Credit Card Processing Blog

Over the past few years, we’ve covered a wide variety of new payment technologies. Both payment and consumer electronics companies have experimented with adding payment capabilities to all types of devices. Given the ongoing innovation in this space, it’s not surprising that there’s a new target that many players in this space have their sights set on. That target is adding payment technology to cars. Although this may seem a little far-fetched at first, we’re going to cover everything you need to know about why in-car payments actually make a lot of sense.

Who’s Focused on In-Car Payments?

As of now, there are four big companies who are really focused on in-car payments. Two of those companies are car makers, and the other two are credit card brands. The four companies we’re talking about are Honda, General Motors, Visa, and Mastercard. Each car maker has chosen to partner with one of the credit card companies. Honda is working with Visa and General Motors is working with Mastercard. The goal of these payments is to allow people to pay for parking, gas, and tolls without needing anything other than their car.

The Technology Behind These Payments

Although this concept is relatively new, the current solutions aren’t trying to reinvent the wheel. In the prototype that Honda unveiled at CES, their method of transmitting payment information is Bluetooth. This is a proven technology, and is one of the two technologies most commonly used for contactless payments. The other technology is NFC. The reason Bluetooth makes more sense for car payments is it has a bigger range than NFC.

While it seems like the basic technology groundwork is already laid, there are some interesting hurdles that will need to be cleared in order for this concept to really take off. Those hurdles have to do with infrastructure that can accept payment information. Solving those challenges are why specialty companies like Gilbarco Veeder-Root and IPS Group are putting their energy into equipping gas stations and parking lots with the right technology.

The Future of In-Car Payments

In terms of what makes this type of payment appealing, there are a number of different scenarios that are easy to imagine. Some of these have to do with convenience, while others are based on safety. As more companies push into this space, it will be interesting to see how consumers react. And if other payment technology we’ve covered in the past is any indication, in-car payments may ultimately be the spark for different kinds of innovation within the payments space.

We will continue to keep you updated on the progress of this and other forms of new payment technology. If you want to ensure that your business is always ready for any new technology that make take off, choosing a payment processor that’s dedicated to actively developing their offerings is the best thing you can do.

At the beginning of the year, plenty of people thought that cryptocurrency and the blockchain were going to take over the financial sector in no time. While those technologies are still very interesting, the frenzy around them has cooled down significantly. But that doesn’t mean it’s been a boring year for the payments space. Because so much has happened in the span of just six months, we want to highlight three of the most interesting credit card trends:

  1. Legalized Sports Betting

In what came as a big surprise to many people, the Supreme Court recently ruled in favor of states allowing individuals to place bets on sporting events. This activity is expected to start in New Jersey and then expand throughout the rest of the United States. Although legal US sports betting is expected to quickly bloom into a huge industry across the United States, that doesn’t mean it’s without any hurdles.

Just as dispensaries and other businesses in the cannabis industry have faced quite a few challenges, there are concerns about payments companies allowing bets to be placed with credit cards. As of now, none of the major payments players permit this activity. But given that illegal betting is already a $150 billion a year industry, it will be interesting to see if any of the major payments players take a gamble and allow betting activities through their cards.

  1. Consumer Delinquencies

Although the stock market and overall economy have been very strong, individual consumers are facing some challenges with their use of credit. In addition to general credit card delinquencies trending upwards during Q1, store-branded card delinquencies actually hit their highest rate in seven years. According to Equifax, the specific reason for those delinquencies spiking is a common belief among consumers that they can stop paying their cards when a retailer goes out of business.

  1. Small Business Owners

The other very interesting trend that’s showed up in recently collected data is that small business owners are heavier users of credit cards than normal consumers. Not only do owners have an average of just under 5 cards, but almost a quarter of the people in this group have used at least one personal card to fund business expenses. This trend is part of why so many big companies are putting a lot into B2B payments and lending.

Managing finances is just one of the many challenges that small business owners face. Reliably processing payments for a reasonable price is another very common challenge. If you’ve had issues with the pricing or service level of your current processor, there’s no reason to settle. In fact, finding a great processor is likely easier than you expect.

The reason it’s not nearly as hard as many business owners assume is we’ve created a great resource for comparing credit card processors. By looking through that page, you’ll be able to see exactly what rates are available and the types of features you can expect from a leading processing company.

We regularly write about digital payments for consumers. This space is highly competitive with a lot of innovation. But what about B2B payment solutions? Although the B2B industry has a reputation for moving slower, B2B payments have expanded quite a bit in just a few years. Because there have been so many changes, we want to cover several of them, along with how they may impact your own business.

The Current State of B2B Payments

Before we dive into some specific trends and projections, it’s worth taking a look at the current state of these payments. Analysts believe that in just two years, B2B payments around the globe will pass $23 trillion a year. As far as what businesses want from their payment experience, low rates, reliable service, and security are at the top of the list. Saving time has been a big driver of digital B2B payment adoption, and will likely continue to be over the next few years.

Fewer Businesses Are Using Checks

Now that we’ve covered the current state of B2B payments, we’re going to highlight a few major trends and future projections. The first trend worth looking into is that fewer businesses than ever are using checks. While it’s not surprising to see this trend among consumers, it may come as more of a surprise for the B2B industry.

Just how big of a decline have checks seen for B2B payments? In 2004, 81% of B2B companies used checks. As of 2016, that figure had slipped to 51%. And by 2020, it’s projected that B2B usage of checks will decline to just 34%. In addition to an increase in ACH payments, this decline is being driven by digital payment alternatives.

Important Partnerships and Innovation Milestones

Given the size and scope of the B2B industry, individual companies can only do so much to change the way payments are handled. That’s why key partnerships are playing a big role in driving adoption of digital payments. One notable example that will have a big influence this year and the next is the release of API-enabled interfaces by different financial platforms.

Because APIs are a way for one organization to open up their platform to others, their prevalence is empowering previously difficult actions like cross-border B2B payments. Creating partnerships through API usage can also support the creation of B2B cashflow solutions.

There are several other significant innovation milestones that have recently occurred. One is the maturation of self-service portals. This eliminates the inefficiencies associated with the traditional invoicing process and makes digital B2B payments truly seamless. Finally, blockchain technology is a major driver of online B2B payments and will continue to be an area of significant interest for the rest of the year.

For even more information on the subject of B2B payments, be sure to read our recent post on Visa’s acquisition of Fraedom.

In case you haven’t been on social media in a while, we want to fill you in on what IHOB is all about. A couple of months ago, IHOP announced via Twitter that they were changing their name to IHOB. Although they initially kept the meaning of the new acronym a secret, they later revealed that it stood for International House of Burgers.

Because IHOP shrouded their announcement in secrecy, it created a lot of buzz. From Twitter to Reddit to Facebook, people were trying to figure out what this new name was all about. And once it was announced that “B” stood for burgers, the buzz continued online through ongoing discussions, memes and more.

If you’re wondering why IHOP put so much marketing push behind this name change, the answer is clear in their regulatory filings. For the last 10 quarters, the restaurant’s customer traffic has continued to fall. Since IHOP relies so heavily on customers coming in for breakfast, they wanted a way to remind the public that they also do lunch and dinner.

In terms of brand awareness, this marketing stunt was a complete success. The company’s word of mouth score is as high as it’s ever been since analysts began tracking this metric in 2012. Unfortunately, generating tons of awareness hasn’t translated into a smashing success for IHOP. Researchers found that interest in actually dining at any of IHOP’s 1,750 locations has remained about the same as it was before the IHOB campaign.

Since there’s a lot to be learned from what IHOP did and the outcome, we want to share three key marketing lessons:

  1. Going Viral Doesn’t Require Going Negative

In today’s online climate, it seems like negative comments and stories are the ones that get the most reach. While that’s often unfortunately true, the light-hearted nature of IHOP’s campaign shows that negativity isn’t a requirement for viral success.

  1. Virality Doesn’t Ensure Business Success

The Internet moves so fast that lots of attention is no longer a guarantee of being able to move the needle on business metrics that really matter. Simply telling people in a creative way that they have burgers wasn’t enough for IHOP to inspire the type of online desire that other brands like Supreme have mastered.

  1. Focus on the Bigger Marketing Picture

Before you put any resources behind a viral or another type of marketing push, be sure that you have a clear plan for converting the attention you receive into more transactions. Whether it’s doing something relevant or having a follow-up conversion activity, this is the piece of the puzzle that IHOP paid the price for missing.

By putting these marketing lessons into action, you’ll be able to ensure that you’re generating the right type of awareness and traffic for your business. And if you want to be sure that you can always keep up with any additional customer demand you generate, having a great credit card processor will provide that assurance.

Given their name, the idea of Mastercard moving away from card payments may sound very counterintuitive at first. However, the reason it’s not as much of a stretch as it may initially seem is the company is very aware of just how quickly payments are changing. Whether it’s wearables or cryptocurrency, consumers now have more options than ever before for making payments. As a result, even the biggest payment companies can’t simply sit back and cruise along with what’s always worked for them.

Instead, these companies need to continue innovating to avoid losing relevance. And based on some of Mastercard’s recent moves, the company is committed to doing exactly that. One of the moves we’re referencing is Mastercard’s new partnership with Worldpay. If you aren’t familiar with that company, we’ll cover everything you need to know about them in a minute.

What makes this partnership quite significant is it marks Mastercard promoting a consumer payments product that isn’t processed through their network. Worldpay offers a variety of different ways for payments to execute. While Worldpay is a company that’s based in the UK, this may be a sign of what Mastercard has planned for future partnerships in the US and around the globe.

A Recent Supreme Court Decision’s Impact on Mastercard

Although Mastercard is doing a lot to expand their presence, that doesn’t mean they’re without any challenges. One big issue that recently came up is the impact of a Supreme Court decision on the company. The decision actually involves American Express, and many experts believe it will allow them to be more competitive.

What the decision did was uphold provisions in American Express’ merchant contracts that prohibit merchants from “steering” consumers to use credit cards that have lower interchange fees. This means that Mastercard can’t bank on businesses encouraging cards other than AMEX in order to avoid higher fees. Even though this may not be a huge blow for Mastercard, it means they’re going to have to get even more creative with the type of rewards cards they offer consumers.

As this move and many of the stories covered in our recent posts show, the landscape of the payments industry continues to evolve at a very rapid pace. If you always want to be sure that your business is out in front of what’s happening, the best way to ensure that is by having a great payment processor on your side. Since finding the right company can be a challenge, we’ve put a lot of resources into creating a highly curated list of the leading payment processors. Choosing one of the companies on this list will benefit your business for years to come.