Tips to Improve Your Business’ Website

Today The Official Merchant Services Blog is going to address an e-commerce issue that perhaps gets overlooked by a lot of merchants — effective design of your online shopping experience. Previously we offered a 2-part series on free, open source online shopping carts that are available. But just having the basic elements there for functionality is only part of the process. Your site should integrate e-commerce into its experience seamlessly so that visitors effortlessly make the transition from stopping by to actually purchasing.

Design plays a huge role in making this happen.

What is E-Commerce?

E-Commerce refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The term may also refer to the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services. You can review a detailed explanation of E-Commerce in the Host Merchant Services Article Archive at this link here.

Why is E-Commerce Important?

E-Commerce is important because of how commonplace it has become in the daily lives of consumers. Shopping online has blossomed and grown in the past decade, and sales figures show that it is a standard. Merchants need to offer online shopping alternatives and can make quite a lot of profit by offering good online shopping solutions.

E-Commerce Tips

To assist merchants in making their e-commerce venture robust, well designed and profitable, we’re going to offer up a series of tips focused on improving e-commerce through strong design elements. Here’s our list of tips:

Navigation

Navigation is probably one of the most basic, and yet most often mangled aspect of strong e-commerce design. All online shopping sites have to allow their customers to navigate through the products to find the stuff the customer wants to buy. But so many sites out there have difficult or clunky navigation. Make sure your site offers a smooth, easy to navigate experience and you’ll get your customers clicking “purchase” much more frequently.

Host Merchant Services image for online shopping

A Detailed Product Catalog

Tied right into navigation, is the single most important element merchants need to consider — the product catalog. This is what you are selling and it needs to be seamlessly incorporated into your website. Your product catalog needs to have detailed information about the products you are selling.

Database Search Capability

This is an extension of the previous element. If you have a large product catalog, then you need to offer your customers the ability to search through that catalog. Essentially you need to give your customers a database searching tool that will help them drilldown through your catalog to quickly find what products they are interested in.

Product Images

Your catalog needs to contain clean, easily readable images of the products. You should consider offering images from multiple angles — this is of course product dependent — so that your customers can feel safe that they are getting the most information possible about what they buy. One of the long-standing concerns about buying online is that customers feel like they’re being conned because they can’t view the product right there in front of them. Offering multiple angles can assuage some of those fears. Also you must balance the issue of image file size versus resolution and quality of image. You want to keep images small enough that they don’t distract from your catalog, but detailed enough that they give the customer a good look at what they’re buying. One solution that a lot of sites use these days is a Content Delivery Network (CDN).

Contact Information

Your E-Commerce solution needs to contain an easy to use, and easy to find, contact information area. Many sites make finding contact information a bit of a treasure hunt — sometimes requiring using the site map just like a treasure map. Keeping contact information visible and easy to use helps you with long-term customer service goals. And your contact information can also assist you in making sales. If a customer has special needs or requests involving a product they want to buy, they may need to contact your business directly. Making them hunt around for the ability to contact your business could cost you a sale.

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Checkout Process

Integrating your online shopping cart into your site is extremely important. It was the primary reason we ran through our two-part series on open source shopping carts. Those 10 carts were advertised because of their cost efficiency (free) and because of their online support. Having a strong support community from an open source shopping cart gives you a safety net for things like your checkout process. Your checkout process needs to be smooth. It needs to be just a series of clicks and a small form (usually credit card information). Your customers want to click to purchase, click to confirm and get the shopping done. That’s the biggest draw of an online shopping cart — the internet makes it easy and convenient. So your checkout process needs to play on that, and get your customers through the checkout fields as easily as possible.

Payment Options

Building off of the checkout process, a good online shopping cart needs to present the various payment options to its customers in a clear, concise and easy to read manner. You want to offer your customers a variety of payment options. This includes all forms of credit and debit transactions, including gift card — even EBT where applicable. You want to make sure coupon codes and gift certificates are also shown clearly and have easy to use forms for completion. Merchant Services Providers, like Host Merchant Services, make it easy for merchants to offer any and all forms of payment for their online shopping cart. So it’s really just a matter of contacting your merchant services provider to make sure your e-commerce is customized to offer the maximum amount of payment options.

Related Products

This is an E-Commerce enhancement that helps improve your shopping experience. You an see this in a variety of forms. It can be something as simple as a list of products that fall under the same “category” your customer was searching, or as over the top as what Amazon does with its Customers Also Bought These Items lists that you get when shopping there. No matter what your approach, though, you should consider offering some type of related products feature in your online shopping cart. This helps establish return business in a very meaningful way as it gives customers targeted advertising to products they may also be interested in purchasing.

Image for Host Merchant Services article on credit card processing

Shipping Rates Calculator

This should be standard on any and all e-commerce sites. Letting the customer control and maximize their shipping options directly will lead to more sales. Shipping costs have always been one of the biggest obstacles E-Commerce has faced, so making it transparent and giving customers the ability to reduce their costs manually helps keep them hooked on the potential sale of your product.

Store Policies

And last, but not least, try to make any and all relevant store policies displayed prominently on the site during the perusal and during the purchase portion of the experience. This includes things like return policies and refund policies. Be as up front about what it is you can and unfortunately can not do for your customers and your E-Commerce site will avoid some serious customer service headaches.

That’s just the basics of what The Official Merchant Services Blog suggests merchants do to make their E-Commerce and online shopping experience powerful and persuasive for their customers.

stop online piracy act

SOPA: The RIAA isn’t doing so bad [2023 Update]

Today The Official Merchant Services Blog dives right back into the fire with the Stop Online Piracy Act (SOPA). We were kind of surprised to find out what this PC World Article had to say. Apparently the  music industry is doing pretty good despite the issue of online piracy upon which SOPA hinges.

SOPA was shelved by Congress more than ten days ago, as we reported in our January 20 blog, but the lobby that fueled the bill is still pushing for federal government involvement in online piracy. In fact, much of the content of SOPA that caused the controversy has popped back up on a wishlist from the International Federation of the Phonographic Industry (IFPI) regarding what they think needs to be done to fight online piracy. The IFPI is a global group similar to the U.S.-based Record Industry Association of America (RIAA).

SOPA and PIPA Review

To recap what SOPA was about you can review our initial post about it from our November 20, 2011 blog. The Official Merchant Services Blog was out in front of this story and eventually the rest of the medial caught up with the impact that this House of Representatives bill and its twin in the Senate — the Protect Intellectual Property Act (PIPA) — were going to have on a variety of tech industry sectors, including Payment Network Providers. Host Merchant Services provides an in-depth analysis of SOPA here.

Host Merchant Services image about the Stop Online Piracy Act and the players involved.

The Kids are All Right

According to the RIAA the music industry is outperforming other entertainment sectors in terms of digital sales. Jonathan Lamy, senior VP of Communications for the RIAA, tweeted that paid subscription services rose 65 percent to 13.4 million in 2011. This tweet was in response to figures released by the IFPI which Lamy was excited to read. Lamy also tweeted that paid digital music services are active in 58 countries, generating $5.2 billion in revenues.

Jumping into the tweets was another RIAA executive, Cara Duckworth. The VP of Communications for the RIAA also cited the IFPI figures and then said: “W/more than half of all music sales coming from digital services, we know how Internet works. “Music=Innovation. Declare THAT. #CES #SOPA.”

Throwing down the gauntlet, the RIAA is now essentially claiming that they have a viable working digital sales model that can exist on the internet. And yet still they pursue a lobby to crack down on piracy, and collateral damage that includes the internet and e-commerce.

Here’s a graphic detailing the top sales from 2011 according to the IFPI:

Host Merchant Services chart on record sales in 2011, related to SOPA

The Wishlist

The IFPI put out this PDF which details a very hardline stance on how to deal with Online Piracy. Perhaps the most entertaining aspect of this wishlist is that it essentially repeats the details of SOPA. According to the PCWorld article IFPI chief executive Frances Moore said record companies are building a business in digital music “in spite of the environment in which they operate, not because of it.”

Moore went on to say record companies are working with ISPs, search engines, governments, and law-enforcement agencies to reduce the number of illegal downloads and ensure that an ever-higher percentage of the music that is downloaded is bought legally. “Our digital revenues, at one-third of industry income (and now more than 50 per cent in the US), substantially surpass those of other creative industries, such as films, books and newspapers.”

So the IFPI establishes with facts and figures that the music industry is doing well on the internet. Digital Music services are getting traction, profits are rising and piracy is being challenged. The RIAA finds all of this so amazing and awesome that they go and re-tweet it to the world.

With all of this good stuff being said about digital music sales, why does the IFPI have a wishlist of demands to fight piracy that seem pretty much like the exact same thing SOPA wrote?

The Seven Demands

This arstechnica.com article goes into detail about the demands the IFPI has. The demands can be broken down to seven key elements:

  1. Graduated response laws in which rightsholders can pass along notices about file-sharing to the accused party and possibly disconnect them from the internet.
  2. Site blocking. The industry wants the ability to wall off infringing sites, however defined (yes, you read that right, they don’t currently define the criteria for being able to wall off the site), at country borders.
  3. Search Engines need to help the industry. Search Engines need to remove links to infringing content that the industry identifies as well as prioritize links according to industry standards, not the engine’s own standards. Search Engines need to rank search results factoring legality or illegality into the ranking.
  4. Payment Processors. Just like SOPA and PIPA, the wishlist also includes payment processors. Which is why The Official Merchant Services Blog is continuing its ongoing coverage of this topic. Payment Network Providers, Payment Processors, merchant services providers, whatever the entertainment industry wants to call us, are being targeted to police copyright infringement. It’s very strange. The IFPI wishlist demands processors cut off pirates voluntarily, much like SOPA tried to do. As the ars technica article states: “This was a theme of the recent Stop Online Piracy Act in the US, which originally featured a section encouraging companies like MasterCard to take unilateral actions against websites, and provided legal immunity for doing so. IFPI touts a deal with the City of London Police and credit card companies in which IFPI supplies the City of London Police with evidence that illegal downloads are being made available from an infringing site. The police review the evidence, verify its integrity and notify payment providers that their services should not be provided to such sites.”
  5. Ad networks are being called on to cut off funds to suspected pirates as well. Even though some online advertising sites are themselves going through litigation for spams, scams and clickjacking.
  6. Mobile operators need to get involved according to the IFPI wishlist. Because hey, why not? The IFPI’s paranoia suggests that outside the comfy confines of the U.S. where illegal downloaders just lazily go about swiping songs from their PCs, “piratical behavior increasingly takes place through phones and other mobile devices.”
  7. And finally, the IFPI calls for increased litigation. Keep suing the big sites. The PDF report cites how much piracy dropped after Limewire was shutdown as the impetus to keep going after the big dogs in the world of online piracy. Compared to some of the other demands on this list, the final wish seems to be far more reasonable, logical and effective. Going after ad networks, especially those already mired in a legal quagmire of clicks and spam issues, might not do a whole lot in the war on piracy. Going after the big, popular piracy sites, though, might have an impact.

Where to go From Here?

Host Merchant Services image of a pirate button keyboardIt just seems tiresome that after all that went down with SOPA, PIPA, the internet blackout, and the controversy, the music industry just reloads and reuses the same exact talking points that got the laws killed in the first place. SOPA died because the things being asked for weren’t going to work. Banking on payment processors to police the internet was a bad idea. It still is a bad idea. This whole wishlist smacks of some old sitcom gag where a child asks one parent for a cookie, is told no, then goes and asks the other parent. The answer’s still no.

Payment Network Providers do not support online piracy. But the demands being given to them have loopholes where the Processor is being asked to shut down customers that are legitimate and not pirates, just on the whim of the entertainment industry.

And the real kick in the pants with all of this? At the exact same time the music industry makes this zealous push to continue to ask for wide open and ineffective legislation, they spend time gloating about how well they’re doing on the internet with legal, and apparently very profitable, digital transactions. All of course run through e-commerce sites supported by the same payment processors they are asking to shut down other customers at their fancy.

The bottom line is if Lady Gaga and Pitbull online sales are robust and  legit, it’s probably time to back off the Online Piracy rhetoric.

Facebook Attacks Clickjackers

Today The Official Merchant Services Blog takes a look at one of the latest and most twisted developments in online marketing: Clickjacking. This topic comes up because of a new lawsuit that is making the news. Facebook has filed a lawsuit against the company Adscend Media. The suit claims Adscend developed targeted spam campaigns and encouraged others to spread spam using a variety of tactics — including clickjacking.

According to Wikipedia, Clickjacking — also called User Interface redress attack, UI redress attack, or UI redressing — is a malicious technique of tricking Web users into revealing confidential information or taking control of their computer while clicking on seemingly innocuous web pages. A vulnerability across a variety of browsers and platforms, a clickjack takes the form of embedded code or a script that can execute without the user’s knowledge, such as clicking on a button that appears to perform another function.

Joining Facebook in filing against Adscend Media was the Washington State Attorney General Rob McKenna. A statement released by McKenna says: “We don’t ‘like’ schemes that illegally trick Facebook users into giving up personal information or paying for unwanted subscription services through spam. We applaud Facebook for devoting significant technical and legal resources to finding and stopping scams as soon as possible – and often before they even start. We’re proud to join forces in order to protect Washington consumers.”

In addition to Adscend, Jeremy Bash and Fehzan Ali, co-owners of the company, are named in the suit.

Jacking for Likes

Here’s how clickjacking scams, such as the ones described in this lawsuit, work:

Host Merchant Services image for Clickjacking scams

Scammers design Facebook Pages to look like they will offer visitors an opportunity to view provocative content. They then require the user to complete a series of steps before they can view the content. These steps are designed to lure Facebook users into visiting websites that deceive them and get them to reveal their personal information. In terms of what this particular lawsuit is focusing on, Facebook users are encouraged to click the “Like” button on the scammers’ Facebook Pages. These like-clicks then alert the user’s friends to the existence of the scammers’ page. Then they are told that they cannot access the content unless they complete an online survey or advertising offer.

In one example noted in the complaint, the scammers overlay the Facebook “Like” button with a link that promises to reveal the results of: “This man took a picture of his face every day for 8 years!!” Of course, the promised content often does not exist and the tricked user is then directed through a series of prompts taking them off of Facebook and through a host of unrelated advertising and subscription service offers, where the scammers receive money for each misdirected user.

In another example, a Facebook user would see a link to a video on a friend’s wall. If the user clicked on the link, a pop up would appear asking the user to verify their age. Clicking on the verification box, the user would unknowingly share the video on their own Facebook wall.

In some cases, Facebook users don’t even need to click the “like” button to spread the spam on their Facebook pages. In the process called “clickjacking,” a hidden code in enticing-looking links activates Facebook’s “like” function and puts it on the users’ friends’ news feeds.

Host Merchant Services Image detailing how Clickjacking Scams work

How this Affects SEO

We bring up this lawsuit to draw attention to this black hat and negative advertising practice. It can have a big impact on SEO and online marketing for businesses. Spam is never good and so on the most basic level if you get your own Facebook page wrapped up even indirectly with this type of scam, Facebook could take action against your business page. Beyond just that, there’s the negative PR that comes from being linked to a spam scam. If people think you are spamming them, you’ll lose more “fans” and “likes” than you would ever gain by the scam campaign.

Facebook is a powerful marketing tool, but as a merchant you should be aware of the pitfalls and obstacles you can encounter while using it. Stay on top of issues like this, and you can avoid any potential long-term harm to your SEO and consequently your business.

What to do if You Get Scammed

If you do make the mistake of clicking on a link spread via a clickjacking scam, follow these easy tips to lessen the damage:

  • Check your Facebook news feed and remove any offending links that you might have spammed out to your friends.
  • Hover your mouse over the top right hand corner of the post and you should see a small “x” which will allow you to remove it.
  • If you entered your mobile phone number, you should keep a close eye on your cellphone bill and notify your carrier to prevent bogus charges from stinging you in the wallet.
  • Remember to be wary of any suspicious links. If you really want to watch a video chances are that it’s available for free — without you having to complete any surveys — on legitimate video sites like YouTube.

Facebook logo

Going forward, it’s essential that you stay informed about the latest scams spreading fast across Facebook and other internet attacks. Keep following The Official Merchant Services Blog, or the Host Merchant Services Facebook Page, as we routinely update both with the latest news and information on any tech industry issues that affect businesses and merchants.

Adscend Denies Clickjacking

According to this Computerworld article, Adscend Media has denied the allegations filed against them. The company said in its own statement responding to the filing of the two lawsuits, “At no time did we engage in the activity alleged in the complaints.”

The article also states that Adscend is pointing the finger at its own affiliates, claiming their customers shoulder the culpability: “Adscend is hired by advertisers that pay the company each time someone clicks on their page or advertisement. Adscend in turn often hires affiliates to drive traffic to the sites. It’s those affiliates that Adscend is now pointing a finger at. ‘We are undertaking an investigation to determine whether any of Adscend Media’s affiliates engaged in the activity alleged by the Attorney General’s office and Facebook. If they did, we are fully certain that the activity was conducted without the company’s knowledge,’ the company said in its statement.”

Adscend Media LLC Logo

The Washington Attorney General’s office doesn’t buy that claim and replied in the suit that: “Defendants create and provide their affiliates with technology that is designed to deceive Facebook users into visiting websites that pay defendants for the referral traffic. Defendants encourage and pay their affiliates to create Facebook pages that are titled and designed to ‘bait’ users into visiting other websites.”

Top Free Online Shopping Carts

Today The Official Merchant Services Blog shifts its focus to the E-Commerce industry — specifically some tips we’ve found online to help small businesses with their e-commerce solution.

An article written by Nova Scotian Vangie Beal details the ins and outs of ten open source online shopping carts that are available to merchants or really anyone who wants to sell things on the internet. Beal’s been covering small business, e-commerce and internet technology for more than a decade with her writing. You can find the original article here.

E-Commerce has become an integral part of the economy throughout the world. Shoppers have embraced online shopping as part of their normal shopping routine. So businesses have responded by jumping into e-commerce and providing those consumers with competitive options that focus on the convenience that can be had with the click of a few buttons — the classic clicks vs. bricks debate is showing that clicks beat bricks.

So what do Merchants need to know about E-Commerce to get started?

Step One: Get A Payment Processor

The first step is something Host Merchant Services can handle — payment processing. Merchants need to accept payment in the form of credit cards and debit cards to stay healthy and viable as a business. So merchants need to incorporate payment processing solutions both in their brick and mortar stores as well as on their website with their online shopping solution. Host Merchant Services provides merchants with these options — along with free equipment and a guaranteed low rate that will save them money.

So step one in setting up your e-commerce business is to get a merchant account, with the services Host Merchant Services provides.

Image for Host Merchant Services article on credit card processing

Step Two: Your Online Shopping Cart

Now that you’ve got a merchant account set up and are reedy to process payments online, step two is to get an online shopping cart for your website. As Vangie Beal says in her article, “When shopping for your own e-commerce shopping cart software the most important aspect toconsider is how well the cart software meets your business objectives.”

The shopping cart has to be customizable so that you can alter it to fit your business needs. It also needs to be able to fit your branding so that the shopping cart melds seamlessly with the rest of your website. It needs to be flexible so that as your business grows, your online shopping card and ability to process payments online can also grow. It needs to be secure and it needs to support industry security standards such as PCI compliance.

You can read about PCI Compliance Standards in the Host Merchant Services Article Archive.

We provide a PCI FAQ here. 

We provide a step by step guide on PCI Compliance here.

PCI Compliance

Open Source Shopping Cart

Vangie Beal’s article discusses the top 10 free or Open Source shopping carts. Beal says “Open source shopping carts are an attractive option. Storeowners might look to open source e-commerce software because it will typically deliver the features and tools to manage a product catalog on a website without the hefty licensing fees that come with proprietary or off-the-shelf packages.”

Continue Reading – Top Free Online Shopping Carts, Part 2

the durbin amendment

Durbin Amendment Back In the News [2023 Update]

The Official Merchant Services Blog returns to a topic that it covered thoroughly throughout 2011: The Durbin Amendment. With the Stop Online Piracy Act getting most of the headlines lately, Durbin Amendment’s continued impact on the payment processing industry has gone into stealth mode. Until today that is. Stick with us as we offer a whirlwind roundup of all things Durbin related.

Bank of America Took a Beating

We’ll start off our tour Durbin tidbits with this article by ABC News. Apparently Bank of America took a substantial hit from their plan to charge $5 per month to use debit cards. According to the article: “Bank of America’s failed plan to impose a $5 monthly debit card fee led to a 20 percent increase in closed accounts in the last three months of 2011 and a public relations headache.”

The article quotes Bank of America CEO Brian Moynihan as saying, “yes, we had some impact from the $5 debit fee. That’s why we made a decision to reverse it.”

It wasn’t all bad news for Bank of America though, as the bank reported earnings of $2 billion in the last three months of 2011, up from a net loss of $1.2 billion in the same period a year ago, boosted in part from a one-time gain on the sale of China Construction Bank.

Small Lenders Strike it Big

The next little bit of Durbin aftermath comes from this article by NACS online. As was seen in the Host Merchant Services in-depth analysis of the legislation, The Durbin Amendment only applies to lending institutions with assets over $10 billion. Smaller banks and credit unions are exempt from the Durbin Amendment. As a result of being exempt, a Wall Street Journal report cited by the NACS article states that these institutions have been “collecting fees that are often three times those imposed on cards by large banks.” 

For comparison, the article says: “The WSJ notes that a $100 sweater purchased with a debit card would incur a fee of 95 cents on a card issued by a smaller bank and only 26 cents for those issued by big banks. “

The article also suggests that banks face further uncertainty by April 1, 2012, when “all U.S. banks and credit unions must offer retailers more choices of companies used to process debit card transactions, a move that is expected to lower interchange fees further.”

New Target: Credit Card Swipe Fees

Time Magazine Online Feature Moneyland reports something that Host Merchant Services has already touched on before in The Official Merchant Services Blog — that Credit Card Swipe Fees may be the next target of legislators and financial reform. From the Time article: “There’s another interchange fee fight in the offing — this time over credit cards. According to CNBC, equity analysts who cover the financial sector have expressed worry that ongoing litigation involving several major banks could lead to a cap of 0.5% on credit interchange fees — one-fourth of what’s currently charged — potentially dragging down bank earnings. If that happens, consumers who are used to generous credit card rewards programs complete with double miles, accelerated earnings, and big sign-up bonuses might get a rude awakening.”

The Official Merchant Services Blog on December 13, 2011 covered the topic of a Credit Card Swipe Fee. In that blog we wrote: “the plan would end up working much like the Durbin Amendment has worked. Where the idea of reform would get overshadowed by how banks and credit card companies reacted to the law. There would be some shifting, so in that sense the reform would cause change. But that eventually the burden for paying for any losses that banks and credit card companies get forced into through reform would end up squarely on the shoulders of the consumers.”

The Time article notes something that Host Merchant Services already pointed out regarding a Credit Card version of the Durbin Amendment — Banks would take another huge hit because Durbin has language that freed up banks and merchants to market and promote options to the consumer directly. In short, Durbin’s language freed merchants up to promote credit over debit. And because of that, a lot of merchants did just that as Banks offered new programs to make credit the more attractive choice. Subsequent changes that would now penalize Banks for doing that would create a lot of negative momentum for Banks and added onus for consumers who get stuck with no good choices overall.

New Hampshire Law

This article from credit.com reveals that one state legislature is already making moves to see a Credit Card Swipe Fee Cap become reality. As the article states: “A piece of legislation introduced in the New Hampshire House of Representatives, House Bill 1319, has drawn some attention for the way in which it would drastically alter the credit card landscape between businesses and payment processors. The law will limit the amount banks chartered within the state are able to charge businesses for processing credit card transactions to just 1 percent of the total purchase value.”

The article goes on to state that many businesses pay costs that range from 0.67 percent of the transaction’s value to 4.76 percent and that a MasterCard spokesperson told the Nashua Telegraph that the average 1.75 percent.

Cash Still Rules Everything Around Me

Our last news brief on the topic of the Durbin Amendment and swipe fee caps is a little different. This article from the Huffington Post shows a study that reveals cash is still king. The gist of the article: “More than three-quarters, or 79 percent, of consumers said they made a cash purchase in the last seven days, according to a report released on Tuesday from Javelin Strategy & Research, a market research group for financial services. Compare that to about 65 percent of credit and debit cardholders who say they swiped their plastic in the last week.”

The article suggests that this is a consumer reaction to card swipe fees. The article states that consumers are choosing to pay for items with cash to avoid fees on small, everyday purchases. The convenience of plastic gets overrun by the savings consumers perceive they get from going back to cold, hard cash. The study indicates that cash is replacing debit for small purchases, and credit is replacing debit for big purchases and the Durbin Amendment’s lasting legacy may simply be that it pushes Debit out of the consumer’s arsenal of payment options.

mobile payments

Mobile Payments: 2023 and Beyond [2023 Update]

Today The Official Merchant Services Blog updates our outlook on Mobile Payment Technology and the rampant predictions for its success in the near future. We have previously covered the topic with this blog entry on Tuesday, October 18, 2011. The parameters of that blog are still pretty much the current state of Mobile Payments. But there have been some very interesting developments from the end of 2011 and moving into the first quarter of 2012.

Black Friday Boom

The Black Friday business blitz revealed some healthy news for Mobile Payments. According to this article from Seeking Alpha, mobile payments business increased 500% from 2010 on Black Friday. According to the article, PayPal mobile reported the huge increase, coming in at 511% to be exact. PayPal Mobile also noted that there was a 350% increase in mobile shopping on Thanksgiving 2011 when compared to 2010.

According to numbers from the aforementioned IBM research, 17.37% of all consumers used a mobile device on Black Friday to visit a retailer’s site. And 9.73% used a mobile device to make a purchase. The Seeking Alpha article quoted Amanda Pires from PayPal. Pires suggested that this year’s holiday is proving to be the largest mobile holiday shopping season PayPal and eBay has ever seen, and then quoted Pires directly as stating: “The retailers that are taking advantage of mobile shopping are going to win. We expect mobile shopping to continue to be strong throughout the holiday season.”

This is good news for Mobile Payments, as Host Merchant Services research has shown in the past that there have been some bold predictions for growth in Mobile Payments, but that the services were slow in taking hold this year in the U.S. Growth like the numbers cited from Black Friday 2011 should fuel more positive momentum for that consumer payment option.

Host Merchant Services E-Commerce Mobile Payments image

From 2012 Onward

All of this brisk business in the mobile payments sector is indicative of the forecasting that analysts and reporters have been making for the technology. But the obstacle that our Magic 8-Ball suggested hurts the industry still remains: Consumer confidence. There’s still trust issues with mobile payments. This article by Eric Savitz from Forbes really delves into the heart of what we at Host Merchant Services have been saying about Mobile Payments.

Savitz says: “There’s a common thread between these points: there has to be something fundamentally changed about the current point of sale model in order for mobile payments to take off. It’s about added value and convenience to the consumer, and the ability to drive more customers, loyalty, efficiency and lower risk for the merchant and banks and operators involved in the payments process. Think of contactless “tap and pay” credit cards – you may have one in your wallet right now, but you still swipe it anywhere you go. As a consumer, there’s nothing more convenient or inherently better about tapping your card vs. swiping your card if all that matters is making the payment. Would the time spent setting up and configuring a “mobile wallet” be worth it if the only difference at the cash register of Macy’s is that you wave a phone over a terminal rather than swipe a card through one? Doubtful.”

That’s what Host Merchant Services has been saying. It’s about convenience to the consumer. The worries about security are valid. E-Commerce has faced the same problems with security and the same worries. But people have adopted online shopping — as seen with the same Black Friday and holiday shopping season boom in 2011 — to the point where it’s now just a common part of the shopping experience. People can’t even remember back 10 years where online shopping was new, awkward and insecure. It’s just part of their lives now.

And for Mobile Payments to jump off the same type of conversion of consumers has to take place. Convenience will outweigh security concerns and people will just accept the behavior as part of the way they shop. That’s where the Mobile Payments Industry stands right now. On the edge, waiting for the breakthrough that will rocket it into everyday life for shoppers. It has to grow beyond gimmick. Because gimmick won’t carry it forward. It might be easy to do, but as Savitz points out, if there’s no reason to swipe your phone over just using your card in your wallet, people won’t bother.

Small Businesses Susceptible to its Charms

One inroad Mobile Payments are making with consumers is through small businesses. This article from Newsfactor.com delves into how small businesses are seeking mobile payment solutions that free them from reliance on traditional payment solutions. The article discusses how Square has been shaking things up with the changes its made to its business model in 2011, becoming an entire processing solution itself and making its card reader more readily available to merchants. The article then mentions how Gartner Research data shows that the Mobile Payments Industry surged to $86.1 billion in 2011.  The article notes that Square is just one of many viable options that are helping fuel the growth the sector is seeing.

HMSPay

Host Merchant Services recognizes the huge growth potential in this sector of the industry. Beyond their coverage of the latest developments and news that take place in Mobile Payments, Host Merchant Services offers its own mobile payment solution, HMSPay. The solution utilizes a card reader that is attached to a smartphone and an application on the phone which transforms it into a payment processing terminal, complete with signature field and e-mailed receipts.

Host Merchant Services Mobile Payment Solution HMSPay

So What’s Next?

Savitz’ article suggests that the potential breakthrough for Mobile Payments will take place in 2012. And that the catalyst for this breakthrough will be through value added applications of the process. He cites Google Wallet and Isis as showing the most promise in being a catalyst because they both go beyond just having the swipe gimmick and offer “services delivered on top of the payment itself.” He says these additional services will be what prompt consumers to shift into mobile payments. He offers these bullet points:

  • Deals and offers: Highly targeted, relevant offers based on prior buying patterns and current location. Imagine receiving a time-sensitive text message or in-app alert with a coupon to your favorite electronics store after your digital wallet “checks in” that you are within the store.
  • Digital receipts and account information updated in real time to give a comprehensive view of personal and linked accounts while also displaying loyalty rewards status.
  • Real-time, customizable alerts to certify that the purchases being made in an account are valid, based on your phone’s proximity to where the purchase is being made.

So it appears that one promising avenue for the evolution of mobile payments is to essentially make them a virtual wallet “plus.” Something that does more than just allow you to pay with a swipe of your phone. Something that collects the relevant data and helps you manage your shopping right there, at your fingertips. Something that tracks your own shopping trends and makes you aware of deals, then lets you conveniently take advantage of those deals.

It’s a compelling point. Host Merchant Services sees the value in such a transition. The technology works to make the consumer’s shopping experience convenient and comprehensive — something a shopper can’t even consider they could do without in previous years. That’s what happened with e-commerce, after all.

stop online piracy act 3

SOPA: Time For a Nap [2023 Update]

When last we posted, The Official Merchant Services Blog was busy highlighting its own in depth coverage of the Stop Online Piracy Act and having a few yuks at the expense of the bill’s sponsor, Lamar Smith [R-TX], for having a web-site that violated the bill he sponsored.

Since then, SOPA has somersaulted into the bright shining spotlight of mainstream media news. There was a blackout sponsored by internet industry giants like Wikipedia, Mozilla and WordPress — the same WordPress that this very blog is constructed out of.

And the protest seems to have had an affect. Congress took notice.

Smith Shelves SOPA

The Los Angeles Times reports: “The SOPA online piracy bill that helped spark this week’s unprecedented Internet protests will be redrafted, its lead sponsor said Friday. The move came shortly after the Senate postponed a key vote on the companion PIPA bill scheduled for next week and amid calls for consensus before Congress moves forward on any legislation to address the problem of foreign piracy websites.”

Bill sponsor Lamar Smith is quoted in various media sources as saying:  “I have heard from the critics and I take seriously their concerns regarding proposed legislation to address the problem of online piracy. It is clear that we need to revisit the approach on how best to address the problem of foreign thieves that steal and sell American inventions and products.”

So essentially the struggle to craft a bill to curb online piracy is now in a holding pattern.

This should be heartening news for both sides of the issue. Nobody wants online pirates to flourish. So the core of what the bill is intended to do has merit. The criminals do need to be dealt with. But the way the proposed legislation was worded just wasn’t going to work. Going back to the drawing board was needed. No amount of posturing from Chris Dodd was going to change the words of the bill — which Host Merchant Services provides for download right here.

And those words left too much room for abuse, put the Department of Justice at the mercy of internet trolls, and approached the problem from the wrong direction. Online pirates do need to be stopped. But SOPA was not going to do it.

Hackers vs. Hollywood

As the media intensity for this issue skyrocketed, yesterday saw the FBI make a move of its own. A move against online piracy.  The feds shut down the website megaupload.com, as The Hollywood Gossip reports: “Federal prosecutors have pulled the plug on Megaupload, a massive file sharing operation allegedly helmed by Alicia Keys’ husband, producer Swizz Beatz. Four executives were arrested in New Zealand and an indictment charging seven people with content piracy causing $500 million in losses was issued.”

Then hackers fired right back in retaliation. As the Vancouver Sun reports: “Hacktivist collective Anonymous has launched a series of attacks on U.S. government and recording industry websites in response to the takedown of file sharing website MegaUpload. It claims to have taken down 14 websites including the websites for the Federal Bureau of Investigation, the Motion Picture Association of America and the U.S. Copyright Office. CNN has reported that most of the government websites were back up and running as of Friday morning. However, the websites for both BMI and Universal Music were still down. These sites were taken down by DDoS– Denial of Service–attack, a type of attack that overwhelms site servers and forces them down.”

While this back and forth plays right into the oversimplification of the SOPA story — turning into a Hollywood vs. the Internet battle royale — it doesn’t really further the actual issue. The FBI’s actions were under current laws. And the hacker retaliation was nowhere near as effective as the blackouts and protests and e-mail campaigns run by Google, Wikipedia, WordPress and so many others on the internet.

As sexy as hackers and FBI busts are, they just distract from the story.

Recap the Issue

The bill and its Senate twin Protect Intellectual Property Act (PIPA) have been polarizing because of how open-ended the language of the legislation is. Both bills leave a lot of loopholes available for websites to be griefed by random internet users who may have an agenda against a particular site. And the Department of Justice may or may not be tech savvy enough to navigate their way through the abusive claims to get to the proper crimes. Here’s a hypothetical we’ve posited before:

  1. A small business launches its website.
  2. The site, in an attempt to reach out to its customers has a forum or social media section where its customers can post discussions. The intention of this tool is to create links between the business and the customers.
  3. A poster on that site’s forum/discussion area posts a funny, home-made YouTube video. That video contains copyright infringement.
  4. The YouTube video gets reported for its infringement.
  5. Suddenly the site is under investigation under the purview of SOPA, and now this legitimate business gets its site shut down and its processing suspended. The business can’t make money anymore because of reports related to ancillary content on its site — not actual piracy.

And that’s what has SOPA in dire need of a reboot. Right back to the drawing board with this law. Retool it to focus on stopping online pirates, and remove the language that puts the Department of Justice right in the middle of internet arguments, accusations and trolling as they struggle to determine if millions of sites need to get shut down for mere complaints.

For More Information

We initially posted about the controversy of SOPA with our November 20, 2011 blog.

Host Merchant Services provides an in-depth analysis of SOPA here. It explains the bill: “The Stop Online Piracy Act (SOPA) is also known as H.R. 3261. It was introduced in the House of Representatives on October 26, 2011 by Lamar Smith [R-TX] and a bipartisan group of 12 initial co-sponsors. The bill is currently creating a lot of controversy in both the tech sector as well as the credit card processing industry because it expands the ability of U.S. law enforcement as well as copyright holders to fight online trafficking of copyrighted intellectual property and counterfeit goods.