In this episode of Payments on Fire®, George Peabody and Yvette Bohanan are talking payment trends and best practices with Fiserv’s Casey Klyszeiko, Head of Carat and eCommerce at Fiserv.

Tune in to hear Casey, a Payments Boot Camp alum himself, discuss the consumer payments journey and the questions merchants should be asking in order to deliver the right payments experience for their customers.

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George Peabody:

Welcome to Payments on Fire, a podcast from Glenbrook partners about the payments industry, how it works and trends in its evolution. I’m George Peabody, cohost of Payments on Fire, and I’m joined by my co-host Yvette Bohanan, partner at Glenbrook. Yvette, hi.

 

Yvette Bohanan:

Hey George, how are you today?

 

George Peabody:

I’m good. Glad to be here. Glad to have you with me. And I’m really looking forward to today’s conversation because we’re going to be steering upmarket into the land of major enterprise payment acceptance.

 

Yvette Bohanan:

Yep.

 

George Peabody:

Which is, I have to say any operation that’s working in that space has to have no fear of sophistication because it’s a really demanding environment. Before we get there, Yvette, we’re on the education team. What’s happening at Glenbrook from an education point of view coming up? What’s ahead?

 

Yvette Bohanan:

As always, we are cooking on all four burners in education. So we just finished a webinar series on digital currency systems and a insight workshop on that. And it had a lot of demand. And actually for the folks that missed the webinar series they’re recorded now, and you can download them from our website at Glenbrook. So have a peek at those if you want to know all things stablecoin and central bank digital currency, and what’s going on in this space of cross border digital currency pilots that are starting. It’s pretty interesting stuff. And we’ll be touching on that with our guests today a little bit, about acceptance and merchants and what’s going on here.

 

Yvette Bohanan:

And then coming up, we are focusing on fast payment systems or as the Bank for International Settlements calls them, instant payment systems or IPS. And we have a webinar series in Q2 on the different aspects of SWIFT, what they’ve been up to when it comes to making payments faster and also some of the fast payment system innovation going around the world. And we have some really cool stuff going on here in the U.S. We’re about to launch next year FedNow. So we thought it was time to really look at this space in more detail.

 

George Peabody:

Great.

 

Yvette Bohanan:

And of course we have our block and tackle Payments Boot Camps, which we’re selling out. So lots of new people coming in the industry, and we’re super excited about that. So…

 

George Peabody:

Yeah, one of the things about the payments industry is that it’s constantly changing. We’re always saying to one another how we come to work and we learn something every day that’s unexpected. So that’s just part of the industry. So let’s get to what we’re talking about today, which is indeed about the needs of enterprise merchants and from a payments acceptance point of view. And to do that, really delighted to welcome Casey Klyszeiko, who is the Head of Carat and eCommerce at Fiserv to talk shop about payment acceptance and the needs of big time merchants. So Casey, welcome, really glad to have you here on here on Payments on Fire.

 

Casey Klyszeiko:

George, Yvette, it’s a pleasure to be here and I’d be remiss George, not to say to start, because you just mentioned education, my very first day in this industry and I had no idea what I was doing. I participated in a three day boot camp from Glenbrook, and I’ll always remember that experience. We talked about ISO 8583 and BINs. And I said, what the heck have I gotten into? Fell in love with after that and those three days were transformational in my career. So a little, little bit of a plug for your activities.

 

George Peabody:

Well, thanks for that shout out, Casey. Really appreciate it. I’ll tell you, I was working in the payments industry for five years before I got to a payments boot camp and like so many others, I was in there going, that’s how that works. It was amazing. So speaking of how something works, let’s get started. And Yvette and I at Glenbrook, we’re always working with big merchants, and generally in our world, when we talk about a big merchant, we’re talking about merchants who are 1 billion and up in turnover, and often I’ve been in these merchant RFPs that we run. We’re really putting multiple providers up against each other and Fiserv is almost always in the room. So you’ve got a front row seat to what’s happening in this space. And I’d love to know, just to start at the broadest level, what you’re seeing with respect to what merchants thinking about on that three to five year horizon, because as we’ve said so much is going on and we’d love to hear what you’re hearing from where the rubber meets the road, if you will.

 

Casey Klyszeiko:

Yeah. Thanks for the question. We’re hearing a lot. It’s always great to be out there. Yeah, I’ll start for those, some people might not know what Carat is by the way, George, just so get an overview of that for the group. So Carat is the operating system for our enterprise clients at Fiserv and around the world. Carat, as I think about it as an operating system, is the set of services and connections, applications that businesses need to thrive and grow in an increasingly complicated environment, whether that’s e-com or card present or money in or money out or disbursements, local, global, check, card, real time payments, as you were mentioning, Yvette, EVT data and insights, we are that one stop shop for enterprises to come and help them thrive. So, we think a lot about your question and we listen a lot to our customers and our potential customers.

 

Casey Klyszeiko:

And I think when you start to think about with a merchant what they need, it quickly goes, and this is how we think at Carat, what does that end customer need? What does the consumer need? How are they experiencing not just payments, but the actual commerce journey, which is what payments is the foundation, the backbone of today. And so I think we see three things in that consumer space, especially now post pandemic and the rise of digitization. I think one is the unification of their experiences. And how I think about it and many do I know, is experience is the new loyalty currency. It’s not points or rewards or perks, it’s does it work? Is it simple? How did I feel going through that journey? Did I get what I needed? Did the merchant meet me where I was?

 

Casey Klyszeiko:

And was it easy therefore. So whether it’s across channels or geographies, and frankly now actually beyond just individual merchant ecosystems, but across platforms and multitenant, multi merchant. Our customers are looking to solve that pain point for consumers and give them the most unified experience they can. So as a partner, we really focus on being a global, scalable partner for merchants to use in that way. The second thing I would note is choice. Choice abounds and customers want it, depending on the day or their finances at the moment or the device they’re on or any number of things, they want to be able to pay the way they want to pay, a variety of alternative payment methods. We’re going to talk later, I’m sure, about BNPL and crypto and all these great things that have come to be, but it’s fundamental that a merchant can deliver options for their customers and customers demand that.

 

Casey Klyszeiko:

So again, it’s a focus area for us as we listen to merchants in terms of how do you build out that choice? And finally, I would say consumers these days, trust and brand is incredibly important in how they select who to do business with. They want to engage with brands that they trust both from a security and privacy perspective that are doing right in that way. But also those brands that do right by the communities, the environments, those around them, their employees. So as that becomes more important, that has to be front center for our merchants in terms of attracting, retaining, and growing customers. And again, from our perspective, we’re focused on being a brand that could help our merchants deliver secure experiences and be a trusted partner for them. So as they grow, as they look to do more, as they look to scale, do they have the backbone of the Fiserv heritage right there at their fingertips?

 

George Peabody:

Got it. So coming out of COVID and, I hope we are out of the pandemic entirely, obviously we’ve seen during the space of COVID to your point, a huge growth in the buy now pay later set of options. Are you bringing the BNPL players into your merchants and saying, “Hey, we’ve established the connectivity. We’ve established the relationship. So you can pick from this set of BNPL players.” Is that an offering that you’ve got at this point?

 

Casey Klyszeiko:

Yeah. So at Carat, when you think about BNPL or other digital form factors. It’s important to realize, and we have a Carat insight survey and data system that we use to gather what is happening in the space. And we certainly just starting with the consumer again and how they’re interacting, we are seeing a rise post pandemic, as you said, knock on wood, hopefully post pandemic, I know not in some parts of the world, unfortunately. But we’re seeing a rise of many digital form factors I think have hit the inflection point. So whether that be, we see that 11% of online purchases are now with a wallet, over 10% of in-store transactions are now done via contactless up 150 basis points since before the pandemic. And we also see on BNPL that nearly a third of consumers are reporting that they have used some form of BNPL, not necessarily that it’s their go to option, but they’ve used it and they’ve tried it.

 

Casey Klyszeiko:

So we certainly see the infection point in people using these new digital form factors to transact and actually demanding more than just those single form factors, but demanding things like connected commerce experiences, demanding things like financial services to round out that entire experience. But when it comes to Carat, we design when we think about this, so we do offer a very broad set of APMs, BNPL being one of those sets of APMs. And we pride ourselves on being a single go-to shop. So whether you want to use a digital wallet and enable that, whether you want to enable BNPL, whether you want to enable a connected commerce in app in-store experience that’s seamless for a consumer. These are things that we offer. And obviously as part of the Fiserv ecosystem, which has been the backbone of financial services around the world for decades, we also can go beyond that and start to look at offering more sophisticated financial products as well. But specifically to your question on BNPL, absolutely an area we’re focused on that regard.

 

George Peabody:

Yeah. There’s so many players who have different market focuses and different appeals. And to your point, different levels of trust, I think from consumers. Each one has its own sort of brand cache, sorting that out must be a real challenge for some of your merchant customers.

 

Casey Klyszeiko:

Yeah, it is. I think back to the data and insights, it’s critical for any merchant to understand who is their target audience. Who are they trying to serve and what do those customers want and really where do those customers live? Which brands, which endpoints, which wallets? And how are they thinking about what good looks like for them? And so, faux pas is creating the laundry list of like, you actually have to scroll when you’re on the payments page. That doesn’t feel seamless, it doesn’t feel value add, and it’s actually confusing and probably leads to higher abandonment at the end of the day.

 

Casey Klyszeiko:

What good looks like in my mind is being able to curate the experiences that work for their end customers and also curate it by channel. By what experience you’re in. If you’re outside the merchant ecosystem, what is the connectivity back inside? And how do you extend beyond? So being able to understand that, and at Carat we focus on bringing insights to our merchants so that they can do that. We help them design the experiences. And we say we have a variety of APMs, a variety of channels, a variety of ways to interact, and we can support you in all of them. But more importantly, these days, isn’t just providing you, “Hey, come pick.” We provide you a recommendation, a thought on what good looks like.

 

Yvette Bohanan:

I got to jump in. I’ve got to double tap on that, Casey, because one of the biggest questions we get all the time, whether I was at Glenbrook or pre Glenbrook, when I was working inside of a large merchant, large tech organizations, the big question is always, like you said, you don’t want the NASCAR effect. You don’t want every payment method just splattered on, because that destroys conversion. People get confused, you get lots of card abandonment. I’m totally with you there. But then how do you help people curate? What do you look at? What are you doing with your merchant to help them understand the right things to do?

 

Yvette Bohanan:

One of the big questions of buy now pay later right now is how many? If I’m offering Affirm, is that enough? Should I also offer Afterpay? Should I also offer this? And of course you got solutions all over the globe. And how do you get it from country down to consumer? Because I totally agree, the experience is the new loyalty, but you just gave a little more insight in how you do that at Carat. How do you do that for your customers? How do you help them?

 

Casey Klyszeiko:

Yeah, absolutely. And I should say, we’re not in the business of picking winners and losers. We’re an enablement partner. So obviously start there. And we see value, any partner we light up for our merchants, we see a ton of value. We wouldn’t light something up where we didn’t. So we want to be open. We want to be agnostic in that way to many of these different ways to pay. We want to be more simple for our merchants so that they can consume it easily. But when it comes to how we work with merchants, I would say again, the enterprise space, and I think George opened with this, it’s incredibly nuanced, it’s incredibly detailed. And even within retail or in specialty retailers, especially online retail, every merchant and every brand is different in how they go to market, what they’re known for and the customer profiles they want to look after.

 

Casey Klyszeiko:

So when we work with merchants, a lot of it is around education. People are wondering what we’re seeing in the market. So we’re sharing, here’s a use case, where we’ve seen high conversion. Here’s something we’ve seen someone stand up where we see great throughput on conversion or otherwise. We see higher spending. We see higher engagement, we see more visits, we see AB testing working. So we educate them on what we’ve seen in the past and what we’ve seen work, obviously with the highest standards of privacy and data and all that. And we also help them understand the different options we offer. What are the nuances. Everything from what are the technical nuances? So you want to build a certain experience across a certain amount of channels in certain countries, there’ll be some solutions that technically can do that.

 

Casey Klyszeiko:

There’ll be certain solutions that don’t technically do that. So we’re helping them even go through the technical flow of if this is your ecosystem that you are in, we have a great amount of solutions and technical architects and integrators that help us inside Fiserv with our clients. We help them map out that customer journey. And it’s really about the whiteboarding session, it’s cliche, but let’s get in a room, these days we can, for 48 hours. Map out what good looks like to you. What do you want your customers to see, feel, experience pre, post, during and let us give you our experience.

 

Casey Klyszeiko:

And we also have, as I mentioned, some of these Carat insights data, we’re able to say, “Hey, we’ve looked at customers in this vertical and 30% of them have used BNPL before.” Maybe in this vertical 30% or 15% have. So we’re able to also give them a perspective on a consumer and what they ultimately are looking for are at the highest level. And then obviously there’s the actual integration where we partner very closely through implementations to post implementation, conversion and testing and all of that. That’s really how we work with our merchants. And it’s a data approach. It’s a white glove approach. It’s a solutions based approach and it’s an end to end, what gets you to your commerce goals? And that’s what we pride ourselves on.

 

George Peabody:

Casey, do you have an example, where you’re bringing this whole collection of experience as a firm and the data, do you have an example that you can give us of a particular merchant engagement where your strength really made a difference to them?

 

Casey Klyszeiko:

Well, I won’t go too deep into it with the exact how we worked, but one of the examples that I love and I’m a coffee drinker, so its Dunkin. And if you’ve ever experienced the Dunkin consumer journey, if you will, it’s very sophisticated, very seamless. And we work with Dunkin in terms of that application that supports both digital in terms of in-app customers, stored value. You can link that to your loyalty and your rewards on your mobile phone. You can order ahead, pick up in store. You can look at favorites, all these things you can do. And then you can also go into the store and basically have the same interface across the channel. And you can use a variety of these things, loyalty points, stored value, other form factors. And I think that online, offline story is very powerful for the Dunkin consumer. And that is enabled by the connected commerce solution at Fiserv. And we’re very proud of those types of experiences. So that’s an example of things that we’ve done in other places as well, but that was really about what is the customer journey?

 

Yvette Bohanan:

I think that’s really important and the nuance that you’re referring to, especially for large merchants, especially as you’re alluding to multinationals. Every country, every vertical, every consumer group in that country, they’re going to have their preferences and you have to treat it, we always say, you have to understand the psychographic, demographic preferences of your customer or your customer base, because lots of people go to Dunkin Donuts, all sorts of folks. So how do you actually meet your entire customer base in the best way in that country for your vertical, for what you’re trying to accomplish with the experience? Going back to that experience, can we just touch for a second when you started teeing up your description of Carat and what you’ve been up to there, you said it was the operating system and we were actually having a debate before we started talking with you today. Is Carat, forgive me, an orchestration layer? It’s a very overused term today in the industry, so I try to shy away from it. Or is it a hub or is it… So then you show up and you say it’s an operating system. So help me understand.

 

Casey Klyszeiko:

It’s a great question. And as you mentioned, a lot of these terms are used that you’ve mentioned. Integration, abstraction, API, some of it gets lost in translation these days. Why I like to say that Carat is an operating system is because we are fundamentally the backbone technology platform that merchants can run their commerce experiences on. And that is a set of solutions that runs from enabling payment, so whether it’s all the different APMs we talked about, it’s e-com, it’s offline, it’s Omni commerce, AR, it’s AP, it’s B2B, no matter how those journeys and flows are happening, this is the infrastructure that that whole commerce system is running on. And then like an operating system, not only is it that infrastructure that fundamentally supports commerce, but it’s all the other value added services and systems that we bring on top of that.

 

Casey Klyszeiko:

It’s like clicking on an app or a system app store. Let me add to it, plus plus. So let me add real time payments. Let me add payment facilitation capabilities. Let me add authorization optimization features. Let me add tokenization. Let me add et cetera, et cetera. I mean, I could go on and on. So it’s that set of solutions that sits on top of it, all technically integrated and all technically available from one place through a set of very consistent API layers. So that’s how we see it. It’s simple. It’s one interface for our merchants and they can run their business and plus plus on top of that, as they grow and expand.

 

Yvette Bohanan:

Okay, I like that. I like your point of view there on adding on to a backbone that has all the different, what we would call payment domains, but payment use cases of all the different opportunities merchants have to take payments, to pay out, disperse. It’s a continuous flow, continuous cycle. Okay, let’s shift gears for a second. Let’s talk digital currencies. I recall that you had an announcement last year. Last summer? About Fiserv partnering with Bakkt and NYDIG to enable Bitcoin payments. Now in all the insights you’ve just been talking about, you must see something here. Either from the consumer demand side or the merchant side. So let’s start with the consumer because we’re focused on experience. How do you envision consumers using crypto or digital currencies to pay? What do you see in terms of consumer preferences in that space, in their insights that are leading you down this path? And I know it’s super early days here, we’re at the very tip of this sphere. So…

 

Casey Klyszeiko:

Yeah, no, it’s a great question. Obviously we’re very proud of those partnerships by the way. And I think we were out in front of a lot of this, both of those partnerships in our mind, we think about them as helping to democratize access to crypto through what we’ve called trusted channels. And we got there because to your point, when we go back to our Carat insights and surveys we do and the insights we drive from that, which is again how we lead our business and think about our roadmaps. We actually found that there’s no doubt, consumers are interested on top of just what the markets and all that is doing. But we actually found that one third of the consumers we surveyed expressed interest in using crypto to pay in the future. So are we seeing massive adoption?

 

Casey Klyszeiko:

No, we’re not yet. But is there an interest, is there something there? So, no crystal ball, no great projection on the next big world event or form factor, but we believe there’s something that’s enticing consumers to want to explore this as a payment method at some point in the future. Now we see probably three, what I’d call mainstream use cases today that we’re focused on and looking at. Obviously there’s the traditional maybe merchant acceptance you would say, consumer paying for goods and services, you can think about businesses paying out funds to consumers, crypto wallet perhaps, or you could think about consumers wanting to buy crypto from a bank or a brokerage account. And in all those ways the partnerships we just mentioned help enable us to deliver those experiences. But as you said, it’s the tip of the iceberg.

 

Casey Klyszeiko:

And, there’s a lot of questions out there of not only this, but what is the implication of the core underlying technology that powers this for financial services going forward? And so obviously we’re also very interested in that and at Fiserv, we’re experts in the space and we’re always think and exploring, it’s early days, but we’re definitely not just stopping at a back partnership. And we’re listening to consumers and we want to be prepared for demand that may come. And if it doesn’t, that’s fine too.

 

Yvette Bohanan:

Are these U.S. consumers or globally, were you surveying folks everywhere or are we really talking about the U.S.?

 

Casey Klyszeiko:

So I should clarify primarily in the U.S.

 

Yvette Bohanan:

In the U.S. Okay. And any particular demographic or age group or are these… Are you seeing this sort of 30% peanut buttered over everybody from 12 years old to 98 or is it sort of honed in on millennials, our favorite topic or…? Who is driving this interest?

 

Casey Klyszeiko:

Look, I think we look at the data. I think it’s hard to pin that down. I think a lot of people want to say that it’s X or Y and it helps people put it in a box. Like, oh, it’s the young ones or, oh, it’s the wealthy ones or, oh, it’s these digitally savvy first ones. And I’m sure it’s some combination and there’s some algorithm there, but I think the interest frankly, is broad from what we hear in the marketplace, from what we see as we’re out there in terms of an exploratory interest. And I think what you see in the market, just in terms of crypto trading, it’s hard to ignore. It’s on the front cover of everything. It’s always on the news. And reporters report the price of Bitcoin almost as frequently as they report the price of the Dow Jones.

 

Casey Klyszeiko:

So it’s becoming so mainstream in the dialogue that I think there, you can’t help, but have an interest in what could that mean in the future. But again, there’s a difference between what could that mean and actual activation at the end of the day. So we’ll see where it goes. And again, at Carat, we’re particularly focused on listening to the market and saying, we are ready as a partner for a merchant what we want to do is say, look, market can go many different ways, but we’re your partner. We’re investing, we’re preparing. So whichever way it goes, wherever you want to go. You want to be an early adopter. You want to be later adopter. You want to wait and see, you want to go this way? Based on what you’re trying to do, we’re here to support you.

 

George Peabody:

All right, Casey. So let’s get nerdy here from not the future, but let’s go inside a real challenge for e-commerce merchants, which is how do I store payment information without running afoul of PCI. And of course, a lot of these techniques have got everything to do with streamlining the overall experience. And one of those decisions that a big e-commerce merchant or a big merchant who has a strong e-commerce channel is should I be doing account updater or should I be using network tokens? So what’s your approach to that or are there characteristics of a merchant that you look for and help them steer that in that decision?

 

Casey Klyszeiko:

Yeah, well, it’s an incredibly important topic,. And we spend a lot of time and care thinking about this and designing solutions for it. And having been across a few major payment companies in my background, I’ve been around this issue for a while. Look, I think, and just for everyone, it’s complicated out there in this arena. I think as you know, I mean where the issuer is, where the merchant is, where the consumer is, how the issuer is set up, how the fields are noted, what the MCC is. The device settings, these all play a role and many, many other things in the message system and in the surrounding environment, depending on the different services that accompany it. I mean, thinking about auth optimization is incredibly complex. Now I think we’ve done a great job as an industry, all of us on this phone.

 

Casey Klyszeiko:

Continuing to advocate and design new change that’s secure and seamless commerce enabled. I think token and account update are two great tools for that. Both of which of course Carat enables for our customers. But thinking about them is not a silver bullet in itself for perfectly optimizing transactions, reducing fraud. So I think there’s so much more, whether it be how you manage the data, intelligent routing, message confirmation, cross channel management and clear reporting to understand performance and also what fraud tools you want to layer on at the end of the day to those. And I think it comes down to when we talk to our merchant, it’s helping them understand what are the drivers of what you’re seeing? Because oftentimes it’s not clear. For some businesses, the driver is there’s might be a lot of debit and it’s actually an insufficient funds issue, for example.

 

Casey Klyszeiko:

If that’s the outcome, it might be, wow. I need to think about offering a credit solution to optimize this to have more conversion. You could have an active fraud issue. And it’s true fraud. So in that case, you actually need to implement a fraud solution to better secure the payment. And by the way, that could be a guest checkout as opposed to card on file, which account updater and token or more card on file solutions. So when you think about the data, again, if we’re saying, Hey here is a digital goods merchant, and a lot of the issues we’re seeing is that when I go to hit the card for payment, the CVV is expired. Or the card is generally the address has changed or something like that. Then obviously we’re going to say, okay, token, account updater, these are great solutions to implement.

 

Casey Klyszeiko:

So at the end of the day, I would say we have a breadth of solutions across all of these things. We have our own auth optimization for prior tangents. We have a variety of fraud solutions. That all comes to bear, but account updater, token, these are two incredibly important products for the security of our ecosystem, both of which Carat offers in spades and implements well. Which one you want to use, depending on how you’re storing credentials. Depending on what you’re trying to do around life cycle management, depending on what your core issue is in terms of are your cards being compromised or not, or is it just expired credentials. There are obviously economic differences to consider and the whole grand scheme of it across region, across issuer, across all things. So those are all the set of things that we help our merchants think through when they’re deciding what solutions to implement.

 

George Peabody:

So there’s simply really tools that are available to you as available to your clients in the service of fraud management, auth optimization, which is really the goal of what they’re looking for. Yeah.

 

Casey Klyszeiko:

And I think it’s, for an enterprise client, it’s just plus plus as always. You have to wrap other services, other intelligence around your transactions, around your ecosystems, around the input phase even, of the data that’s coming in to optimize authorization and kind of throughput.

 

Yvette Bohanan:

It varies by country a lot. And I think the more that we’re talking, the more that is really being drawn out here in your approach, in your thought process in sort of your vantage point, the years that… You’re one of the big incumbents in the industry. And yet you’re innovating in a completely different way because you’re seeing the complexity and you’ve experienced it with your really large merchants and things like tokenization, account updater, this isn’t implemented the same way across all issuers in all countries. Just like consumer preferences, just like which channels in particular vertical, a merchant in a particular vertical is operating. So you’re looking at so many different moving parts in each of these parameters. And you have to think about this. And I think that’s what even really big organizations, big merchants, merchants are focused on going to new markets and making money.

 

Yvette Bohanan:

And most of the time when talk to people, it’s a very small team that really understands how payments enables those larger business objectives and enables those larger customer experiences that the CEO, the marketing group, the B dev group, all those folks are actually really focused on. And it’s that inter-relationship between those business objectives. And then what can you do in the payment space? So they’re always bringing in the payments group or the payments person and saying, I have this objective and either you’re the hero because you know how to resolve it for that country, for your business or you’re not because you’re telling them you can’t solve it because of X, Y, Z problem.

 

Yvette Bohanan:

Regulation, system limitation, partner limitation. So these conversations you’re having to do this design work and this experience approach is actually a way of helping someone who’s in charge of payments in one of these organizations communicate the value prop that they can bring to the business, to the customer ultimately. And not everyone thinks of it that way. Especially the folks who are just out of business school. It’s almost an afterthought. Well of course the payments experience will do this.

 

Casey Klyszeiko:

Yeah. I think that’s fun. It’s been one of the most exciting things when you think about evolution of my career so far is as things have gotten more complicated and the customer experience has become more important to be more unified and as it’s become the new loyalty… Payments has always been important of course, but it continues to move more to just the front and center of every C-suite role. Like everyone touches that. And if you are talk about return on investment, if you have a digital goods business with a recurring ARR model, with a high margin and that consumer has choices and the first time they go to put a card on file, or the first time they go to make a payment, that payment doesn’t work, that doesn’t go through, that’s arguably years of lost profit and revenue.

 

Casey Klyszeiko:

So what that’s also done is enabled the industry to invest significantly in driving more security solutions and optimization solutions because the need for it is so great. And I think those enterprises that truly realize that, they’ll be very successful and they’ll be differentiated. And at Carat, look, we take a collaborative approach. No one knows everything. I say that the head librarian at the Library of Congress doesn’t know where every book is. They need a lot of help. And we are there to be those partners.

 

Casey Klyszeiko:

And you said, you want to set up the same type of experience in a new market. Issuer readiness, fire readiness networks. APMs, how regulation works. These are very complicated things and so working across board is just another example you mentioned of the level of complexity and consumers just don’t care. They just don’t care. They’re like this should work every time, the way I’m used to and if it doesn’t, I’m out. And so that’s the importance of it and that’s why payments is about experience and it’s front office and why, I think we’re in the midst of such an exciting industry right now. So I’ll just say, I completely agree with your assessment.

 

Yvette Bohanan:

So you guys are doing some really incredibly interesting work in creating this operating system. If you could talk to all the merchants out there about where things are headed and what’s going on and the three key questions they should turn around and think about when they look at their business and their environment that they have today. I’m sitting here today, I’m a merchant in whatever vertical, what are the few questions that they should really be focused on? They have so many things going on, payment operations, you got fraud, you got risk to deal with. You got all these people calling you all the time and you want to be a thought leader within your organization. What questions should you take back and try to think through the answers for your particular company?

 

Casey Klyszeiko:

It’s a great one. And there’s a lot of questions, I’m sure. A couple of the big ones, to your big challenge. If you want to be a thought leader out there, you want to be asking these questions. And for me, first of all is I would say is the customer experience differentiating my business and my results? So do I have a journey that is so seamless that when a consumer goes through it or a customer, if it’s a small business, is that consumer saying, wow, I’ve noticed how easy this is. I notice how simple it is, and this is going to make me come back for more. And can I measure that? So really understand how they’re interacting and make sure that that’s a wow moment and a notice moment. And so ask that question. Because once you ask that, if you find some gaps, to our whole conversation, there’s a lot we should talk about.

 

Casey Klyszeiko:

I think the second question that’s interesting that leading customers are asking is, am I serving this customer in the most ways I can? You have a captive audience, someone who trusts you who’s been doing commerce with you maybe for the first time, maybe for many years, but perhaps narrow to what you’ve been doing in the past, but with the technical advances or the ability to take more services and sell them the plus plus model, are there other ways I can maximize or serve my customer better? So, we talked about disbursements briefly or real time payments briefly. Do I have an opportunity in whatever some businesses lend themselves, some don’t, so just an example. Do I have an ability to help move money to my consumers faster when I’m dispersing funds to them? Is that a differentiator I could serve?

 

Casey Klyszeiko:

Ultimately there are incremental economics for the merchant and retention and value and increased usage. And there are a variety of examples like that. So am I in a position to deliver more to the customer than what I have today? And I think the third, maybe be more simple. But am I providing the most secure and responsible environment for this consumer? Consumers value that, we’ve seen time and time again, when it comes to data, when it comes to we talked about PCI, we talked about privacy. We talked about the trust around, this is a secure environment that I’m operating in and I feel safe.

 

Casey Klyszeiko:

If we used to live in the physical world and now we live more in the digital world, just like in the physical world, we walk into a storefront, we want to feel welcome, safe, at home. People should feel that digitally or across channels as well. So if you want to be a thought leader and you’re in this space in a merchant, I would ask those three questions and obviously a little bit of leading, at Carat, we spend a lot of time helping clients ask and answer those questions. And I think that’s fundamentally what takes it to the next level.

 

Yvette Bohanan:

When I listen to what your perspective is on those questions, it’s little bit like saying to a merchant, Hey, we’ve been trying to get people to go digital for a while here and adopt. People in the industry, you’ve been chasing a bus, you caught the bus. Congratulations. But now the flip side of that is, yeah adoption is in three months, it skyrocketed to the expectations of what people were thinking digital adoption would be in three years. Okay. And then everyone’s asking, will it stick? What you’re really saying is it’s going to stick if you actually understand that you’ve changed expectations of your customer. And if you can meet those expectations and continue to build on this, it could be really awesome in terms of loyalty, in terms of retention. And that all leads to revenue for the merchant and that, but if you’re not going to build on it, there might be someone else out there that can, and you got to be aware of this and figure out how you’re meeting the customers, who you’ve now attracted and whose behavior you’ve changed and therefore their expectation has changed. So.

 

Casey Klyszeiko:

That’s right. It’s like that movie, in Transformers. You caught the bus, now it turned into a fighter jet. So like hang on. I think you’re exactly right. Just being there you is no longer enough, but being there, you now have a platform to differentiate. And this is, I mean, product availability, product quality, services, content, all these things will of course continue to matter, but how you experience it and engage with it will equally matter today. So now that you’re there, what we want to do at Carat and why we designed Carat and built Carat, isn’t just to provide that infrastructure. It’s critical. You’re there. Great. But what’s on top of that that now goes the extra mile? And that is the foundational premise behind Carat. And the operating system comment is incredibly intentional exactly to that idea.

 

George Peabody:

So I’d love to point at how the payments industry is changing and has had to respond particularly with a forcing function of COVID with a big push in the back towards digital. But one of the reasons Glenbrook is so busy with our education program is that you can’t go anywhere and get a degree in payments. You can in accounting and other line of business functions, but payments has become a front office as well as back office need. And so like we’ve been talking about the last 45 minutes, I got to ask you the effectiveness of it is got to do with how is the payments function organized within, inside an enterprise? And I wonder if you could comment on what have you seen as an effective organizational approach amongst your enterprise customers? Where does payments most effectively live? I appreciate that yeah, getting everybody in the room is one thing you have to do at various times, but that’s a rare event. Everybody else is busy at some point another. What’s a good way for, how should that enterprise be thinking about organize the payments function in their business?

 

Casey Klyszeiko:

That’s a great question. I love what’s happening in our industry. You got me thinking now. I’m like maybe my Alma mater should offer a payments master. How cool would that be? There’s an opportunity. Fantastic. And we’re seeing such, by the way, seeing such great talent coming to payments. I’m sure you see, that’s one of the most exciting things and the smartest and best and brightest want to be a part of our industry. It is complicated because it matters. It touches everyone. We all experience it. And at the end of the day, digitization in our industry is one of the drivers of the democratization of financial services and ultimately that leads to a rise in access and equality. So I think for all those reasons, it’s really elevated. And so I love that. Going back to your specific question in an organization, obviously large enterprises, the amalgamations of how that works is infinite.

 

Casey Klyszeiko:

But I would say whoever is, and dotted lines, solid lines, matrices, but whoever is thinking about the customer, whoever’s thinking about the customer journey and experience that you’re driving off the front end, payments has to be a part of that. Maybe it’s a part of the team. Maybe it’s a dotted line. I don’t know, but payments must be integrated into that thinking it has to sit across multiple parts of the organization, but intrinsically that is the linkage. Customer experience and ultimately that goes hand in hand with product design and feature sets. So I think those organizations that have taken the step to formally connect those parts of the world are those that have been able to do what we’ve just said and used it as a actual differentiator in their space.

 

George Peabody:

Great. Well, Casey, we’re going to have to cut it off there. We could be talking for another week, I know. So really appreciate your observations on the industry. We look forward to having you back here on Payments on Fire.

 

Casey Klyszeiko:

I appreciate you both. Thank you so much for what you do for our industry and for inviting me on here.

 

Yvette Bohanan:

Our pleasure. Take care and good luck.

 

George Peabody:

Thanks again. So Yvette, that was really interesting. I love the broad topics that we are talking about here with Casey and it’s very difficult to take a set of products and processes that you’ve put together and still adapt that to what is essentially a unique set of requirements at each enterprise customer. Now, if complexity is tough when you’ve got a upset of, well an OS, as we’ve talked about, that’s a platform. OS is supposed to meet all needs. And the mapping of that to individual merchant is a real challenge.

 

Yvette Bohanan:

Yeah and let’s just unpack for a second the challenges that Fiserv is… They have broad shoulders, they’re taking on a bunch of challenges. So let’s unpack these. Challenge number one, long established incumbent. You can look it up and measure them any which way you want. They have been around for a long time, decade. They have gone through tons of merger acquisition, pivot development to adapt. This is their latest around digital, but they have a very long and broad history. They have a massive customer base. They’ve been in the industry for a long time. They’re your classic payments industry incumbent, which means they have all these connections, all these customers, and a lot of historical insight, if you will.

 

George Peabody:

Mm-hmm (affirmative).

 

Yvette Bohanan:

To a degree of what’s hard, what’s easy. They’ve seen the perennial topics over and over again. Now on this pivot and part of their challenge is you have an installed base. What’s the joke, Allen Weinberg always used to say? How did God create the world in six days and have the seventh date to rest? No legacy systems, no installment fees. So yeah.

 

Yvette Bohanan:

Here we are. Massive legacy system infrastructure, massive installed base. And the challenge they’re picking up is we have to continue to innovate. So as an organization, challenge number one. Then as you’re pointing out challenge number two, they’re trying to help merchants innovate in this space where digital demand is there now. Digital consumer expectation is there now. Everything. Not just using my iPhone when I check out at point of sale, but this whole buy online, pick up at store. This whole, if I’m standing in the store, why are you asking me for my loyalty points? Don’t you know? Can’t I do something here to help me make this smooth and seamless.

 

Yvette Bohanan:

If I’m standing outside of the store using my app, you’d know I am a loyalty customer. If I’m at point of sale, why are you asking me for my phone number? There’s all of these different little nuances that they’re really getting into about how to just make it magical without being creepy and to differentiate yourself from other competitors in your vertical and space, bringing things together. If I’m paying in, can I be paying out, if I’m doing this, can I be doing that? So there’s all of this nuance that they’re tackling in the customer experience. That’s a big challenge.

 

Yvette Bohanan:

ITrying to do this right now, and they’re doing it to varying degrees. And they’re saying we want to do this across all domains, all payment systems, all countries we operate. They’re like 10 X Xing when he said, plus plus I’m like, you’re plus plusing your challenge because you’re tackling every dimension in all of those ways. That’s a tall order.

 

George Peabody:

Tall order. And I was impressed when Casey said we are extending ourselves into the customer journey. We do not just want to be a processor in the back end.

 

Yvette Bohanan:

Yes. And I totally agree. This is where the opportunity is to make magic happen. If you are simply the plumbing, I got to get the money from point A to point B. You’re not going to be able to do things that make your customer love you even more.

 

George Peabody:

Right.

 

Yvette Bohanan:

And so I think what he said there at the end was really important. And we are constantly having people in the industry, people who’ve been in the industry for years and are exhausted and people who are brand new to the industry and are just gung ho with energy, they’re all asking how can I influence the organization? I see that I have tools now that actually can help with the customer journey, with the customer experience, with churn, with loyalty, with all of these things, with expansion in new markets. How do I get out in front in my organization?

 

Yvette Bohanan:

And you kind of touched on that with your org, I loved your org structure question. Where does this sit? How do you get in the room? What’s that Hamilton song? I want to be in the room where it happens. How does the payment professional get in the room where it happens and elevate the experience? And I think his points about loyalty and customer thinking about payments and some of the bigger over macro ideas around ecology and cultural aspects of choice in how we pay and how we want to be paid are all starting to come in here. So how do you bring all of that together and who do you talk to at the company to do that?

 

George Peabody:

Plus on top of that knowledge around the role of payments, the experience of payments, below that, payments experts, subject matter experts in the firm’s actually on to understand the complexities and the ramifications of choices that get made. Now, yes a lot of the providers like Fiserv are there to eliminate some of the complexities, but still, you got to know how a lot of these systems work in order to make smart choices for your organization.

 

Yvette Bohanan:

Oh yeah. It’s all in the details of these systems and some of those details go back decades, why is this happening? What protocol?

 

George Peabody:

Really, it works that way? Oh my God. Yeah, right. Well, look Yvette, as always, this was great fun. I want to thank Casey Klyszeiko for his time with us today. Yvette, thank you. Jill, thank you.

 

Yvette Bohanan:

Thank you all for listening.

 

George Peabody:

Thank you for listening. And we look forward to having you back on Payments on Fire. Listen to Payments on Fire. As always, please let us know if there are topics that you’d like to have. Jill, I think we’ve got PaymentsOnFire@glenbrook.com right now. So if you’ve got an idea for a topic that you’d like us to pursue, PaymentsOnFire@glenbrook.com. So until the next time, then thanks very much for listening. Do good work and we’ll see you the next time.

 

Yvette Bohanan:

Take care everyone.