Receipt Reliance

Thinking Outside The Payment Transaction Box

By Mark Johnson (@ReceiptReliance)

Increasingly we are seeing the question, 'What kind of new services can be provided around the payment transaction?' Digital innovation in the retail payments space has opened up many new opportunities that didn't previously exist, and while the aim for cashless payments is to make them as easy and as fast as possible, there is also growing interest in identifying other ways to add value that is complementary to the payment itself.

Something that I've put forward many times and that I think would be of enormous value to all of us is itemised digital receipt management and storage via our bank. (See TechCrunch article here ) We are all well aware of the many reasons it's important to retain our itemised receipts and for most of us, dealing with them presents an onerous task. The payment transaction records the total amount for a purchase; the merchant receipt records the itemised list of products and/or services that were received for that payment. It makes sense to connect the two for many valuable reasons. (Read about the advantages here ).

In the past, merchant receipt issuance has been a fairly separate process to the payment transaction, but times and technologies are changing. Merchants are now looking for ways to improve the purchase experience and provide additional value to their customers. As the majority of them are not software developers or payments technology experts, they are turning to others to enable that innovation. 

Banks have a wonderful opportunity here; they are in a position that they've never had before to do something outside of the box. Many fintech companies are finding their footing and arguably starting to make an impact on some of the bigger players' bottom line. Whilst they may not be necessarily poaching customers lock, stock and barrel, they are certainly providing an incentive for banks' customers to take some of their business elsewhere.

To keep their position as primary financial provider, advisor, and to stay 'top of wallet', banks have to get more creative and begin making the most of the many advantages they have such as regulatory compliance, consumer trust and a large customer base. It is up to the banks to work collaboratively amongst themselves and with others in the industry if they wish to create something truly transformative; in fact they need to do this just to keep pace and remain competitive, or as I've heard mentioned many times, they 'risk being relegated to back-end pipes'.

Itemised merchant receipt storage and management is one idea that would open up a huge opportunity for banks to provide something new and useful that will truly make a difference to their customers' lives. With automatic POS integration the issuing of receipts becomes invisible. (Read more about it here)

The spin off services that can be built on top will be amazing. Product warranty monitoring, product manual access, product level loyalty and rewards, automatic accounting and insurance interfaces, to name just a few. With customer consent, perhaps at varying levels of access, the data will be able to be used in many other ways to the benefit of not only the customer, but also merchants, banks and the community. 

Why is it important for banks to be the custodians of our receipts and not an intermediary 'fourth' party?  

Well, from a consumer's perspective, there are three main parties involved in a purchase; the consumer, the merchant and the card issuing bank.  We need a solution that is automatic, seamless, secure and ubiquitous, and by introducing a fourth party those requisites will be hard to achieve.

For instance, a fourth party will need some way to identify a consumer. In many cases this would be via personal information such as a phone number, email address, credit/debit card number or maybe bank account details. Apart from the added friction of acquiring that information, there is also the additional security risk of storing that information. Will every fourth party have the necessary bank level security to look after our data? Our bank does, and they already have all the details needed as well.

A fourth party will have to develop a relationship merchant by merchant and therefore, theoretically, there could be as many fourth parties as there are merchants. This would mean our personal information could be unnecessarily stored here, there and everywhere, and our bank would have to interface with any number of companies in order to retrieve our receipts and display them against our transactions. That's provided the fourth party has not gone out of business.

With the three party solution, a bank is not compelled to have a relationship with a particular merchant, and vice versa. For example, if I use my OneSmartBank issued credit card for a purchase, whether I am local or travelling overseas, the information gleaned from the card enables the POS software to process a purchase and send a transaction back to OneSmartBank. If it was standard to attach the itemised merchant receipt at the same time and send that as well, then it would not be necessary for me to provide any further information to the merchant or register my details with any fourth party, in order to receive a digital receipt. The merchant will not be concerned who the particular card issuing bank is and likewise, the card issuing bank won't necessarily need to 'know' the merchant.

If a bank provides a digital receipt service their customers will place their trust in them to ensure that it will work every time and be safe and secure. If a fourth party has custody of the receipts and something goes wrong, it will reflect unfavourably on the bank, whether the fourth party is visible to the bank's customer or not. It will also be out of the control of the bank to rectify any issues.

Merchants are also acutely aware of their customers' security and privacy concerns. That is why not only consumer trust in their bank comes in to play, but also the merchants' trust in banks as well. Merchants will want to be assured that the receipt they issue is transferred securely from the POS to the customer's account, is not tampered with, and remains a true and original version.

It is also likely that interfacing with fourth parties will cost the bank unnecessary fees which could vary from company to company. Why should banks pay a fourth party when it is a role they can easily fulfil themselves? They already have the infrastructure in place in addition to working relationships with other payments entities and the retail community. In fact it is worth noting that some banks have already begun moves in this area by provisioning for the retrieval and display of receipts that their customers have manually uploaded and attached to transactions. (Find out what some banks are doing here)

Finally, I don't think this idea can be executed with a single piece of software or platform sitting between many merchants and many banks, which is what a fourth party would have to develop in order to make it work. Given the merchant by merchant proposition, and the variety of POS and Online systems, Apps, Mobile Pays and AI payment methods etc, it would be extremely difficult to do, if not impossible. The notion of a central storage location between the merchant and the bank lacks purpose and creates a point of vulnerability in the process. An idea can be acted upon in many different ways, and in this circumstance, instead of producing a specific product, I think creating awareness, and encouraging and facilitating collaboration between relevant parties in a position to implement it is the best strategy.

The last few years have seen banks investing heavily in digital innovation. From core system upgrades and Big Data analytics to mobile banking, mobile payments, APIs and distributed ledger technology. In a number of cases the ROI is merely to stay in business and remain competitive. As some revenue doors close, banks will be looking for new doors to open and I do think a real opportunity will be missed if they don't move on ideas like the one outlined here. Banks are great followers, and in some circumstances that strategy works, but in others it is necessary to lead, especially now when consumers are more technologically engaged than ever.

Nowadays we are presented with many different ways to pay for goods and services. Regardless of which method is used - plastic, mobile, online, inApp, voice, or maybe an IoT smart device etc - the payment transaction is common to all and common globally. Associating the itemised merchant receipt with it is a simple, yet powerful idea.

It's time for banks to start thinking outside the payment transaction box!