The financial services industry sets the pace for technology innovation. Wall Street’s global role as an allocator of capital has a lot to do with that, along with the financial industry’s voracious need for technology capable of crunching massive amounts of data to support split-second decisions.

Since the launch of Netscape Navigator 20 years ago, the impact of technology on businesses of all sizes has been nothing short of transformative. From instant storefronts to mobile coupons, small businesses have benefitted hugely from the power of technology.

But technology cuts both ways. The same combination of speed and accessibility that builds business can be a merchant’s undoing without guidance from ISOs and agents as part of their merchant account management strategy.

Regardless of the size of the business, the vast majority of business technology tools (applications,  devices and, more recently, services like the cloud) start as consumer breakthroughs that make their way into the workplace,  sometimes gradually, sometimes overnight.

Merchants–particularly in the B2C sector–must straddle both worlds, using appropriate tools for their businesses while optimizing their marketplace offerings for consumers who live, love and shop on their smartphones and tablets. According to research firm Aberdeen Group, the mobile phone has emerged as a “channel growth” opportunity for engagement while increasing revenue options for retailers.

That sets up a fundamental challenge for merchants of all sizes. In an always-on marketplace, the impressive data mining and scaling capabilities that technology provides, coupled with a 24/7 sales cycle, means opportunities for revenue growth are greater than ever.

But it also means that every second counts. For a merchant, waiting days, weeks or longer for the capital they need to upgrade a commercial kitchen, break ground on a new location or kick off a seasonal advertising campaign can turn into lost opportunities, or worse.

Retail merchants in particular represent a significant opportunity for ISOs to provide value-add guidance on ways to leverage mobile marketing.

The good news for merchants is that the concentrated focus on technology can be seen in a dramatically accelerated underwriting process, with application cycles far faster than anything a traditional bank could provide. Instead of needing up to 60 days to underwrite a traditional loan, alternative lenders’ online platforms can receive, analyze and fund a request in 10 business days or less. In some cases, the process takes just a few hours, a development that has played a major role in our own business. 

In terms of technology’s tendency to cut both ways, one aspect often overlooked by small businesses–particularly those with heavy e-commerce transaction volume–is security and trust.  Security is more of a business imperative than ever before.

The rapidly expanding reliance on IT systems for businesses generally has thrown a harsh light on the state of corporate security. The fact is most organizations, large and small, remain vulnerable to breaches, despite a doubling in spending on cyber security in the last decade.

According to Symantec’s latest 2014 Internet Security Threat Report, 2013 saw a stunning 91% increase in targeted attack campaigns and a 62% increase in the number of breaches. Of particular concern to small- and large-business owners alike: more than 552 million identities were exposed via breaches in 2013. Considering the mushrooming growth of mobile commerce, it is also of concern that 38% of mobile users have experienced mobile cybercrime in past 12 months, according to Symantec.

The perils of accessing work-related financial data or confidential information on a personal device such as a personal laptop, tablet or smart phone cannot be ignored, even by smaller merchants, who may, erroneously, view themselves as “off radar” because of their size and who may not employ the same security on their personal devices that they do with their business systems.

Armed with the appropriate technology on their laptops, drive-by packet sniffers, for example, will literally park outside a Starbucks and pull down email-based transmissions from an unsuspecting business owner exchanging customer data while nursing a mocha frappe.

Finally, for all its potential as a catalyst for business growth, technology and the “need for speed” that defines today’s business environment (and, indeed, our lives), obscures the vital importance of the human factor in  merchant relationship management.

At the end of the day, merchants don’t do business with companies, they do business with people. 

ISOs and merchants who can balance the innovations and efficiencies technology has to offer with the importance of human interaction will flourish in what is shaping up as a golden age for alternative financing.

Stephen Sheinbaum is CEO of Merchant Cash and Capital


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