In the payments industry, data can be just as important as the payment transaction itself. The trick is having a payment processor that can collect data and present it to merchants in a way that offers to add value to not only them, but their customers as well. But there is something that makes it possible for retailers to leverage data responsibly: Cloud technology, which has transformed the technology landscape over the past decade.

To learn more about how legacy payment processing systems create a disadvantage for retailers — and what the cloud has to offer —PaymentsJournal spoke with Scotty Perkins, Senior VP of Product Innovation at Quisitive LedgerPay, and Dan Devlin, Quisitive LedgerPay’s Senior VP of Operations, along with Raymond Pucci, Director of Merchant Services at Mercator Advisory Group.

Legacy payment processing technology
isn’t up to par

Historically, payment processing has been based on multi-layered legacy technology that is largely commoditized and not particularly innovative. Further, much of the innovation that has happened has occurred outside of core processing capabilities. As a result, legacy payment processing systems that were built exclusively to process payments can only handle a very small amount of data and offer few additional capabilities.

This significantly limits retailers and merchants from being able to leverage the data to better serve customers and drive revenue growth. Beyond that, many merchants don’t believe that they are getting the maximum value out of their processor. Payment processing often involves a number of bundled fees for a service that, while essential, is relatively basic. The result: Payment processing is viewed by retailers as little more than a necessary but costly evil.

This doesn’t have to be the case. Cloud technology can bring new efficiencies to the process while creating opportunities for merchants to better serve customers. “There are opportunities to take advantage of efficiencies in the cloud that can bring cost efficiency to traditional payment processing,” said Perkins, “But the real advantages are increased security, faster access to data, and an infrastructure that is essentially future proofed in a rapidly changing technology landscape. Pucci agreed, adding that because processing costs are a major pain point for merchants, they “are all in on whatever new technology can bring cost efficiency to the process.” 

How retailers benefit by implementing cloud processing infrastructure

In order to leverage data, merchants need access to integrated information about both the payment itself and information about the transaction around it. That’s where the power of the cloud and machine learning (ML) comes in. When combined, the cloud and ML enable an entirely new level of access to advanced modeling, predictive analytics, and real-time data deployment. After all, “traditional 40-year old payment processing orchestration for credit or debit cards doesn’t know anything about machine learning,” explained Perkins.

With access to these advanced tools, merchants can not only manage payments data securely and responsibly, but also take advantage of transactional information to help them make informed decisions on offerings and promotions to customers.  “Consumers want personalized marketing offers, and there’s so much that can be gleaned from a traditional payment transaction for future payment and shopping behaviors,” added Pucci.

In many cases, merchants aren’t even aware of what can be accomplished with this transaction data. Many retailers, particularly small and medium sized players, have been unable to work with – or integrate – vendors that can help supply them with access and analytics to the rich data every payment transaction contains. Companies like Quisitive LedgerPay have worked to change this reality.

LedgerPay wants to help merchants get up
to speed

Online retailers have long worked to customize the customer experience in ways that aren’t possible for brick and mortar stores. By virtue of having browser information, the ability to see what shoppers looked at and what they actually bought, and key identifiers like name, address, email and phone numbers, e-tailers have a wealth of data that can be leveraged to develop personalized promotions based on a shopper’s preferences,  But traditional brick and mortar merchants are blind to what individual customers consider and/or purchase while they are in their stores. Loyalty programs can help, but these usually have low penetration rates and typically reflect the patterns of a retailer’s most loyal customers.

That’s where Quisitive LedgerPay comes in. “The value proposition that we bring is that we collect all of that data from every transaction that can be piped into any analytics tool that a merchant wants,” Devlin said. “By linking purchasing patterns to individual cards, the merchant can recognize an individual consumer’s preferences within a category and then deliver  a promotion that has been tailored just for them. As simple as this may sound, it just isn’t something that traditional payment processors were built to do.”

“We also bring in that additional rich information about the transaction, take that into the cloud, perform those analytics, and return that as part of the return flow in the payment authorization—all while the consumer is still standing there in real-time,”

Scotty Perkins

Merchants don’t have to onboard customers into a loyalty program to access this valuable information. Rather, LedgerPay’s payment processing and payments intelligence solution is agnostic and compatible with any electronic card processed in-store at the point-of-sale. By creating a lens into a customer’s behaviors and purchase pattern through their card-based payment, merchants can gain a high degree of awareness of who they are and what they like to buy, then use that knowledge to personalize future customer experiences.

The takeaway 

Legacy payment processing technology is ill-equipped to help retailers in the modern world. Those that switch to cloud-based solutions can access data that offers actionable insights to drive down processing costs and offer their customers personalized, custom experiences. One such solution, Quisitive LedgerPay’s payment intelligence platform, allows merchants to capture and create customer profiles based on their historical and real-time behaviors.