Georgia Payments Sector Poised for Long-Term Industry Leadership
Friday, November 2nd, 2018
Over the years, Georgia has established a strong leadership position in the financial technology payments industry. With the region earning such titles as “Transaction Alley,” we are – and continue to be – a global leader in this sector.
Companies with a significant Georgia presence process a whopping two-thirds of U.S. payments volume, according to a 2018 report by the Technology Association of Georgia FinTech and Georgia Tech’s Scheller College of Business.
This would be an enviable position for any state, but the fintech space is evolving so rapidly that maintaining this position will require relentless innovation. Past performance, as they say, is no guarantee of future results.
One key reason this is true is because the payments industry is an attractive place to be, and companies like Apple and Google with records of innovation and change are challenging the status quo. Change is guaranteed; the only question is how rapidly and what technologies will end up dominating.
The future of the plastic credit card
Today’s payments industry is still largely built around the plastic credit card and the infrastructure needed to process these types of transactions. There have been advancements – like chip and pin technology – but the card has basically looked the same since the 1950s.
Credit cards will have staying power for the near term as traditional issuers defend their customer base with loyalty programs and other perks. In addition, the industry has improved convenience with features like tap-and-go technologies and the phase-out of signature-based purchases.
But defending the status quo is not a long-term strategy. More retailers will begin making digital transactions easier at the point of sale, enabling consumers to use their digital wallets – services like Google Pay, Apple Pay, Venmo and PayPal – seamlessly.
Digital is often synonymous with “easy,” but in the case of making a purchase at a typical retailer, it’s still easier to swipe plastic.
For instance, if you walk into a store that accepts mobile payments, you could easily encounter a bit of inconvenience as you – as well as the cashier – both learn together how to make the transaction. In the case of some digital wallets, there are the added steps of signing in to your phone, finding the right app and telling the customer service representative that is how you intend to pay.
Compare that to grabbing your wallet and inserting your card in the reader. The process is easy and there’s little doubt that the retailer will accept your card (and the agent knows how to process the transaction).
But as digital wallets get easier to use, more consumers will gravitate towards them and away from plastic cards. This process will take years, but industry innovators are working hard to make these transactions as easy and convenient as plastic.
For the time being, many merchants are not accepting digital wallets yet, and that will hold up consumer adoption.
Georgia companies poised to lead
Payments companies in Georgia, like TSYS, are poised to move the payments industry forward – even in a post-credit card world. Innovative services that were developed 30 plus years ago have put TSYS in a leadership position, and that track record provides an excellent foundation on which to continue building the next industry-leading products.
For TSYS, that process begins with clients. TSYS continually meets with them to discuss the company’s product road maps and future plans, ensuring they are aligned with what’s important to our customers and the end consumer.
One area where TSYS is making significant process is in fraud prevention, which is one of the most serious issues plaguing the industry.
TSYS recently partnered with Featurespace, another fintech company with a presence in Georgia, to create the TSYS Foresight Score, an industry-leading product that can help increase fraud detection up to 35 percent. Using machine learning, the platform learns individual customer behavior and risk scores each transaction to catch real-time fraud.
TSYS Foresight Score is particularly effective against card-not-present fraud, which is where much of the criminal activity gravitated after chip-and-pin technology was introduced.
Data analytics is key advantage
Data analytics is another important advantage for established fintech companies like those based in Georgia. This is because much of the new innovations – such as machine learning – are more effective when there is a large pool of data to analyze.
For example, the more transactions that TSYS can evaluate for fraud patterns, the more accurately it will be able to identify and prevent unauthorized card activity.
The advantages of housing and being able to utilize data are far bigger than just fraud prevention. TSYS, for example, is expanding its data and analytics capabilities to give customers access to more information that will help them improve their businesses, from refining loyalty programs to increasing client retention.
Georgia’s payments industry is well-positioned to thrive for decades to come. Building on their deep experience, customer relationships and insights, as well as an impressive volume of data, companies like TSYS will continue to innovate and recreate the industry. Whether consumers keep their plastic cards or gravitate towards digital payment methods, chances are that the products they use and the transactions they execute will continue to be driven by companies based right here in the Peach State.
Gaylon Jowers, Jr. is senior executive vice president and president of Issuer Solutions at TSYS. He also serves on the board of directors for China UnionPay Data Services, Ltd. (CUP Data), TSYS's joint venture with China UnionPay (CUP) in China.