One of the largest U.S. banks is expanding the digital tools it offers small businesses, a customer category whose needs are attracting the attention of a flurry of software developers.
PNC Bank, the sixth-largest bank by assets, announced Monday a partnership with Bill.com. The relationship has allowed the Pittsburgh bank to expand its tech offerings for small businesses to help them manage their cash flow management, in the hopes of deepening customer relationships and gaining fee income.
The announcement comes at a time when many banks are rethinking the way they serve small business clients. Industry analysts have identified the small business category as ripe for innovation, and suggest banks that create customized digital tools such as cash flow forecasting can better serve customers and decrease the risk of disintermediation from startups like Square and InDinero.
“Now is the time for banks to begin addressing their vulnerabilities in the small-business space,” says Christine Barry, research director with Aite Group and author of a 2013 report on small-business banking, in a blog. “They must proactively offer the tools necessary to improve customer satisfaction, address customer inefficiencies and challenges, and increase the utility of their online banking platforms.”
Bill.com, founded in 2006 in Palo Alto, Calif. as CashView, ties together finance and accounting programs, banks, customers, vendors, accounting professionals, and documents to automate small business’ financial tasks, including handling payments.
“Cash flow is the life blood of all small businesses,” says Tom Kunz, senior vice president and director of payments and e-Business for The PNC Financial Services Group, PNC Bank’s parent company. “Most small business owners aren’t finance professionals. …Knowing their cash flow isn’t intuitive or easy for them.”
PNC’s existing suite of digital tools, called Cash Flow Insight, is designed to tackle that challenge by helping small-business owners automate their financial pain points and offering them visuals of their anticipated incoming and outgoing funds.
PNC’s partnership with Bill.com expands what Cash Flow Insight, launched in April 2013, lets customers do. The service served as a place to forecast cash flow based on small businesses’ bank data, such as bill payments. Now, the suite includes digital invoicing capabilities and the ability to sync in data from popular accounting software like QuickBooks. The combined tools now let small business clients pay bills, manage contracts and receipts online, generate reports, and model their cash flow three ways: a shorter-term (90-day) view, an 18-month model and what-if scenarios of the user’s choosing.
“To have all that [data] in real-time with a bank is what we think customers are after,” says Kunz. Other cash-flow software products available for this market don’t integrate with bank accounts, Kunz says.
PNC does not disclose its small business customer count. The updated tools, however, have been live with some customers for 30 days, Kunz says.
The enrollment is a one-click process for online banking customers. Then, of course, a business owner needs to enter data about vendors and other aspects of his business, to get a more accurate forecast. In turn, the length of the set-up process will depend on each small business’ operations. The bank, then, gets access to a treasure trove of data and potentially more logins and more dedicated customers.
PNC used APIs from the Bill.com business payment network to integrate the service with existing tools. Bill.com announced in November it updated its platform to let banks offer its services.
PNC is the first large bank to announce offering the services. Mercantile Bank of Michigan was the first financial institution to partner with Bill.com in 2012.
To be sure, every small business is different and the features they will want or need to use will vary.
Unlike retail customers, small businesses are more likely to swallow fees for services, according to recent industry research.
The software’s advantages for the end-user are positioned as time savings and a single place to manage money. Most invoicing customers are using simple software, such as Microsoft Word, to send out bills and a separate payment provider to collect, which requires double data entry, says Kunz. “It makes it easy for the small business owner to understand cash flow,” he says.
Users can set up alerts and calculate what-if scenarios, too.
Historically, banks’ digital tools have ignored small businesses. In some cases, banks don’t understand the small business customer.
Small Business Payments Company is a newer startup designing software meant to help small businesses handle money matters, including forecasting their cash flow. Yodlee, meanwhile, is working to make such services available to banks.
The emerging technology is a direct shot at digitizing process for an audience pressed for time and that has yet to warm up to digital banking services the way retail customers have taken to them.
“Business owners are challenged with juggling numerous responsibilities, so finding time to focus on strategy and grow their business is more valuable than spending time on spreadsheets, payments, and forecasting,” says John Schulte, senior vice president and chief information officer of Mercantile Bank of Michigan.
Translation: Expect more features to be integrated into banks’ online banking platforms soon.
“We are at early stages of a secular trend of small businesses customers becoming more automated,” says PNC’s Kunz.
Springbot analyzes customer and purchase data and then recommends and prioritizes the best marketing actions which makes it simple to take and track each activity. A few weeks ago we gave you a rundown of the company and how they got the idea for it. Check it out, and then continue reading below to learn about Springbot’s tools & processes, how they stay on top of trends & built a motto based culture, and what they need most right now. Collaboration Tools & Processes Do You Use: We use a number of collaboration tools but some of our favorites, and ones we use daily, are Salesforce, Jira, and Intercom.io. We also make it a point to meet regularly with our team and our customers to share ideas, wins, and news. Where Do You Gain Insights From & How Do You Stay On Top Of Emerging Trends: In our industry, trends move faster than we can blink so we spend a lot of time researching how large eCommerce stores are leveraging marketing technologies and then we work hard to make those technologies simple and affordable for smaller online retailers. And because we value a collaborative environment, we make sure to share our findings both internally and with customers so that we all “stay on top of emerging trends.” We also make sure to spend time in the community hosting and attending events. What’s Unique About Your Company Culture: We make it a priority to deliver on promises. We live by the motto “Do what you say you are going to do.” What You Need Most Right Now: More space, which is a great problem to have. [Photo Credit: Marin/Hypepotamus]Continue Reading »
Cash—and even checks—may have come back into vogue since the Targetsecurity mess, but the example being set by small businesses like San Francisco sandwich shop Split Bread shows that some owners are positioning their registers straight ahead—straight to cashless. From the low cashier stands placed in the middle of the restaurant to the metal-plated QR codes affixed to each table, the design of the rotisserie sandwich shop was wholly inspired by the owners’ desire for a no-cash customer payment system. “As we were designing the space, we realized that we were designing it around a cash till,” said David Silverglide, co-founder of the 20-employee operation. “We stepped back and said, ‘Why are we doing this when 70 percent to 80 percent of customer transactions at our other seven [restaurants] are made with credit cards?’” Philippe Huguen | AFP | Getty Images A customer pays at a register with a smartphone application in a Auchan supermarket in Faches-Thumesnil near Lille, northern France. The harm, following the recent data heists at Target and Neiman Marcus—where millions of consumers’ personal information was stolen—is now readily apparent. However, experts say that costs for merchants who process credit cards will skyrocket, and that may be a greater pain than cashless solutions mitigate. It may be too little too late, but the world’s largest credit card companies have set a deadline of next year to switch from traditional magnetic swipe cards to EMV—computer chips embedded into credit cards, which can offer an extra layer of security depending on the way they’re used—for point-of-sales transactions. It’s a timeline that existed before the Target data breach but has taken on some urgency since: Target this week presented an expedited timeline for its own $100 million investment in EMV during a Senate hearing. (Read more: The dysfunctional state of America’s credit cards) For thousands of small businesses, that means paying hundreds to thousands of dollars to swap out old terminals for hardware and software that can handle the new credit cards. Given the way these cards are processed—consumers must pause to enter a pin after their card is read—it also means a slowdown in transaction time, which for quick-serve service businesses equals more money lost. “For the small merchants, it’s not really fair—they’re asked to pay the cost to upgrade, but they’re not really at a huge risk, because of the [relatively small] amount of card information that they have,” said Jeff Shanahan, president of payment technology firm CardConnect. “They have to buy into the fact that this is for the greater good of the industry.” Freeing itself from cash can help solve this retail cost/benefit imbalance. Investing in a cloud-based point-of-sales system allows Split Bread to more easily adapt to changes in the marketplace, like capturing sales from the increasing number of American consumers embracing tap-and-pay smartphone apps or complying with new security standards set by the credit card industry. “We can scale as all these new technologies emerge,” said Silverglide. “Cash was the limiting factor.” Building a better credit card trap Split Bread is well ahead of many of the nation’s small businesses, just over half of which still only accept cash or checks. But as more small merchants make the investment to switch to cashless payments systems, Split Bread’s payment model—a blend of wireless and traditional payment processing—offers a more cost-effective way to navigate the waters of a historically complicated and expensive market. (Read more: Post-Target, some businesses say cash again king?) Play Video Target CFO ‘deeply sorry’ about breach Target CFO John Mulligan tells the Senate Judiciary Committee that the company is “deeply sorry” about the massive data breach and outlines what Target is doing to prevent another one. Accepting credit cards has never been cheap or easy for small businesses. Besides the initial cash outlay of a few hundred dollars for hardware, merchants must pay a fee of 2 percent to 3 percent per card swipe, plus a laundry list of monthly and annual costs that banks, credit card companies and merchant service providers tack on. “They send us the most complicated, hard-to-understand statement ever,” said Ben Van Leeuwen of Van Leeuwen Artisan Ice Cream, a 60-employee Brooklyn firm with six ice cream trucks and three retail locations. The company, founded in 2008, started accepting credit cards a year and a half ago. “I can’t really spend the hours and months trying to figure out what it means,” he said. According to the National Retail Federation, merchants pay about $30 billion each year for debit and credit card purchases, most of which goes to the banks issuing the cards. Merchants who have invested in cloud-based point-of-sales systems that support swiping credit cards via smartphones or iPads are finding their way around some of the more exorbitant upgrade costs. “New hardware will be needed; that’s an undeniable truth about EMV,” said John Berkley, vice president of product at Mercury Payment Systems, a payment solutions company based in Durango, Colo. “If you have a piece of hardware that only accepts magstrips, the smaller it is to replace, the better,” he said. “When it’s a software system with a peripheral attached to it that can easily be swapped out, that’s an easier way to make [the upgrade] happen.” (Read more: Time to put chips in U.S. cards: MasterCard) The costs to switch to EMV will likely be lower for users of Intuit’s GoPayment and Square, wireless payment technologies featuring card readers and software that integrate with smartphones and tablets. Both companies already support chip card requirements in Canada (Square) and the U.K. (Intuit). Fraud magnets But even as these new technologies, like chip cards and wireless payment, promise a higher level of security with continually evolving encryption measures—for example, like many of its competitors, the GoPayment card reader encrypts credit card numbers and then decrypts them on Intuit’s servers so no personal data is ever captured in the software hosted on a merchant’s phone—fraudsters will likely find a way to hack into them. “In other countries where they have required chip-and-pin in brick-and-mortar shops, the fraud risks have moved online,” said Jason Richelson, founder of ShopKeep POS, a purveyor of cloud-based point-of-sale software. Or as Bob Sullivan, fraud expert and contributor to Credit.com, put it: “Here’s the thing about crime: It’s all a matter of odds. There’s no way to prevent it.” Small merchants face a double-edged sword when it comes to fraud protection: They are less at risk than a major national chain like Target, but they also have a known tendency to spend less than their bigger counterparts to protect digital information, making them more susceptible to attacks. The first defense against risks associated with wireless—things like malware targeted at mobile devices and the lack of time-tested fraud controls configured specifically for mobile—is education. “Most merchants don’t spend the time or effort to get educated, and that’s to their detriment,” said Steve Casco, founder and CEO of Cardnotpresent.com, an online publication that covers issues in the e-commerce and mobile payments industries. “We’re trying to bring our readers into the 20th century, let alone the 21st.” The majority of small firms rely on their vendors for infrastructure security updates, and partnering with a well-known tech company can help ease client worries about security weaknesses with new technologies. “That’s one of the reasons why we wanted to go with a company like PayPal,” said Justin Joseph, a partner and CFO of EJ Blooms, a start-up floral design firm in Manhattan that only accepts plastic via PayPal Here to serve clients, including Viacom and the New York Historical Society. “Most people will have heard of it and know they can trust [the system].” When Silverglide first deliberated on the decision to go straight to cashless, he asked himself, “What’s the harm of getting rid of cash already and see what it does for our operation?” It did quite a bit. Despite the occasional customer grumbling about not being able to use cash, Split Bread has seen well over double-digit sales growth month over month since opening a year and a half ago. Silverglide attributes some of that growth to fostering an electronic payments–only business, which allows for quicker customer throughput—if they don’t want to stand in line and swipe their credit card to pay, customers can seat themselves at a table, scan the QR code with their smartphone and order without having to interact with staff—and less time and labor wasted with counting, watching over and depositing cash. —Maggie Overfelt, Special to CNBC.comContinue Reading »
By Jason Richelson The next generation is growing up with a new baseline set of expectations about what the minimum standards of technology should be. Modern retailers have never known the excruciating anticipation of waiting for some incredibly basic report to load over a 56K bit connection. They are strangers to the hours of mind-numbing tedium spent surrounded by papers trying to get your books in order. There are a whole host of miserable experiences that the next generation of merchants will just never have to deal with. They too are entering the world of retail with a whole new set of expectations as to what the minimum standards should be. That being said, here are five retail miseries that are now a thing of the past. 1. Man vs. Mother Nature My disastrous old Windows POS system ran off a server kept in the basement. Prudence (and the insurance company) dictated that data from this server would backup at the end of each business day in case of fire or flood. This involved connecting a massive external hard-drive into the back of the computer and waiting whilst the data seemingly inched across the cable. It also involved carrying the hard-drive back home every day because, let’s face it, a backup is no use if it burns down in the same fire as the actual server. How It Got Better: The cloud. With cloud-based servers data backup is automatic. Data is constantly synced and stored in the cloud, so Mother Nature can do her worst to the server, and crucial business data is always secure. 2. Man vs. Virus Threat detected! Malware found! Critical vulnerabilities discovered! In the Land Before the iPad (LBtiP) the computer virus was a very real part of every retailer’s life. Thousands of dollars and hundreds of hours have been spent dealing with malfunctioning and infected PCs. And then, months were spent afterwards being a tyrant banning staff from using the computers to do anything other than ring up sales. Not exactly conducive to a fun working environment. How It Got Better: The Mac and now the iPad have both proven themselves to be infinitely more robust in the face of hack attacks. So, now sales can be rung up in peace – and staff can play Angry Birds when things are quiet too. 3. Man vs. Data The prohibitive expense of hardware meant most small businesses used only one machine for all the functions in the store. The same machine doubled as a POS unit and as a business computer to respond to email and run reports. In practice this meant running reports could only happen at the end of the business day. What’s more, even if there was an additional computer, someone still had to be physically located within the store and connected to the server to get access to the data. As a result, business decisions were often made on the fly and without consistent reference to real-time data. How It Got Better: Cloud-based reporting has made it possible to access data anywhere. Something that was a complete headache previously is now as simple as opening an app and checking out real-time data on staffing, inventory, sales and more. 4. Man vs. Power The power is out, you can’t take sales. The Internet is down, you can’t take sales. It’s a Tuesday, you can’t take sales. Considering the expense of the old Windows POS machines, they were often unreliable. After spending thousands of dollars on the machine itself, panic set in every time the power went out. And if the Internet went down for any reason, forget about taking any payments at all, hours were spent just trying to get someone on the phone. How It Got Better: Mobile POS solutions rely on tablets that come with powerful, built-in batteries. Also, the top modern POS solutions allow for acceptance of payments even when Internet connectivity is down. The best part? The hardware to make this happen now costs about $500 instead of $5,000. 5. Man vs. Upgrade I always thought that the great, cosmic joke of the old-fashioned POS system was that six months after you shelled out half of your life savings for some truck-sized Windows POS system, they would release hardware that was half the size and twice as fast – along with new software that contained lots of great new features. But it was too late to install that one, or you could but you’d have to pay for it all over again, including someone to install it. Then again to fix the viruses when it went wrong. How It Got Better: The advent of the iPad has provided a touchscreen system that is getting better and better without raising the price point. What’s more, these updates get pushed out to the iPad from the App Store without ever having to do anything. The major POS providers now operate on a no-contract, monthly subscription model that means they are incentivized to constantly upgrade their service to remain competitive and retain their customers. In short, there has never been a better time to be a retailer looking for technology. Jason Richelson, Founder & CEO, ShopKeep POSContinue Reading »
Payment Security and Compliance firm ControlScan celebrates company milestone as one-millionth merchant begins the PCI SAQ compliance validation process ATLANTA, Dec. 4, 2013 – Payment security and compliance solution provider ControlScan has surpassed the one-million milestone for merchants initiating its Payment Card Industry (PCI) Self-Assessment Questionnaire (SAQ) process. Each year, small merchants complete the PCI SAQ to assess their security posture and comply with the PCI Data Security Standard (DSS). ControlScan partners with merchant acquirers, independent sales organizations (ISOs) and other merchant service providers to help the small and mid-sized merchants within their portfolios more effectively secure their payment transactions and comply with the PCI DSS. Known for its high-touch support services, ControlScan expertly guides merchants through each step of the process, including SAQ completion. “We’ve spent the last six years helping small merchants understand the steps they need to take to protect their business and their customers’ information from data thieves,” said Timothy Thomas, director of product management, ControlScan. “The expertise and connectivity we’ve established has allowed us to continually innovate within the payment security space.” A recent ControlScan innovation, SmartSAQ, was designed from the ground up to maintain the integrity of the traditional PCI SAQ while removing the complexities that can cause merchant error and abandonment. According to Thomas, the completion rate for SmartSAQ, which has been in use since mid-Summer 2013, is 89.1%. “Crossing the one-million SAQ mark is an important milestone for ControlScan, because it shows the value we provide to both our partners and the merchants they serve,” said Thomas. Merchant service providers who are interested in partnering with ControlScan to better secure their merchants and reduce business risk are encouraged to visit ControlScan.com or call 1-800-825-3301. About ControlScan Headquartered in Atlanta, Georgia, ControlScan delivers payment security and compliance solutions to a global network of merchant service providers and the small businesses they serve. The company’s innovative approach to secure hosted payment and PCI compliance solutions leverages technology, education and services to provide flexible options for its customers. Known for its thought leadership, ControlScan gives its customers a clear view of marketplace issues and trends so they can remain competitive. For more information, please visit www.controlscan.com or call 1-800-825-3301.Continue Reading »