillion asset class, have long been plagued by complex and manual infrastructure, a lack of standardization and limited transparency,” that report said. “These factors have resulted in inefficient distribution and operations. The proof of concept aimed to address these challenges by leveraging blockchain technology and smart contracts.”

Citi last year created an application that uses blockchain to execute foreign exchange (FX) trades, employing blockchain infrastructure to price and perform bilateral spot FX trades. Also in 2023,Citi Treasury and Trade Solutions unveiled a digital asset tool to enhance cash management and trade finance capabilities.

In other Citi news, PYMNTS spoke with Ambrish Bansal, global head of liquidity and cash concentration products, for the Citi Treasury and Trade Solutions, about the changing role of the treasury department.

The rise of instant payments and the connected economy, Bansal told PYMNTS CEO Karen Webster in an interview posted on Tuesday, can help pull the most value from financial interactions, turning cash flow forecasting from a simple “point in time” exercise to a fluid, real-time effort.

However, that report noted, the demands of faster payments means that businesses need to integrate advanced payment processing systems and have real-time cash flow monitoring systems in place to make those treasury functions more dynamic.

“Many treasurers are thinking, ‘Well, how can I extract that last ounce of juice from my financial ecosystem?’” Bansal said.

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Credit Unions vs Big Tech: Winner Gets the Customer https://www.pymnts.com/news/banking/2024/do-credit-unions-hold-edge-over-big-tech-in-loyalty-showdown/ Tue, 13 Aug 2024 17:05:01 +0000 https://www.pymnts.com/?p=2051708 For banks — and especially for credit unions — the battle with Big Tech for the hearts, minds and wallet share of consumers may seem a more than challenging proposition. After all, Big Tech’s role across all facets of everyday life is pervasive, touching on everything from commerce to search to social media to the […]

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For banks — and especially for credit unions — the battle with Big Tech for the hearts, minds and wallet share of consumers may seem a more than challenging proposition.

After all, Big Tech’s role across all facets of everyday life is pervasive, touching on everything from commerce to search to social media to the actual devices in one’s hand (think Android and Apple) where banking services and products can be delivered.

In the report “How Top-Performing Credit Unions Innovate to Stay Competitive,” a collaboration between PYMNTS Intelligence and Velera, we found that even among top-performing credit unions (CUs), who have relatively high scores on membership satisfaction, a majority (at 56%) view Big Tech firms as key competitors. Overall, 28% of CUs say they compete with Big Tech companies.

Digital Wallets and Big Tech Supervision

There are, of course, signs that the competitive landscape will only get more competitive. As has been seen through the past several months, and as noted here, last year the Consumer Financial Protection Bureau (CFPB) sought to extend the same supervision to Big Tech firms that already is in place for banks and credit unions. The supervision would apply to companies that see volumes of more than 5 million transactions annually, which of course covers everyone from Apple to Amazon to Meta’s financial ambitions. All told, the CFPB’s rule-making would add 17 new entities to its purview, companies that facilitated about 12.8 billion transactions in 2021, with an estimated value of about $1.7 trillion, covering 88% of known transactions in the nonbank sector.

The tech firms have the critical mass that would seme to put the CUs at a disadvantage, particularly given the user level data — rendered in real time — that they possess.

If data is the gold, the oil, the … well, you name the precious commodity as metaphor here … underpinning banking services, it should be noted that last year we found 57% of consumers said they trusted banks to keep their credentials secure, edging out Big Tech players.

Some of the Advantages

The traditional financial institutions (FIs) already are regulated, and have been regulated for decades, as they’ve sought to innovate, funding those innovations with the deposits already on the books. But for forwarding-thinking banks, specifically for credit unions, we’ve found in playbooks and interviews that two-thirds of CU members want more payment capabilities. The CUs that are putting time and effort into digital/omnichannel initiatives invest 13% more in payments innovation than bottom performers and benefit from 57% lower member churn, which conceivably blunts the movement of “churned customers” to Big Tech.

The banks themselves have insight into the payment behaviors and account usage that can help them take a proactive approach to keeping those members engaged. While Big Tech’s point of access is through the mobile device, the banks have the digital and in-branch settings to keep customers’ attention, and to offer loans and other services in data-driven context.

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Contextual Commerce Drives Omnichannel Engagement for Emerging Alcohol Brands https://www.pymnts.com/news/retail/2024/contextual-commerce-drives-omnichannel-engagement-emerging-alcohol-brands/ Tue, 13 Aug 2024 15:00:43 +0000 https://www.pymnts.com/?p=2051710 As alcoholic beverage brands look for ways to capture consumers’ attention and spending in the digital world, Purity Distillery sees contextual commerce help build these omnichannel connections. Tate Troelstrup, president and CEO of the spirits brand, explained in an interview with PYMNTS how the company originally focused more on offering product recommendations and combinations than […]

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As alcoholic beverage brands look for ways to capture consumers’ attention and spending in the digital world, Purity Distillery sees contextual commerce help build these omnichannel connections.

Tate Troelstrup, president and CEO of the spirits brand, explained in an interview with PYMNTS how the company originally focused more on offering product recommendations and combinations than on simply driving sales.

“When we initially dipped our toe in, we were really focused on offering interesting groupings of our brands to try and find different touch points,” he said. “… The whole goal for us was just to create a connection with consumers. We were somewhat interested in sales, but more than anything, we were trying to figure out, as a small brand, how we could build a relationship with different consumers and what are they interested in.”

Part of this came down to influencer marketing, working with creators to offer, for instance, cocktail recipes that would encourage consumers to try the company’s gins and vodkas.

Many young consumers look to influencers to guide their spending decisions, per PYMNTS Intelligence research. According to the “Generation Zillennial: How They Shop” report, 13% of consumers nationwide stated that social media influencers or celebrities at least partially influenced their purchasing decisions in the previous 30 days. This figure more than doubled for Generation Z, with 28% reporting such influence, while 22% of millennials indicated the same.

Troelstrup noted that working with creators proved less effective than tapping micro-influencers, who tended to have stronger connections with their followings.

“Folks that had maybe a smaller follower count but a more authentic connection, and that’s what we’re looking for as we’ve built our own [customer relationship management (CRM)] and our own account — more about how we can have these high-quality interactions with consumers who will not only potentially buy us on eComm but knowing that eComm is part of a multi-touchpoint consumer journey,” he said.

As Purity Distillery’s digital strategy evolved, there was a shift from purely engaging consumers to incorporating a more sales-oriented approach. The company learned that directing consumers straight to an eCommerce hub was less effective than integrating them into a broader ecosystem. By providing various pathways — be it online purchases, finding local stores or ordering a cocktail at a nearby bar — Purity Distillery is creating a more flexible consumer journey.

“As [our omnichannel presence has] evolved, it’s become a little less blocky, a lot more nuanced and focused,” Troelstrup said.

Economic factors also play a role in shaping digital engagement. With rising price sensitivities, consumers prefer to buy products during their regular shopping trips rather than online, where shipping costs and delivery uncertainties can deter purchases. This effect mirrors the trend seen in the restaurant industry, where economic pressures have consumers shifting away from ordering delivery toward lower-cost channels such as pickup.

Looking ahead, Troelstrup said he expects some of these challenges to be alleviated, but the regulatory issues with alcoholic beverage eCommerce will continue to hamper growth in the space.

“A year from now, we’ll … hopefully have moved beyond some of the economic headwinds and be talking about what the online experience can look like for the consumer,” he said. “The consumer should have access to a great, wide selection of brands. eCommerce lets them do that, but of course, there are some compliance challenges, so I think that conversation will be ongoing and not something that goes anywhere anytime soon.”

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Collaborative Defense: The Role of ‘Intelligent Friction’ and AI in Fraud Prevention https://www.pymnts.com/news/security-and-risk/2024/collaborative-defense-role-intelligent-friction-ai-fraud-prevention/ https://www.pymnts.com/news/security-and-risk/2024/collaborative-defense-role-intelligent-friction-ai-fraud-prevention/#comments Tue, 13 Aug 2024 08:03:06 +0000 https://www.pymnts.com/?p=2051036 Every now and then, an executive in the payments business comes up with a catchphrase that captures a complex concept, and you know it’s going to resonate. A good example lies in describing the tension between tight security protocols and practices and a positive customer experience. The catchphrase that nails it is “intelligent friction.” Attribute […]

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Every now and then, an executive in the payments business comes up with a catchphrase that captures a complex concept, and you know it’s going to resonate.

A good example lies in describing the tension between tight security protocols and practices and a positive customer experience. The catchphrase that nails it is “intelligent friction.”

Attribute that one to Graeme Bullock, EMEA sales leader at financial verification company Entersekt. He turned the phrase during a conversation with PYMNTS and a panel that included Nordic payment processor Nexi Group and J.P. Morgan, focusing on the tension mentioned earlier.

Bullock introduced the concept of “intelligent friction,” which emphasizes applying security measures based on the level of risk associated with a transaction rather than a one-size-fits-all approach. This approach ensures that security measures are dynamic and context-specific, reducing unnecessary interruptions for legitimate transactions while effectively targeting potentially fraudulent activities.

As Bullock explained it, intelligent friction involves analyzing multiple factors, including the device used, location, transaction type and user behavior, to assess the risk level accurately.

“Rather than looking at a single point and making a decision based on a rule, it’s more about understanding the full context of the interaction,” he said. “We need to consider the omnichannel approach. Sometimes, I may interact with my financial institution on my laptop, and other times through my mobile app. The institution must make decisions based on my identity regardless of the channel. This requires a seamless integration of data from various sources to create a holistic view of the customer’s behavior.”

The panelists discussing the issue agreed that intelligent friction is crucial in maintaining a balance between security and user experience. As Nexi Group Head of Risk Management Services Sean Neary added, the consumer knows what they are doing when authorizing a transaction. Payment systems, therefore, need to be smart enough to introduce the right level of intervention without disrupting legitimate activities.

However, the picture gets a bit more complicated when larger commercial transactions are in play. As J.P. Morgan Head of Fraud Prevention for Commercial Banking Alec Grant told the panel, in commercial payments, clients are sometimes a few steps removed from personal knowledge of who they’re paying. He applied Bullock’s phrasing to his experience.

“Our friction involves having conversations with clients to ensure they understand the risks and verify the transaction’s legitimacy,” Grant said. “We train our teams in psychological profiling to listen and challenge appropriately. This approach has significantly reduced fraudulent transactions without compromising the client experience.”

The Consortium Approach

Intelligent friction, therefore, represents a nuanced and sophisticated approach to fraud prevention, ensuring that security measures are as seamless as possible while effectively mitigating risks. By using advanced technologies and fostering cross-industry collaboration, financial institutions can protect their customers and maintain trust.

That cross-industry collaboration was an important theme during the panel discussion.

It’s imperative that we standardize data sharing and classification,” he said. “This ensures that the consortium model is effective in preventing fraud across institutions.”

Neary also highlighted the role of privacy-enhancing technologies in enabling secure data sharing without compromising personal information.

“These technologies allow us to tokenize and standardize [personally identifiable information (PII)] data, facilitating secure and meaningful data sharing across the consortium,” he explained.

The consortium model has worked in specific areas of fraud. For example, Bullock underscored the success of collaboration in reducing authorized push payment (APP) fraud. He said the contingent reimbursement model introduced in the United Kingdom has plateaued the increase in APP fraud, proving to him that collaboration and data sharing are essential in tackling fraud.

APP fraud has emerged as a concern, particularly in Europe and the U.K. Grant highlighted the complexities of this fraud type, where customers are tricked into authorizing payments to fraudsters.

“We are seeing a two-thirds reduction in the clients letting the funds go just by setting up these very specific teams, who are trained to handle these situations,” he said. “It’s fantastic for our clients because they appreciate the extra layer of protection.”

The AI Angle

Artificial intelligence is also playing an increasingly vital role in fraud prevention. Bullock emphasized the importance of AI in creating a multilayered approach to security.

“AI helps us analyze the behavior of an individual and a fraudster,” he said. “We use risk modeling for that, considering factors like location, IP address and device type. This allows us to make informed decisions about the legitimacy of a transaction.”

Grant echoed this sentiment, highlighting the precision AI brings to fraud detection.

“In the last two to three years, we’ve worked closely together to apply AI in identifying fraud,” he said. “We are seeing a significant reduction in interrupted transactions while increasing fraud detection.”

Looking into the future, expect to hear a lot more about intelligent friction and the consortium approach. As financial institutions strive to stay ahead of fraudsters, adaptability and collaboration will remain key. Neary emphasized the importance of a layered, configurable platform that can adapt to different stages of digitalization globally.

“Choose your battles, connection points, and invest in technologies that offer harmony in layered security, ensuring customer satisfaction and trust,” he advised.

Grant shared his vision for the future, where data sharing among banks could reduce fraud losses.

“If we could share information anonymously with other banks, we could collectively make a massive difference in reducing fraud losses to clients,” he said.

Bullock said there is a need for continuous evolution in fraud prevention.

“We’re never going to get to 100%, but by adopting a multilayered, context-aware approach, we can make the best decisions to protect our customers while ensuring a seamless experience,” he concluded.

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Citi: Faster Payments Help Treasurers Extract ‘Last Drop’ of Liquidity From Financial Ecosystems https://www.pymnts.com/news/faster-payments/2024/citi-faster-payments-help-treasurers-extract-last-drop-of-liquidity-from-financial-ecosystems/ Tue, 13 Aug 2024 08:00:05 +0000 https://www.pymnts.com/?p=2051376 Corporate treasurers once were relegated to the back office, manipulating spreadsheets, preparing audits, handing printed reports off to more senior management — the folks charting the company’s course ahead. But as Ambrish Bansal, global head of Liquidity and Cash Concentration Products, for the Citi Treasury and Trade Solutions business, told PYMNTS’ Karen Webster, the role […]

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Corporate treasurers once were relegated to the back office, manipulating spreadsheets, preparing audits, handing printed reports off to more senior management — the folks charting the company’s course ahead.

But as Ambrish Bansal, global head of Liquidity and Cash Concentration Products, for the Citi Treasury and Trade Solutions business, told PYMNTS’ Karen Webster, the role of the treasury department is changing at a rapid speed.

Now, the treasurers are tasked with navigating through choppy seas of interest rate volatility and geopolitical uncertainty. The cost of inefficient cash management escalates in such an environment, where every dollar counts, and transparency into where money is, where it’s headed and what’s coming into the coffers is determinative of whether companies thrive, or even survive.

Armed with the right data, which gets delivered, analyzed and acted upon across departments, treasurers can help explore the regulatory, tax and other nuances of worldwide developments in ways that help their firms meet their business objectives over time.

Squeezing the Juice

The advent of instant payments and the always-on connected economy, he said, can help extract the most value from financial interactions, to move cash flow forecasting from a simple “point in time” exercise to a fluid, real-time endeavor. 

In turn, he said, the same speed and surety of modern, instant payment systems can improve the customer payment experience of their own end users. A benchmark to how companies are evaluated, he said, can be found in what he termed the “customer friendliness” of those transactions.

But the demands of faster payments — and a shift in underlying infrastructure — means that businesses must adapt by integrating advanced payment processing systems and employing real-time cash flow monitoring systems in place to make those treasury functions more dynamic. 

“Many treasurers are thinking, ‘Well, how can I extract that last ounce of juice from my financial ecosystem?’” Bansal said.

To get there, he said, treasurers are eyeing the use of cloud-based technologies and APIs to ingest information and speed transactions so they can balance their exposure to various currencies, if they are operating internationally, and centralize their cash operations as efficiently as possible.

 Necessary Shifts

Embracing faster payments and fostering treasury’s role as strategic adviser, Bansal said, demand a multipronged “combination of technology readiness, process readiness — and a cultural readiness too.”  

That means making sure that treasury workstations and ERPs are upgraded to ingest data at the speed of what businesses want (technology), managing liquidity on a 24/7 basis (process) and understanding/adapting to the pace of change in an enterprise’s chosen competitive landscape (that’s the cultural aspect). 

If those aspects are managed well (and managed simultaneously), cash becomes more accessible, productivity improves and entire industries — particularly in B2B — evolve.

Security also is on the agenda, and banks have an important role to play in developing new protocols tied to their cloud-based systems.

Providers such as Citi, Bansal said, with APIs and treasury management solutions, are well positioned to act as a “global network bank” that helps clients adapt to the connected economy.

“We are creating a hyper-efficient network by bringing in technology, by bringing in innovation and building on top of an already solid foundation through our geographic presence,” he said.

With those partnerships in place, Bansal noted, Citigroup’s clients are “able to extract efficiencies and do more with less.”

We’re in an environment where treasurers can fund payments anywhere from a central pool of liquidity, minimizing risk along a given “last mile” of transactions — no matter if that payment is happening in Australia, Hong Kong, Singapore or Mexico with Citi’s network and cross-border, cross-currency pooling solutions.

Looking ahead, Bansal said, the mindset of treasurers is generally “positive” as they examine what the “treasury of the future” looks like with the potential to leverage Citi’s blockchain, cloud and API solutions.

“I see the role of treasury becoming more central to [the enterprise’s] business strategy, to the growth strategy, to the expansion strategy — and quite frankly, to the sustainability strategy. The treasury team plays a pivotal role,” he told Webster.

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Digital B2B Payments Turn User Experience Into a Superpower https://www.pymnts.com/news/b2b-payments/2024/digital-b2b-payments-turn-user-experience-into-a-superpower/ Mon, 12 Aug 2024 23:48:22 +0000 https://www.pymnts.com/?p=2051422 Not all B2B payments have a great user experience (UX). But all great B2B payments elevate the end-user experience. The problem with building convenience into business payments is that, while in theory it sounds relatively simple, in practice it ends up being incredibly difficult. B2B payments exist primarily below the waterline — being made up […]

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Not all B2B payments have a great user experience (UX). But all great B2B payments elevate the end-user experience.

The problem with building convenience into business payments is that, while in theory it sounds relatively simple, in practice it ends up being incredibly difficult.

B2B payments exist primarily below the waterline — being made up of workflows and data as much as, if not more than, they are the actual transfer of funds. And below that same waterline lurks four key buckets of complexity around risk, regulation, infrastructure and cost basis.

Historically, B2B payment processes have been plagued by inefficiencies, such as manual invoicing, slow payment cycles, and complex reconciliation procedures. These inefficiencies not only strain cash flow but also consume time and resources that could be better spent on core business activities.

Digital mechanisms are slowly chipping away at the long-standing dominance of paper checks. But to fully turn the tide, a great B2B payments UX needs to solve for thousands, if not tens of thousands, of small issues and fragmentations across payments infrastructure, process, and compliance.

This can be a daunting proposition, but companies are recognizing that improving the UX for B2B payments can drive efficiency, security and business agility — as well as keep their commercial customers and suppliers happy.

Read more: Building Better B2B Relationships Through Payments Innovation

Elevating User Experience

Efficiency is at the heart of any successful business operation, and B2B payments are no exception.

But optimizing B2B payments tends to run through, and into, the following bottlenecks: building a frictionless experience runs into know your business (KYB) requirements; removing friction can result in an increase in fraud — and card networks will ban providers who fail to get their fraud rates down. Banks will also de-platform providers without effective anti-money laundering (AML) processes. B2B payments can also simply just not work due to formatting errors and other manually driven disconnects.

“There’s a lot of messiness around payments, particularly very large B2B payments that might house hundreds or thousands of invoices with hundreds of associated line-item details,” Boost Payment Solutions Founder and CEO Dean M. Leavitt told PYMNTS last month. “Large enterprises on both the AP [accounts payable] and AR [accounts receivable] side are looking for ways to automate those processes, digitize them and reduce their cost as well.”

Against this backdrop, PYMNTS Intelligence finds that automation, virtual cards and digital payments are becoming the new cornerstones of B2B payments, with businesses recognizing their role in strengthening buyer-supplier relationships. According to the report, a “consumerization” of the B2B payments experience is inevitable as businesses recognize the need to build loyalty with their “other” customers: B2B partners.

“There is value in convenience; it makes customers more sticky,” Eric Foust, vice president of banking partnerships in North America at Trustly, told PYMNTS in November. 

Read moreWill 2024 Be the Year of Win-Win Buyer-Supplier Dynamics?

Agility and Certainty

Certainty is another critical factor in B2B payments, particularly when dealing with large sums of money and complex financial arrangements. Uncertainty in payment processing can lead to cash flow issues, strained relationships with suppliers, and even legal disputes. By elevating the user experience, businesses can achieve greater certainty in their payment processes, reducing the risk of errors, delays and disputes.

“B2B transactions have traditionally had a slower approval process, and B2B players have been slower to adopt new technology. But what we’re seeing with a shift to digital is that there is now more data, more controls, stronger authentication coming into that B2B space, all the while bringing down the cost and improving the risk models,” Jennifer Marriner, EVP, Global Acceptance Solutions at Mastercard, told PYMNTS. “We’re definitely seeing on the B2B side a realization that there’s a way they can streamline their business.”

Improving the UX in B2B payments via automation and virtual cards can play a crucial role in enhancing security. A well-designed payment platform can incorporate advanced security features, such as multifactor authentication (MFA), encryption, and real-time fraud detection, without compromising on usability. By making these security measures intuitive and easy to use, businesses can ensure that employees adhere to best practices, reducing the risk of human error that often leads to security breaches.

“A lot of fraud is in the checks. If you cut out checks, you cut 60% of fraud right there,” Ernest Rolfson, founder and CEO of Finexio, told PYMNTS.

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.

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