Modo recently added Lynn Holland, a #paymentsgeek with over 25 years of experience in the merchant payments space, as our Chief Solutions Officer. Prior to joining Modo, Lynn worked at ACI Worldwide where he dug into some of the biggest merchant payments pains and gained invaluable industry experience. Since Modo is lucky enough to now have Lynn on our team, we got Bruce Parker (Modo CEO) and Lynn together via webinar to chat about what Lynn has seen in the industry throughout the years and how Modo is poised to solve many merchant payments pains.
Merchant Payments Stacks
Understanding a merchant’s payment stack starts from the very basics of their company, explained Lynn. What a payments stack looks like and how they manage their payments varies drastically by vertical. Are they a quick-serve restaurant, an online hard goods retailer, a travel business? How big are they? Where are they located? How many countries do they want to do business in today or tomorrow? Even though there are so many different kinds of businesses, they all share the common pressure to change and evolve.
That pressure to change and evolve is compounded by complexities around security and regulations.
Merchants always have security at top-of-mind. They started by spending money hardening their networks, on point-to-point encryption, and tokenization, explains Lynn. Then they moved into EMV and then contactless, all the while managing their risk in securing their customer’s data. Online it’s a whole different ball game. Merchants have to hold and secure credentials, implement a hosted payments page or work with i-frames and i-fields. They’re thinking about in-app security, about denial of service tax on their websites, or selling through third party websites. The security problems keep getting exponentially more complex as more and more channels are added into the customer journey.
And Lynn is betting that the complexity in payments is not going to slow down anytime soon. With PCI, EMV, the Durbin Amendment, AML, GDPR, Open Banking, there is no reason to believe more regulations and disruptions will be coming. Since payments are at the core of every business, payment operations are being driven by these regulations.
“It’s not going to stop. Costs go up. Risk groups get bigger. IT organizations get bigger. Treasury struggles. Store ops struggles. Payment ops struggles, and I think that’s not going to change. That’s where we are.” - Lynn Holland, Chief Solutions Officer at Modo
The Then And Now in Payments
Back in the day (not to date Lynn here, but he does have over 25 years of experience in the industry), merchants had a dial-up card swipe terminal transaction. Now, transactions live for hours and even days in systems. Lynn explains that to take a single online order merchants may need to do a device ID, call out to a third party to get their device ID to be sure they’re dealing with the card holder, check it for fraud, then if it’s over $5000 then they need to do AML. And because of all of this they need to go out and do a 3DS authentication to help manage risk.
To add onto that already complex payment flow, the customer may want to pay with a 2-year service plan, or pay with iDeal, Sofort, or any other emerging payment schemes. The merchant may also want to offer loyalty points. And the complexity continues. Shipping can bring in even more issues. If they don’t have all the items to ship they may have multiple settlements, potentially a reauthorization, maybe four to five more interactions with their fulfillment system.
All of that complexity is for a SINGLE order.
Modo’s Cloud-Native Technology
There were a couple main reasons that Lynn decided to join the Modo team. At the top of the list was Modo’s payments technology and infrastructure.
“Over my career in payments, I have worked on, managed, or been involved with most of the commercial payment platforms that are out there today. I think when I look at Modo, there are a couple things that I think Modo has done right and differently than the companies that have come before and that are prevalent in the industry today.” - Lynn Holland, Chief Solutions Officer at Modo
Modo’s technology is cloud-native. We were born in the cloud. We’ve never been anything but a rapid, agile team that provides significant time to market. While some payment service providers are struggling to address things like containerization, microservices, clustered/kubernetes deployment models to support DevOps with an underlying cloud security framework, for Modo it’s in our DNA.
Payments Orchestration with Modo
Lynn was equally impressed with Modo’s unique ability to orchestrate payments.
“The ability to orchestrate is critical. Modo can do that.” - Lynn Holland, Chief Solutions Officer at Modo
At the core of Modo’s payments platform is our patented COIN® technology. The COIN is a high-throughput, scalable ledgering system that, as Lynn puts it, acts as the nerve system of managing the lifecycle of a payment from authorization, to settlement, to exceptions and customer service.
As a user of Modo, the COIN allows you to see the health of your payments through every step of the payments flow in one unified view. You know how many orders you’ve taken, as well as how many payments you have, and can ensure those are in balance. You can also get a better understanding of what payment methods are being used whether that be credit card, gift card, closed loop, third party private label, immediate payments, ACH, subscription, recurring, etc. The payments insights don’t stop there. You can dive even deeper to find out which part of each payment has settled and which hasn’t, so you’re able to gain a better understanding of what you think your fees ought to be as compared to what they actually were.
“Being able to have not only a transaction system that’s going to ensure the integrity of your transaction, but one that you can see the states and let it affect your business decisions is a true differentiator for Modo.” - Lynn Holland, Chief Solutions Officer at Modo
Lynn believes that what Modo allows you as a merchant to know about your payments is unheard of. With Modo, you have real-time visibility into the state of every transaction - whether it’s been fulfilled, completed, or booked. Most payment platforms give you a view into yesterday’s data (and that is in the best case scenario). Modo allows treasury, payment operations, and store operations to turn trends, analysis, and reports into actionable intelligence. You can know within the hour if one payment provider is giving you a particularly high decline rate and roll traffic to another provider. You no longer have to wait for the end of the month to get your monthly net settlement and see your interchange fees.
As Lynn puts it, merchants currently feel like they’re boxed in. They are constrained by the offerings of their processor or payment system, and can’t create the customer journey they want because of it. With all the new payment methods available around the globe, from real time payments, loyalty points, or another form of payments, merchants have to be empowered to allow their customers to pay in the way that best suits their business needs.
“If I can’t really make my payments system support how my customer wants to do business with me and buy, it’s going to make it very hard for me to compete.” - Lynn Holland
Take Control of Your Payments Stack with Modo
Modo is bringing control back to you by giving you power over your payment service providers, helping you get to the cloud, and reducing your cost of payments acceptance.
“If one thing is changing it’s the ability to integrate with third parties is not only more important but with companies like Modo it’s getting easier.” - Lynn Holland
Lynn finished off the webinar by telling us a story about work he had done with a major manufacturer - they were in 27 countries, had 18 acquirers, 260 flagship stores, supported 12 alternative payment types, and had a website and an app. This company had an incredible level of complexity that could’ve been solved by payments orchestration and leveraging cloud infrastructure. Modo is helping large enterprise companies like this manage their payments across the globe.
If you’d like to chat with Modo about regaining control of your payments stack, reach out to us!