Advancing Digital Payments – [FULL INTERVIEW]

In this full interview with Mark Kelly from Key IVR, we talk about digital payments, or mobile payments, and how adoption has been accelerated by COVID. It will continue and there is a place for both fully automated and manual payments methods.

We chat about this, recent trends in fraud and how there are nuances in customer behaviour that are shifting across the world.

Find out more about KeyIVR-> Here.

Interview Transcript

So hi, everyone. I’m here with Mike Kelly today, who’s the Chief Commercial Officer for a key IVR and key IVR digital payments services company with a with a focus on compliance. So, So Mark, thanks very much for joining me today.

And good afternoon, Chris. Thanks for inviting us.

So first off, if we could, just to talk a little bit about, you know, what have you seen over the last sort of 18 months or so particularly, Digital’s become a bit of a theme and obviously, digital payments will become a theme as well. What would you say the themes are?

Yeah, I mean, we’ve we’ve obviously digital transformation is a is a thing for, from local government to business first, but it’s a directive now in most local governments to digitise all the payment journeys. Excuse me, we’re very lucky that we were in purely in that space. We build staffs deliverable Software as a Service, deliverables and bespoke applications. But we were we were focused specifically on customer not present. So people are having to do over the phone payments, and we’re trying to digitise that. And we, we’ve been in that market for 10 years, 10, more than 10 years, I suppose. But then just try to code we, we did a big push into the US into other areas we’ve been working in, and then COVID hit and we just blew up, to be honest. So obviously, our main focus was the ability to work anywhere and securely capture payments without putting your client or your business or the agent at risk of exposure to any sensitive data. So it was quite fortuitous. Some people may have thought we started the DCC jazz saying, but yeah, so we fit that market particularly well.

And how much of a gap Do you think there was before they started in terms of that digitalization of payments or the like remote payments, at least anyway? I mean, was that was there, I think, a gap that we perceived.

Yeah, I mean, it’s quite strange, because if you look at the industry stats, they talk about mobile payments, when they they would use a set of digitally called a mobile payments, but digital, but the whole mobile digital transition went from about 30%. In 2018 40% 2019, it’s just kept going. And then during COVID It’s gone over 65% of payments have digitised when you think that there are still 35% that aren’t there is a lot of people who are still struggling to get paid, you know, we still have clients who come to us who are taking checks and having to open their branches to take cash payments and things like that. So there’s a huge area that still not even entertained the idea of digitization.

Where’s what sectors? Is that in? Is that really where you’ve got like face to face? Kind of but they’re reliant on that first or is there are there other themes that sort of come from

that? Well, for us, I mean, all of our verticals are such a mixed set from traditionally we you know, we were dealing with parking, parking fines, permits for councils, and loans, companies, IPAs, charity halls, all of the areas where the people were all remote. So that that was very much the growth but then we also look after manufacturers and retailers so manufacturers who sell to the home. So manufacturers selling direct, whether that be furniture, windows, upholstery, cleaning, dry doesn’t matter what it is, if you if you make something and you wish to be paid for it before it gets there and then get paid when it’s been installed. This method This was very difficult for people to deal with. You had the whole any type of cash or bank transfer any one of our clients was taking 11 million pounds in cash a week, using the agents at home, delivering windows and completing the installation and taking cash 11 million pounds in cash a week. Just the banking charges were enough to pay for our solution because I can imagine and they were struggling because they had to the staff had to pay into their own banks and transfer. It’s just very, very antiquated. They tend to find anything that’s FCA regulated as leapt into digitization in a lot firmer approach, actually because the dollar be fined for lack of compliancy. And anybody who is looking to be PCI compliant and properly accredited, not just our certificate, but actually be compliant to the process. They have to walk down the digital path because it’s very difficult to attain a decent level of safety if you’re not digital. But there are still a lot of you know, we had a couple of larger by two lakhs companies. So like you might have gone Bama TV and pay for it over five years. Those sorts of businesses they were they were traditionally before COVID It was all paper books, you know that people are paying in books, they were still going into the store. And they were when they looked at digitization, it’s all this money we got all this equipment to pay for and we did a study with them, you know their average salesperson on a Saturday afternoon for instance. would be interrupted six times to take a payment whilst trying to sell a TV. So that cost alone in that person who can’t buy or it physical difficulty in having to have six people working in a store instead of four because we’ve got famous tape. So I suppose

it’s, it’s, it’s all a bit of a theme. It’s almost like taking the more transactional routine type process and just digitising that. So let the the guys in the in the store actually focus on what what they do.

Yeah, and if we did it is the stores are open 24 hours a day. Yeah, you know, these stores are six days a week, but it comes to six o’clock and the close. And then people have to queue up on the next morning to make their payments. And if they don’t pay on time, they would be fined because So because these people are penalties in place for late payments to make people come in and pay. And so yeah, switching them over to the flexibility. And not just it was better for the client. So the clients journey was literally journey to the shop was literally wait literally paying. And now the journey is they found through one of our digital channels, or they go on through a digital web channel. And once they’ve been in that channel, it knows who they are. So the journey, you know, their first journey into digital is perhaps six minutes, seven minutes. But from that moment on whichever digital path they pick through technology, it identifies them with a phone number or seeing a secondary identifier. We already have their card details stored with the bank. Clearly we know our details. So a typical transaction for that customer went from seven minutes to 27 seconds.

What are the some of the security trends and some of the things to really think about, you know, when when you’re actually processing digital, because it does open up potentially to fraud. And so there is some risk there, I suppose you want to take some some precautions?

Yeah, I mean, there’s a lot of there were several malware hackers out there, we’ve made where we’ve seen some some enormous thefts of car data from some very, very big players. And you tend to find that’s because they build their own websites. And then they embed payments within their own website, which is the number one mistake that is made. The reality is though that 94% of digital card fraud is not digital theft issue. It’s hearing the card details and writing them down 94%. Globally, nobody wants to steal data that’s not worth anything. So no PCI data,

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PII data, and you’re no longer target. Because it’s nothing for them. Any businesses trying to go fully digital has had lost clients, because there’s about 12 to 15% of the nation, just don’t care what you want to do with your business. I’m going to pay my fine, I’m going to blame first I’m going to pay my debt. And I’m going to claim first I’m going to buy my 10,000 pound ring, I’m going to speak to you make sure you’re real. It’s that kind of scenario. So hence we did there still cardholder, not present moto transactions, deemed very risky buying a 10,000 pound damn ring over the phone. It’s a bit dangerous. But Hybrid’s work. You have a set SEC set, you don’t make everybody go complex, but if it’s something specific or something that’s risk, just at that time.

So we talked about omni channel there, I suppose. And like agent, Agent driven conversations versus purely digital. I mean, where do you think that’s going to evolve to? I mean, there’s definitely there’s been a swing towards digital, there are definitely, there’s definitely conversations out there around trying to create 100 percentage of journeys, as you just said, you know, some of them, you have to have some on the phone as well. I mean, what how do you think that’s gonna evolve?

Well, one thing I know, for certain, taking payments over the phone, it’s going nowhere. That’s the reality. Digitization we don’t believe will go above 80% 80, maybe 85%. But it can’t go further. Because the people using it don’t want it. And until they there was a reason for it was a benefit for it. That outweighs their chosen channel of communication. You’re going to be trouble.

I mean, what do you think the driver that is? So is it? Do you think it’s his age? Is it I suppose technical ability? Is it just you know, is it you know, extrovert versus introvert? I mean, what do you think sort of drives the need to have that human interaction versus, you know, being able to do things on your computer on the phone?

It’s straight? It’s a good question, because we get it’s our key objection. You know, when we’re doing a digital payments, or when we’re doing payments over the phone, it’s still technically digital as far as a customer is concerned, because they’re, they’re keying in data into their device. We’re taking that data up and carrying it to the bank. We’re not letting it go to the agent. So it is technically still digital. But it’s not it’s not an age thing. It’s a fear thing. There’s definitely a fear thing, but the most of the people we see still wanting to pair with a phone. It’s just a personal choice. I don’t care whether you’re 18 or 80. It’s how you want to interact with the supplier and there are things that are I pay for and I’m happy to pay for completely digitally. And I don’t want any interaction. But there’s no other things where I just want to ask something. Yeah, I want to be sure. Before I do that, you know, do I want to buy that, that 50,000 pound motorhome without having a conversation? Yeah, no, not really, I want to feel like you’re a business, I want to feel like I’m trading with a person. So I don’t know if that’s a personality, I think debt is a huge digital because there’s an element, even the people who would perhaps like to speak to somebody, they don’t want to speak to somebody who’s just come into this job today, on a minimum wage knows nothing about life. And he’s gonna, and I’m going to feel judged that my 1000 pounds credit card debt that you’re now looking at, and it’s a very personal thing. So when we talk to clients in that situation, it’s a different reason, you know, they want the anonymity. I don’t want to say yes, I’ve got no money. No, I can’t afford to pay you. Yes, I’ve got myself in debt. I want why would I want that conversation? So in that scenario, and in fines scenario, it’s a very small percentage of people who want to talk, you do tend to find that in those areas. It’s only the people who wants to complain about being found to be, you know, they want their if I’m going to give you my 70 pounds for this parking fee, I’m gonna give you the peace of my mind, because I think you’re horrendous business. And that’s what when we speak to our clients, this is what people are saying to them, and they’re coming on and just venting, and then pay. Yeah, so PCI compliance is was originally settled by the the big four. So AmEx, Visa, MasterCard, JCB set up the payment services, directives, and the PCI clients. So they police themselves. So the reality is that somebody’s wondering saying, no, stop taking these 10 million pounds of transactions, because you’re not compliant in another and they go, Oh, my God, they’re stopping taking those 10 million pounds of transactions where we’re going to get a 10 million pounds run. So we see this a lot where there is some flexibility, which is why although we’re PCI compliant, and we, our products are, when we work with a client, it’s not about PCI compliance, it’s about safety and risk. It’s because you can be compliant and still do it wrong. Because getting a certificate is really easy. Answering questions that are almost leading questions. It’s easy to get certificate. If if I was cynical, I would suggest that they would like you to be able to get the certificate. The one of the questions is do you store card data? And if you answer no, it removes 200 Questions from the questionnaire. Yet the interpretation document states that can’t store our data, or Aircar data. Yet, the question on the certificate application is you stalk our data and ask if you hear it. Yeah, yeah, there’s a whole section specifically aimed at contact centre payments that specifically stipulates that you are responsible for the talent for the audio and the DTMF on the handset telephone line on the cable on the network, that you plug into the physical socket, your computer, your telephone lines, your network lines, your environment itself, and all of your third parties connecting to that solution have access to your card data and is your responsibility to prevent them getting

mentioned earlier around tight software as a service and you guys are in software as a service provider. I mean, how much do you think that is changing the industry in terms of like centralising expertise. I mean, it feels like there’s so many some of these things are sort of like developing but it’s also like almost like a self reinforcing because as you specialise, you get more expert on it. And then you can you can put give that more back to clients, I suppose.

Yeah, I mean, we, we see it, there’s a lot in the sort of telephony, digital digital digitization of telephony is probably the biggest change or in the last 10 years, you know, all of your original PSTN solutions change into cloud based and you know, open code source and every every CRM provider now offers telephony embedded in their solution every payments, provider offset telephony embedded in the solution, and that digital switch, create create a massive battle in the market. So you know, the bigger the bigger players, your evaders, and those sorts of companies have had to rethink their approach and everything has had to become digital from their perspective as well. And that you know, that traditional phone on premise stuffs gone, that traditional handsets are gone. Everything’s web based so that every business is switching that way.

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Do you think he’s going to fragment the business though into the light so you had these large companies before that sort of did everything and now you’ve sort of got like specialist companies that are probably a little bit narrow that then have to be knitted together. Do you think it’s do you think that’s a pro or con?

I think it’s both I think we find customers will their customers who want to buy from a single provider for everything. And I think that’s risky because Jack of all trades and master of knowledge never really a good thing. You know, we we spend What we do we work with some very good industry partners in telephony and physical payment services themselves. CRM and infrastructure providers, because that’s their specialty. And we, we, we we don’t have, we don’t buy other people’s products and sell them, we only make our own products. We don’t make it, we’ll we’ll be working with the person that does make it and he’s really good at it. And yes, we can contract together if needs be, or you can contract directly, because normally we find the reason people don’t want multiples, it’s they want one phone number. Yeah, something something didn’t work helped me. And that that’s probably the biggest driver away from multiple platforms and multiple solution providers into a single entity isn’t for the system isn’t even for billing. It’s for help. How do I? Why is it not working? Because we’re now heavily into digitization, therefore, it breaks. So you’ve got to know what you’re doing? Because that’s, that’s technology.

So what do you think the solution to that is then? So that’s, that’s almost like having a primary relationship manager or a primary business that sort of, you know, sits at the head of it, and then and then works with partners. So it’s like that partnership approach, but within the business sort of environment, rather than multiple suppliers?

Yeah, I think so. I think, you know, we, we’ve got a number of clients where we were the primary supplier. And we’ve helped them bring in secondary suppliers. So we retain client ownership. And we this is the arrangement with third parties, it’s better for them. You don’t, I don’t we don’t they don’t want a new relationship. They just want to supply a service. And we understand how our service works. So we can we can help.

Going back to that customer side of things. We’re quite interested, like, how other differences in terms of like, you know, mobile payments, digital payments, how they sort of get implemented in different markets? And what are some of the themes and sort of, you know, who’s ahead versus not? Or, you know, what are the different flavours that sort of work well, in different in different different kind of markets.

So the UK is probably one of our positive negatives. One of the things we do in the UK, we’d like a good rule, we’re really good at following rules. You know, this is, that’s practically what we do our however, the US, for instance, purposely goes against the rule. So, whereas in this country, I think there’s about 40% of the businesses aren’t PCI compliant. So 85% of the businesses in the US aren’t and refused. It was created, PCI compliance was instigated and created in the in a country where up until 18 months ago, they still didn’t use Chip and PIN. They felt it was an infringement of their rights. They’re not PCI compliant. They’re not digital. You know, we we’re currently doing a massive piece of work with the what will be the build society, but the credit unions over there, credit unions for mortgages, they’re non digital. They walked into COVID with every single credit union, taking payment by cheque or over the counter in cash. And then they shut 10,000 companies who couldn’t and had no means to collect payment. Because they were not digital. So they didn’t even have card transactions. It is crazy. They are so they’re so far behind. We will see this digital transformation, you do get into really niche areas where they’ve perhaps been an international business or there’s been an international sales drive, that makes them change. And they can be so you can have skip levels, you know, where we’ve gone through, change this type of digital, we’ve gone to this, we’ve gone to this. They’ve gone from PayPal to the newest sort of doing Apple Pay, Amazon pay all those sorts of things, but yet you didn’t have Chip and PIN. It skipped a whole generation two machines. So they don’t like to adopt the new technology. They keep their top down technology longer. So here our server systems are three years or five years, 10 years to 15 years in the US. So what the invest in capital equipment they expect to keep it a lot longer. For instance, for us to be PCI compliant, we we’ve just thrown away a quarter of a million pounds worth of hardware. Because I’m with to be PCI compliant. The hardware mustn’t be older than five years. It doesn’t matter whether it’s compliant or not. That’s so we’ve literally just disposed and we have to because of what goes through them, we have to destroy them. We can’t even use them. They get they literally get wiped out. And then we go to a country where they’re keeping their technology for 15 years and are PCI compliant. And yeah, it’s very frustrating for us in the market. You know, when you’re trying to compete with it with we’re competing against suppliers, you don’t follow the rules. And therefore, like a good English person, that’s the rule, we’ll follow the rule to my dad.

About what about end user? So his customers end user customers, so customers of your clients? Do they have using different usage of the technology or different like mix and use of the technology by market? So for example, in France might be different than Germany, but different than the UK? I mean, is that is that adoption change, then is that becoming? Is it tending towards, like a commonality? Or is it or is it or is it still quite divergent,

it’s becoming more common, and COVID is the cause of it. COVID is, as for all its negatives, has unified the world to an extent, you know, where we’re doing things differently. And digitization has probably had more of a push and growth, because of COVID, then any financial benefit was previous to it. Digitization was cool, we’re going to save some time, we’re going to advertise, it’s really slick, that customer journey is great. We’ve got this omni channel piece, it’s fairly adoptive. What if it cost you money as a business? To add that, in on top of what you were already doing and reduce your revenue? Was? Why should I do it? Unless it’s gonna make me more or bring me more? Why would I do it? All of a sudden, I couldn’t get the money. And COVID caused that. So there’s been an absolute sprint to go as digital as physically possible, as fast as we’re seeing that now. As you would expect, 18 months later, we’re seeing this in the council now. So we do quite a lot of work with councils for fines and permits and things like that. But they’re very poor in a lot of their areas with digital payments. And with any kind of digital anything, they’d still have a bit of paper. But there is a one of my team looks after local government. And we’ve seen over the last four months, a huge push, massive push in digitization people, excuse me, people who were never willing to talk about what internal services they do that are manual. And how screaming and chasing because they’ve been given this directive from, from government to go full transformation. They want everything digital, they don’t want any paper anymore. They they’re being battered, they’re pushing for eco and green, and be efficient. And they’re not green, they’re not efficient, and they’re not eco. So it really you know, it’s kind of like buying a Tesla and then flying around in a Learjet. It’s not cool. You can’t do that. So for us, it’s going to be I think it’ll take about three years government change and council change with the way that we’re for tendering and the RFP RFQ. and stuff of that crazy. But we’ve seen probably a 20% increase in inquiries from that. So it’s, it’s an interesting time. We’re always looking for new, new, new solutions and new services that we can bolt in to try and help with our new services. Certainly from one of the newest one of America, tokenization of data. You know, there’s a lot of tokenization warehouses now, over there, because they don’t trust their internet structure. When we sell a solution in America, the first thing they say is, can we use your Please, can we use your stories in the UK? Because there’s no, there’s no belief that anything that goes online in the US is safe. Yeah. So that is a few large companies have started now where they’re plugging in tokenization. So all of your client data, all of your client records as you take any in real time it goes to them first. They tokenize it and keep it. So they’re trying to find ways to be fully digital

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once or twice that. Was that done? Is that just because of data privacy legislation,

which are very strange. Yeah, I mean that because obviously we were GDPR. California’s got they read adopted the GDPR policy with the California law. There are other states that have different regulations. The US is a different player, obviously, with all of the states they have. You’ve got those states who are fighting, digitalization and change hammer into Don’t, don’t come here. We’d rather have these empty buildings and no money and no jobs don’t come here. And then you’ve got the states where they’re shooting forward on their way to even here in some cases, it’s quite strange. It depends on the state who their governor is what their driver is what the what the app messages for that. Are they an eco stay or the solid fuel state. So that’s been the hardest thing for us to learn. We have now got 51 countries to deal with. The US is not one country. It’s incredibly different from West Coast to East Coast. You know we go west coast jeans t shirt and your East Coast suit you go Midtown it go to Dallas and it’s no one’s in the office. It’s everybody’s home working. So they there Certainly technology companies, telephony, infrastructure, solutions, payment services, companies, all of those businesses have gone full digital full remote. offices are empty. Now. There’s just one of our payment service providers speaking to somebody, and then after the day was on camera, there must have been 300 seats empty three people office. So why did you community rally around the corner? Everyone else doesn’t just nobody been in the building for two years? Yeah. Oh, they’ve got no choice but to be digital. Or

see that as a trend. Right. So and I just checked in here, I wonder how much time increasing heating costs at home, especially over the winter is going to drive people back to the offices will be kind of

I mean, we because of our sector, we’ve obviously not had to, we did let people go home when it was the initial lockdown. But as a as a first line services provider for financing, we have to be in the building. We’ve got live teams retaining services that are system critical to central government ministry of defence, you can’t not be here. Yeah, but that that first eight week period where we all went insane, you know, I was locked in my sleeping the bedroom working in the bedroom, and I never worked in office at home, I like to go out, I like to go to work and come back and have the drive and clear my brain and come into real life and suddenly fell into that eight weeks of perpetual digital connection. And then we we, we asked everybody to come back, you know, it was just like we got to mental health was increasing. Horrendous. So we were very lucky that our systems for ourselves, allow us to be wherever we want to be.

Finally, I suppose Where do you think we go from here? I mean, so we talked a lot about digitalization and payments, you know, things linked together, you know, I suppose, you know, different vendors sort of being linked together and you know, be able to put put services in for customers and sell there’s a big push towards mobile payments, digital payments, but what do you think the next steps are going to be? I mean, what happens from here on out the next five years, so

it will continue the you will find a lot more, there’ll be a lot of new providers in the open source technology that is now around the frameworks that have been built underneath what we do, and meaning so many new providers can start doing more and more of their own. So I think it will just continue to grow. And we we certainly from a PCI compliance, there’s plenty of people who aren’t from a digital usage and process there are plenty of people that don’t. So there’s still a lot to move across. It is very driven by the vertical, clearly. But everybody’s touched with it. Now we go up so I can’t see it stopping. You know, we don’t talk to anybody about, oh, we’re all gonna be back in the office. It’s all hybrid, providing more more technology, more protection, more security and more flexibility to do that. And be connected to your systems. I think that’s the change. For a lot of companies we speak to who digitised first that are going to do it again. So you look at insurance, for instance, they were probably one of the first to digitise what they were doing. And that was mainly because most insurance broker stroke companies are working with multiple providers behind. So just like the travel industry, they digitise first, those two entities would have a computer system with five different programmes you’ll hear you’re still doing that I just need to switch the application detail, I just need to switch the application. So I think that’s where we’re going to see the next changes then realise in the five applications for that user is not very good. Somebody you know, we we’ve created repository hubs and centralised interface hub. So we you’ve got all your legacy stuff. That’s just give you one front end. One thing for your staff to deal with one things for the customer to see single branded format, single usage, and all the legacy stuff just handled out the way you know that that that for me is what I think people will push to a simplification of their digital approach.

So for Mark, thank you very much for chatting with me today. I really appreciate some fascinating, interesting topics as we sort of delve into the whole payment piece so I really appreciate it

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