The speakers at October 2015’s financial services convention Money 20/20 seem to have collaborated at some point before the show commenced to solidify common themes, and the buzzword of the week was “omnichannel.” Commentary on omnichannel solutions for an increasingly complex and varied retail market dominated panels, keynotes, and vendor discussions. Executives from industry giants—including Google, Facebook, Verifone, Chase, Vantiv, and Visa—contributed to the conversation surrounding the task of providing consumers with a truly omnichannel solution.
The consensus appears to be that no matter what sector of the payments industry you’re in, catering to the end consumer’s desire for a convenient and straightforward purchasing experience is paramount to all else. As someone who works at a payment gateway provider that only partners with merchant service providers (and never with the merchants themselves), I questioned this, and wondered if the maxim “consumer is king” is really universally applicable. Is it possible that one entity can hold the lion’s share of the influence in an ecosystem as complex as payment processing? As I considered cases for and against this position, I kept coming back to the example of Starbucks.
In a space full of dedicated payment companies, the slinger of overpriced beverages has captured a huge share of attention, both from the media and industry insiders. When it comes to providing real value to customers via omnichannel payments, Starbucks continues to set the gold standard. How? Adam Brotman, Starbucks chief digital officer, frames it in terms of a commitment to pleasing the customer: “Bringing Mobile Order & Pay to our customers is about meeting their needs of convenience and customization at any time of the day.”¹
Mobile Order & Pay, which rolled out in late September of 2015, is only the latest event in a string of initiatives to position Starbucks as the best in omnichannel retail. The company has actually had a mobile payment app since early 2011, and in a July 2015 fiscal report, Starbucks attributed a full 20% of its in-store transactions to mobile payments.² According to many experts, this makes Starbucks’ mobile app the most successful mobile payment solution currently operating, and predictions are that the introduction of an even more integrated process (with the rollout of Mobile Order & Pay) will only enhance the company’s success in the payment space. Not to mention, Starbucks currently has in development a coffee delivery service that would effectively turn the company into an e-commerce venture.³
So if Starbucks is so convincing in embodying its “consumer is king” message, what’s holding up the fin serv industry when it comes to taking this approach to omnichannel payments?
A few of the executives at NMI weighed in on this matter during Money 20/20, and Nick Starai, VP of Product Development, brought up a good point: “There are a large number of companies working on perfecting various channels, and getting them all on the same page is what’s standing in the way of a true omnichannel consumer experience. I think a lot less innovation would occur if a utopian omnichannel experience already existed. Little change brings little growth and as the payments industry continues to adapt, these changes bring new opportunities.”
In any one transaction, the possible configurations of interested parties is staggering: consumer, merchant, acquiring bank, issuing bank, card network, processor, payment gateway, compliance authorities, government regulatory bodies, and any number of third-party software providers that might be accessories to the transaction; all of these entities are vying for attention, to have their needs met. As Starai says, the fact that all of these parties exist might be what’s contributing to the rapid innovation we’re seeing in payments, but at the same time, at some point there might need to be concessions made to afford consumers with all the convenience they’re asking for.
This complexity in payments is no secret to industry veterans, and there’s a good chance it’s not going anywhere: for the foreseeable future, we can plan on having to consider a lot of variables when it comes to making payments more and more frictionless. However, as Starbucks is demonstrating, there might be a valid option when it comes to navigating the intricacies of omnichannel retail—consider the consumer’s needs first, even when it doesn’t seem rational or necessary. After all, we operate in a free market where demand determines supply, regarding the desires of the customer can—and maybe even should—guide us in the right direction.
And if Money 20/20 has shown us anything, it’s that the customer wants options. In store, online, in app, via social media—to the consumer, it’s all the same. It’s all just shopping. For us in the payments industry, our directive is clear, though complicated: Let the people shop, wherever they are and however they want to. It might just be the case that if all parties set their sights on the same goal, a truly harmonious omnichannel solution will be the end result.
1. Peterson, Hayley, "Starbucks customers never have to wait in line again for drinks and food," Business Insider, last modified September 22, 2015, http://www.businessinsider.com/starbucks-app-enables-customers-to-order-and-pay-ahead-2015-9.
2. Kell, John, "Starbucks wants your phone as much as it wants to sell you coffee," Fortune, last modified July 24, 2015, http://fortune.com/2015/07/24/starbucks-mobile-investments/
3. Wohlsen, Marcus, "Forget Apple Pay. The Master of Mobile Payments is Starbucks," Wired, last modified November 3, 2015, http://www.wired.com/2014/11/forget-apple-pay-master-mobile-payments-starbucks/