Modern payment terminals are streamlining the update process for merchants by enabling instant updates of their capabilities, and U.S. Bank is taking advantage of this technology to rapidly get new offerings to market.
U.S. Bank's processing and merchant services unit, Elavon, operates a technology hub called The Grove. The hub's mission is to hasten merchants' adoption of mobile commerce, and also take advantage of the EMV terminal migration as a portal to new cloud-hosted merchant services. The Grove is producing new releases and updates every six weeks, with much of the current work focused on software that expands mobile payments acceptance.
"If there is an update, it's a software update [rather] than having merchants buy new equipment," said Marianne Johnson, executive vice president and head of global product and innovation at Elavon, an Atlanta-based U.S. Bank unit that offers processing and other merchant services.
The Grove's current work addresses acceptance of Apple Pay and Samsung Pay, as well as security technologies such as tokenization and EMV. It is also working to improve the process of handling loyalty and rewards programs through the mobile point of sale.
U.S. Bank hopes to attract merchants by presenting upgrades as items to be ordered from a menu, rather than offering systems that require a complex integration for each new feature. "We are trying to position merchants to be nimble as consumer behavior changes to act like a startup would," Johnson said.
The strategy is playing out in a number of areas. U.S. Bank and Elavon have developed new software for multi-channel shopping to accommodate consumers who may browse on a mobile app but buy in a store, Johnson said.
The institution has retooled its solution for home-services merchants to allow businesses to bill and deliver customer service in the same app. "Consumers are changing their behavior on how they are paying for home services they're using handheld devices to order and pay," Johnson said.
The EMV migration plays an important role in the move from hardware-based to software-based merchant services, since the new terminals can support software-as-a-service and other cloud-delivery models, said Dominic Venturo, chief innovation officer at the Minneapolis-based U.S. Bank.
"Tokenization, EMV and contactless can all go into the merchant's tech environment and be delivered in a way that is incrementally more secure," Venturo said.
U.S. Bank is also developing biometric options for authentication, Venturo said. In each case, the deployment is made easier by using terminals that can remotely access the new technology, Venturo said.
"There will always be some hardware, you can't get away from that. You'll need an EMV solution where you read the actual chip in a card," Venturo said. "But the model is moving away from the cash register or a single-function point of sale terminal."
Providers of merchant services are under pressure to serve clients with a varied level of comfort with technology. These merchants may be reluctant to upgrade, so their providers must make the process as painless as possible.
"An acquirer that does not have a technology-driven play to enable merchants to upgrade quickly won't be around for a long time," said Brian Riley, a research director at CEB TowerGroup. "Having an early investment in EMV and using it as a tech platform to add other things such as loyalty is just one example."