Cynthia Bailey | Executive Profile | ATLANTA TREND
Perspective on Payments
By Robert Green
Cynthia Bailey has worn many hats in her 2 + decades in the payments industry: Chief Marketing Officer, Editor-in-Chief and Vice President of Payments Consulting, to name a few. But her fondest memories are of her first role in the payments industry, as a product manager for Nova Information Systems, now Elavon. “Nova was the perfect place to start my career. It was such a dynamic time - both in the payments space and at Nova. Our team was young, enthusiastic and eager to make a difference, and our company was a growing organization that was leading innovation in the field. There was so much work to do, it was impossible to step on toes, which made it a great place to learn the intricacies of payments from a technical perspective.”
It was during that time that she came to appreciate the vital role the payment ecosystem plays in cultivating a thriving economy. “I was totally hooked – this was a field where things were always changing. The technology was continuously advancing and competition was fierce as more and more players showed up to chase the same, shrinking, processing margins. Increasing regulatory oversight and governmental scrutiny on all members of the payment chain created pressure on companies in this once entrepreneurial, sales-oriented industry, to be better, faster and cheaper.” This environment acted as a catalyst for forward-thinking organizations that were willing to take strategic risks with product development and customer care. “In the late 90’s payment processing companies felt pressed to get bigger or get bought, and those who acted as if it was business-as-usual, soon found themselves with no business to conduct. “ A testament to its constant evolution, the payments industry experienced more mergers, buy-outs and portfolio acquisitions in a 10-year span than in any other industry its size.
As the payments business has matured, Bailey believes the biggest challenges its companies face include protecting margins and increasing yield from existing customers while at the same time, offering innovative and intuitive value-added payment solutions that are in high demand by both merchants and their customers. “That’s no easy task when your core product offering, the processing of a payment, has razor thin margins similar to those in the commodities markets.”
She goes on to explain that new technologies, like those associated with mobile transactions and EMV, have revitalized the industry after the recession leaving it with so much potential that it’s easy to be distracted and lose focus. On the other hand, since there have been so many new product offerings in recent years, there simply isn’t time to sit back and wait to see what the competition does. “The difference between the industry in 1990 and today is that back then, the payments players could largely be identified – the banks, the card brands, the processors, resellers, etc. Today’s payments landscape is being disrupted by an entirely new class of competitors – from the ventured-backed tech start-ups offering tablet technologies – such as Leaf, to Amazon Payments and the like.” Instead of being deterred, Bailey sees this as a tremendous challenge ripe with opportunity. “It’s a global industry now - we are seeing more and more mid-sized U.S. payments companies establishing partnerships in Africa, India and China, for example, to acquire products that appeal to consumers in those regions and to capitalize on the promise of these emerging, population dense markets. “
Whichever direction a company may seek to go, it is mission critical that organizations have a solid strategy to guide their tactical decision making – particularly when venturing into new product offerings, new partnerships and foreign markets. “At the end of the day, no matter your strategic direction, the battle will be won by those organizations that best utilize technology advances to drive consumer behaviors and, in the process, cultivate more frequent, more loyal customers.”
No contemporary discussion about the payments industry would be complete without addressing mobile payment. “As most in the tech space have experienced, creating a shiny new product is often the easy part. At least as large an undertaking is convincing people to try it and to use it regularly enough that they feel like they can’t live without it.” As Bailey explains, this battle becomes more difficult when the existing technology or methodology works well already and when there is an expense or learning curve associated with trying something new. “I think that is largely the case with mobile payments. The system we have in place for making purchases at a point-of-sale – using a plastic magnetic stripe card to pay - simply works too well and is not overly onerous on either consumers or merchants.”
There is no denying that mobile payment is a hot topic, and has been driving industry dialog for over a decade. Says Bailey, “In my 15 years publishing TWM, we ran close to a hundred articles solely on the topic of mobile payment” referring to her tenure as editor and publisher of Transaction World Magazine, a monthly payments industry trade journal she founded in 2000.
But despite the hype, we’ve not seen payment via a mobile device take off in the U.S. in any meaningful way. The place we’ve seen domestic growth with mobile-based transactions has largely occurred with value-added programs – such as ticketing, loyalty and closed-loop applications. While these mobile-based products may not add to bottom line processing revenues, they definitely help payment providers address attrition as they create an exit barrier for merchants who might otherwise switch processors based on price alone.
So what is the real issue with mobile payment adoption in the U.S.? Referring back to her belief that changing consumer behaviors will be a major barrier to mobile payment adoption, Bailey feels that until both merchants and consumers experience a unique benefit from the processing of mobile payments - in the form of time saved, costs reduced, fraud prevented, etc., the technology is just a solution in search of a problem. “I served on the Electronic Transactions Association Mobile Payments Committee for two years, with some of the brightest and most creative minds in the industry. The problem wasn’t creating a technology that worked well and was easy to use, as technology development always precedes market acceptance. It was convincing all would be users, merchants and consumers, that mobile would provide a better end-result.” Combine this with the added consumer confusion that proprietary products like the soon to be released ApplePay can create and it’s easy to see why consumers remain happy to rely on the tried and true, mag stripe card method.
“While conducting a focus group on mobile payment last year I received a response that went about like this: Why is it faster and easier to unlock my phone, open an app, enter a password, select a card type from the card numbers stored, enter the security code for that card, waive my phone at the mobile point-of-sale device to then have my receipt stored in a cloud-based passbook, when I can simply open my physical wallet, swipe my card on the self-serve point-of-sale terminal, and either have my receipt emailed or printed leaving no corresponding e-trail. I was stumped… the guy was dead on right. And if consumers aren’t adopting mobile, merchants aren’t upgrading their processing equipment to accept it, so it’s a vicious circle.”
While we aren’t seeing mobile payments in the U.S., we are seeing them globally, often in the form of mobile top-up programs. In her role as Chief Marketing Officer for a payments acquirer, Bailey worked closely with foreign-based mobile payments processors. “Even though we’ve not seen mobile payments here, the rest of the world uses cell phones to move money in many innovative ways. In unbanked areas of the world, where large populations of citizens don’t have bank accounts, much less credit accounts, SMS text messages, that can be sent by even first generation flip phones, are being used by millions to send money from person to person, from consumer to merchant and to pay living expenses like rent and utilities. This mobile top-up technology is dramatically improving the lives of millions of the world’s poorest citizens.”
Bailey resides with her family in Atlanta, the city that is headquarters to more payment and electronic transaction processing companies than any in the world. “ I grew up in Atlanta, so it was total luck that after going to college at William & Mary in Virginia, I came home, found my first job at Nova and have been able to grow my career in the industry I love, without leaving home.” Over the past 23 years, she has been a leader in many payments innovations – from the advent of real-time debit processing to cross-border payment acquiring and mobile payment technology.
In her current role as CEO of The Idea People, a payments and electronic transaction consultancy, Bailey works with companies directly involved in the payment processing space such as banks, processors, ISOs and acquirers, those ancillary to the space such as technology and fraud/security solution providers, as well as with organizations that process large volumes of recurring payments, such as utility and membership organizations.
“Since I opened the doors at The Idea People, I’ve found that it is usually the most creative and innovative executives that seek outside counsel – the ones with the confidence to ask for advice and to take risks – which makes my job fun. Most of the work I do now involves generating fresh ideas, cultivating creative strategies for execution and acting as a trusted sounding board. It reminds me of my early days at Nova in that it is exciting and challenging and no two days are the same. One week I may be meeting with the Georgia Banking Commission, the next I’m helping an entrepreneurial start-up create a 5-year strategy and the next I’m developing technical white papers as part of a pre-IPO fund raising effort. It’s pretty cool and I feel pretty lucky. And to think, if I had moved to DC after graduation like most of my college friends, it may never have happened.”
In her spare time, Bailey enjoys spending time with her family, especially her two sons, Logan (15) and Liam (3), whom she is certain will become President of the United States and a retro-punk rock star, respectively. She serves on the ETA Mobile Payments Committee, is on the board of the College of William and Mary Alumni Association, a Sustaining Member of the Junior League of Atlanta and a lifelong member of Holy Innocents’ Episcopal Church.
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