Episode 4: NCR Payments | Connected Commerce and Payments Trends
Our guest on this podcast is Diana Mehochko, COO of NCR Payments. We talk about payment trends – including connected commerce, embedded payments and embedded finance – and how they fit together. We also cover how we can balance the need to deliver connected, seamless solutions that meet consumer demand with the need to protect consumers and maintain a secure payments system.
Read the full transcript below.
Episode 4: NCR Payments | Connected Commerce and Payments Trends
Deana Rich (00:09):
Welcome to It Pays to Know, a podcast brought to you by Infinicept. My name is Deana Rich. I’m the co-founder and co-CEO. Today, my guest is Diana Mehochko, who is COO of NCR Payments. We are going to chat about payment strategies and trends and connected commerce, and how it all fits together. Without further ado, please enjoy my conversation with Diana Mehochko.
Diana, thank you so much for being here today. I really am looking forward to hearing your insights into the payments industry. Thank you for being here.
Diana Mehochko (00:48):
Thank you so much Deana for having me. Certainly, payments, even though it’s a small piece of the even bigger opportunity that we have in the industry, I feel fortunate to be able to share my ideas and answers to a few of your questions and have the opportunity to have this conversation. So, thank you for the invitation.
Deana Rich (01:09):
Oh, thanks. Perfect. We’re going to dive right in. Diana, over the past several years, there has been a lot of growth in organizations that have embedded payments in their offering. At the same time, payments are only representing a small piece of an even larger opportunity to embed financial services, and that’s why we’re here today. What I want to really begin with is unpacking the topic of embedded commerce, embedded finance, embedded payments, connected commerce. How are they all different and how do they piggyback off of each other?
Diana Mehochko (01:46):
As a consumer, from my point of view, these past couple years in the pandemic have really brought a seismic shift to how we work, how we shop, how we enjoy our free time, how much time we’ve spent at home, and how we stay connected. But to that, though, the one thing that has drastically changed in our world is certainly the way we pay and payments. Advances in payment is something that I think on this line that we’re all proud of has brought that flexibility to adapt and thrive in the industry.
When we think about consumers, when we think about what they value most, they do value that shift from cash and checks to more of a digital payment modality, and consumers really do find that more secure than other payment methods. So, in terms of a differentiator, that usability has been brought about by really the pandemic, something that we wouldn’t see as a silver lining in the industry, but certainly has been, because consumers have engaged in almost all payment types and methods, and they’ve had to update and the merchants have had to update. They’ve had to integrate quickly, and it has pushed that expectation for embedded finance and fully connected commerce out in the market.
We’ve seen various statistics that even as early in the pandemic as in September 2022, I think debit usage was maybe 10% in the fast food market. It’s grown dramatically since then. Cash has gone down and debit card usage has gone up. So, we’re looking at the adoption and acceleration of digital payments, anywhere from contactless to touchless, connected commerce. I mean, I’m going to step back for a minute here and really define connected commerce. It’s truly a seamless and personalized integration of not only online, but in-store experiences that enables consumers to discover, shop, purchase, and receive goods on their own terms. That’s one thing that we have to think about, and the merchants certainly have to quickly implement those new payment methods that have been asked about and been required to really survive in this new market. Those are a few things I think that’s kind of unpacking.
Two other comments I want to make is when we look at a software as a service, and certainly PaaS also, as far as those integrated point-of-sale solutions, people are looking to make it simple. One of our taglines at NCR is simplicity. So, there’s a lot going on in that growing segment, also. That credit card process is really truly the key value driver.
Deana Rich (04:45):
That makes sense with embedded payments, having the credit card being the main driver, when we look at the sort of MVP for payments, as you mentioned, in-store, mobile, online. We didn’t even talk about QR codes. I just was on a webinar, where at the end of the webinar, I used a QR code on my screen. I thought it was great. Not to get off track, though. All payment solutions and stacks are not unified, so there’s a lot of work to be done. As we’re coming out of the pandemic… Yes, I did say we’re coming out of the pandemic. How are payment providers going to get ahead of these consumer demands, and what does it mean for the future, and what do you see is driving commerce?
Diana Mehochko (05:32):
One of the things that when we look at… You had mentioned QR codes. Some of these things have been around for a while, right? That barcode scanning technology, that’s really not new, but there was such that strong interest in the ability to provide that contactless purchasing or surveying or menu viewing capability, that has really brought it to the forefront. Many of these things that we’re using so much more in the market aren’t really new. They’re just expanding and having that capability, but I wanted to reference that because I too am looking at… Every time you go to a restaurant, they don’t have menus anymore. Just like money is associated with who wants to handle money, people don’t want to handle menus.
When was the last time you went to a restaurant and actually got a paper menu? Now, for my in-laws, that’s not always a great task. So, I find that kind of comical because we have really projected into a different part of commerce in the way to transact, but one of the things that I think that the pandemic did create is really two groups of providers. There are some that have been building strategies for now and tomorrow and they have a plan, and they look at the business, and they look at the future trends and they have integrations in place, and they have a plan to meet the demands for things like online and mobile and in-person, having gateway solutions, stacks that focus on that connected commerce. And then, there are those that are catching up to the connected commerce aspect. When you look at those, as far as being able to move at a faster clip, there are those that are now going further and faster into things like next-gen payments like crypto.
But that all centers around the availability to get there, Deana, is to look at potentially M&A, because there’s that old adage that you can buy, build, or partner. And the pace that is being required to get there quickly, as quickly as the consumer is demanding, is making different choices for us in the marketplace because the demand is there and I don’t believe it’s going away. I think it’s going to continue on the same trajectory that it has been in the last two years.
Deana Rich (07:50):
That makes sense that with this connected commerce, things are going to begin to change or continue changing. I shouldn’t say begin.
Diana Mehochko (07:58):
Right. Continue changing. Excellent.
Deana Rich (08:00):
Right. A hundred percent. With that connected commerce and continuation of changes, it brings another level of risk and security concerns because we’re talking about many different platforms that are connecting. So, how do we deliver that seamless solution while delivering a secured solution?
Diana Mehochko (08:20):
I think one of the things, when I think about our valued customers within NCR, is there’s so much things being pulled at them, and risk and security is certainly one of them. Certainly, the need for efficient processes and adopting those technologies, there’s a cost structure for that, in terms of the other things that are impacting them. Interchange was at a pause for the first year of COVID. Of course, that has changed. With the new technology going and moving away from cash and check, there’s chargebacks that they have to contend with, et cetera. So, risk and security is one of the many things that this evolution of payments is bringing to the merchants that they’re having to deal with. So, when we look at connected commerce and delivering that seamless and secured solution, we have to be able to give them the data. Right? We have to look at automation and integrations to be able to access that data, so we can utilize those analytics, and then, to be able to protect and manage their business.
There are things such as anomaly detection to look at risk, business intelligence through those analytics, because the merchants in this new wave, and it’s going to continue, need to understand their business and identify that. That indicate those risks because it’s a new wave. Additionally, that information can help them grow their business, understand their clientele, understand their consumers, but as we talked in the last question, the challenge is how fast can we get there to meet those demands? So, that goes back to strategic partners, the whole buy, build, partner conversation again, and that consideration for M&A strategies, and to be able to get there faster and fill those gaps that are needed in the market today.
Deana Rich (10:18):
Diana, when you talk about the M&A strategies, making those decisions, buy or build, and sometimes rent, how do you ensure as you’re doing that or as you’re watching other companies with that buy, build, or rent strategy… Do they pay attention to security or is it more about fast, get it done, speed, move forward?
Diana Mehochko (10:40):
That’s part of our responsibility, certainly, because we’ve been in this industry for a while, so we understand that that has got to be a part of the equation. So, as a partner with our valued clients, that’s something that we need to bring, but that comes with the data.
Deana Rich (10:57):
Diana, let’s talk a bit about M&A strategies and how that aligns with security and secured solutions. How do you or how do other companies, as they’re making that buy or rent decision, make sure that those partners are secure?
Diana Mehochko (11:16):
One of the things that is always, I think, key in having that buy, build, rent, partner, whatever terminology that you want to use is, do your full due diligence. Right? Know what you’re trying to solve for. I’m a big proponent of references. I give them (not freely), but I do ask for them because it’s something that you want to be able to have a track record on how people are working with and how they focus on. There are certain things within this industry that we have qualifications for, and people that compliant and qualify in different levels that you can look at, but certainly, one of the big attributes is, this is a big industry but not that big. So, looking at how people do their business, how they focus on things, where their investments are, but it comes down to, people buy from people, and you need those referenceable relationships to be able to build from that. Sounds a little old school, but I believe in it.
Deana Rich (12:22):
I think it’s solid. It’s a solid concept. I’m going to take us from old school into current day and maybe a bit in the future. Using cryptocurrencies as a way to pay, and ensuring that with this new way of transacting business that we’re staying secure, how is the industry balancing or how are they going to balance the demand for more innovation and alternative payments with those risk and security concerns?
Diana Mehochko (12:52):
You mentioned crypto, and I’m going to take a little detour here. I was looking at a survey just over the weekend. That’s always my good reads, all the little surveys and the little articles that I try to get caught up on. I have a 23-year-old daughter, so she’s right into this age group that talks about this survey, and they made the statement that crypto isn’t mainstream yet, but younger generations are getting on board. They asked specifically, “Do you own crypto or plan to own it in 2022?” 46% of the folks that responded to this survey, either own or plan to own it in 2022. The largest percentage obviously, being in that 25 to 34, and at 60% and 56% in 18 to 24. So, it is here. Right? It might not be my generation per se, but cryptocurrencies has a different look and feel, a different transaction fee set, deals with market volatility. It does have some risks with currency, et cetera. But those kinds of things are here.
I found that survey quite interesting, but we have to look at how consumers do the business. And I talked about data, data, data that drives that business intelligence. To make sure that merchants are getting what they need, they’re capturing how the consumers are preferring ways to do business, and they’re providing the information that merchants protect, manage, and grow their business. That all centers around artificial intelligence or AI, because protecting the consumer and the industry as a whole, as we move faster with these newer technologies, is just paramount. It’s just paramount. AI will also be critical as we look at security and risk because all the things that are next in alternative payments will continue to drive those requirements, Deana, and we need to make sure that we have the ways to protect data and secure platforms, and have access to that data on demand, to look at those anomalies that we need to detect and to be able to make quick decisions with that data.
Deana Rich (15:08):
Diana, you said a couple of things in there that are really pertinent to this discussion. One is protecting the consumer, and we’ve been talking about security and risk. That’s one of the goals is protecting that buyer. And then, when you talked about the younger people and how they look at purchasing differently, they are the consumer we have to pay attention to, because they’re the consumer that’s driving tomorrow. And that’s where that embedded finance piece comes in with the buy now, pay later abilities, and with not using credit cards but using other ways to pay, keeping their debit cards safe and maybe using a push pay instead with a QR code as we were discussing. With that, you also then said data is driving things. So, protecting the consumer, the younger consumer, being the one we need to pay attention to, how will data drive the way we do business and deliver solutions to those new consumers or the consumers that are tomorrow’s consumers?
Diana Mehochko (16:12):
Yeah. I think it’s looking at what that data is telling the merchant, as far as what those consumers want and what they need, and where those pay methodologies or modalities are coming in to their business, whatever business that is. I think we started with how debit has changed drastically in the restaurant market, specifically in the fast food. So, those kinds of things, we have to look at by industry and by segment and capture how those consumers prefer to do business. Because those merchants certainly need the efficient processes. They need the ability to adopt the new technology that supports them, but they can’t do it at a cost. There’s already cost associated with getting there, the cost that each business is having to figure out, to bring in these technologies and this way to pay, but it can’t be at an offsetting cost from a risk and security standpoint. So, there’s got to be a happy medium there.
Deana Rich (17:12):
Okay. Well, that makes sense to me. Things change all the time and I’m enjoying watching payments change with the new consumer that’s out there. People think it’s crypto, but it’s not. It’s more the buy now, pay laters. It’s more of the push pays. Cryptos will get there maybe, but I do like the blockchain technology. When you talk about the security side of things, that certainly can assist with that. As we’re coming towards the end, Diana, we’ve talked a lot about connected commerce, and embedded payments, embedded finance. Is there anything you wanted to leave our listeners with, anything to think about as we move into the tomorrow of payments?
Diana Mehochko (17:56):
You started the question with this industry and the change. That’s one of the things that… The reason why I’ve stayed at this industry as long as I had, in payments specifically, is because of the change, and certainly the hyper focus on all of the different changes that we’ve had since the pandemic back in 2020.
I think it’s more of the same that we live with, but I think looking at when we talk about solution stacks and how customers want to do business, we’ve got to focus on that consumer demand. We’ve got to focus on things that are faster, quicker, and seamless, but we’ve also got to look at it from a security and a risk standpoint. But all of those different how to pay, I think I started with those seismic shifts in how we work, shop, enjoy our free time and pay, we’ve got to keep aware of those things and how we implement and execute on those things, but still keep it to the basics of things that we still have always had to focus on. Right? But keeping note of where the consumer demand is, what the needs are, being able to assist our valued merchants and customers, to be able to get them there because they are going through a massive change.
Because if you remember, all of a sudden, it was like nobody wanted to take cash. Everything was happening online. Digital payments became essential, all of those kinds of things. Now, those have become kind of common knowledge, but we’ve still got to focus on all of the other things that are enabling us to be able to use those types of alternative payments, going into the future as we are because it’s not going back. And it’s going to continue maybe not on the clip, but the trajectory is there.
Deana Rich (19:50):
Agreed. Well, Diana, thank you so much for your time today. I really appreciate you sharing your knowledge and your wisdom, and helping our audience learn a bit about tomorrow, so thank you.
Diana Mehochko (20:01):
Thank you so much, Deana. I appreciate the time and the consideration. Have a great rest of your day.
Deana Rich (20:07):
Thanks. Thanks so much to Diana Mehochko from NCR Payments for joining us today, and thank you for listening to us on It Pays to Know. To hear more from us, please head on over to infinicept.com, where you’ll also be able to learn more about our PayOps platform and how we get payments going your way. For Infinicept, this is Deana Rich. Thanks again for tuning in and we’ll pay you another visit real soon.