Consumers have myriad options available to them when it comes to paying for goods. Gone are the days of just cash and checks. To wrap our heads around all of the alternative payment options available today, we sat down with Nationwide’s VP of Business and Financial Services Chris Kirk.
Rob Stott: All right. We are back on the Independent Thinking Podcast, and I can see the smile on his face already. He’s excited to be a new interviewee on our podcast. Mr. Chris Kirk, our VP of Business and Financial Services… Financial and Business… Does it matter the order that I say it-
Chris Kirk: Either way.
Rob Stott: Either way? All right. Well, I said Business and Financial Services, so that’s what we’re going with.
Chris Kirk: Love it.
Rob Stott: Appreciate you taking the time and joining us. How are you doing?
Chris Kirk: I’m doing great, Rob. How about you?
Rob Stott: I’m all right, just sitting here, getting ready to talk about the world of business and financial services, and payment methods. All kinds of payment methods, we’re going to talk about today. So sounds kind of daunting of a topic for a guy in communications to talk about-
Chris Kirk: To many people it sounds boring. We’re going to try to keep it light and very top of the service. We won’t get too in the weeds, but we got some neat things to talk about today, I think-
Rob Stott: Yeah, absolutely. Before we do that though, before we dive too deep, I don’t know anyone that doesn’t know who you are, but for the random person out there who may not know who Chris Kirk is, what can you tell us about yourself and the role of a VP of Business and Financial Services?
Chris Kirk: Got it. Well, first off, I’ve got a wife and two little girls. Kristen’s the wife, CC and Emmy are my daughters. So. That’s my favorite pastime to do. But outside of that, I’ve been with Nationwide for several years but had several roles, most certainly, as you said, the VP of Business Financial Services.
Really what that means is, I work with all the consumer finance credit card processing, secondary lease-to-own type programs, tertiary programs, also close to the business services side, think about product protection, digital price tags, Energy Star program’s a big one for us. Anything that happens in-store, I kind of help, touch or fill with our team.
Rob Stott: And the fun thing here is that… I mean, yet obviously, business and financial services is such a big part of what we do. At Primetime, there’s a show, you see all the vendors and the product vendors, the appliances, the furniture and bedding guys, but you can’t overlook those businesses, financial services vendors that are there as well. How different is your role, in sort of those vendor relationships and things like that, compared to a traditional product merchant?
Chris Kirk: Yeah. So it’s a neat question. We’re all part of a big puzzle, right? I’m just a piece of it and we’re a piece of it, of what we’re doing here. You look at the merchants and they’re working on key maps and buy-in, and trying to find a product availability, as everybody else is, for the membership. Me and my team help work on the sell through of those products. So it’s got to get out of the store. So how you’re paying for it, your customers are paying for it, you’re paying for it through inventory finance programs. It could be anything from as simple as to Office Depot program, which we save members’ money on when they’re purchasing paper that they need for invoices. So anything that happens in the store that’s day-to-day business, same thing as we do with the buy-in, the merchants are doing, we’re doing that on the sell through or inside the store, and just leveraging the size and the scale of the nationwide members.
Any time, I can go to a vendor and say, “I’ve got 5,000 members that want to offer your service and product.” It perks their ears up. and it’s a fun conversation to have and putting those together. And I love hearing back from the members saying, “Here’s where I need some help.” And then going, attacking that problem and figuring out how we can bring either call savings to them, or efficiencies to them, get them tied into our website platforms for them. So, whatever we can do collectively, it’s kind of a fun job for us to go out and create some of these new programs, or nurture the ones that we’ve had out there for forever. You think about our consumer finance programs that are out there, that’s a major tender type for all members of how their customers want to check out. And nurturing those Wells Fargo and Synchrony relationships, are an important part of job that Jason on the team helps do for us every day.
Rob Stott: So the way you’re talking about it, it’s exactly the way an appliance merchant goes out and talks to vendors. I mean, end of story, bottom line, it’s not that different at all.
Chris Kirk: Yeah, it is, other than the landscapes change more rapidly in our world, like you think about appliances, they’re not creating a whole bunch of new appliances that are out there. So there’s not a lot of new product categories. I know in the last 10 years, we’ve brought on bedding and outdoor, and looked at expanding some existing service or products that we had out there, categories. But if you look in kind of… We’re going to get into a second, but if you look into the payment world, I mean, no one really heard of Buy Now, Pay Later five years ago. You’ve seen a lot of these [inaudible 00:04:23] and these guys pop up now and going out and creating those and making sure we’re delivering to the customers, which is a different customer than it was 10, 15 years ago, in how we advertise to them, how they want to check out. It is ever changing, kind of closer to the digital website world, more so than the merchant side world, I think.
Rob Stott: Oh, that’s awesome. And you hit on it. We can get into the sort of the alternative stuff, but I want to… Payments in general, I feel like a lot has changed lately. Everything can go back… We’re two years in now, and we’re still sitting here talking about the impacts and the effects of the pandemic and everything, but for those traditional sort of payment methods, what’s the status right now? What’s going on in that world?
Chris Kirk: Yeah, so it’s been interesting because there’s been an influx, as we all know, of cash into the consumer market, right? We’ve seen customers with more cash than they’ve ever seen, savings accounts are higher. So a lot of those customers that historically have needed some loans or some other payment methods to pay for things, are walking in the store, not only they’re wanting to get in and out of the store quicker, but they also didn’t want to fill out credit applications, maybe that they were touching paper, pens with other people. So we’ve seen our cash transactions go up significantly. And I haven’t seen the growth that we historically seen with traditional consumer finance, 12 months, 18 months, 24 months interest.
Not only that, we’ve seen also a shift from in-store purchases to online purchases. So you think everybody’s just a lot more comfortable, 18 months out of the pandemic, than they were making any type of purchase online, much less a major appliance. So, whereas historically, that was a small, small piece of our members’ business, we’ve started to see that number pick up and we want to make sure nationwide members and all retailers are ready for that uptake, because we expect all online sales to just continue and to grow as the customer gets more confident about making those online purchases.
Rob Stott: I don’t know if you have a number right there in front of you, but just from gut, from what you can tell, did a solid chunk of our member… Because obviously, it feels like every day we’re adding more, or more… Not that we are adding more, our members are adding more, the ability to turn on that online cart, the e-commerce experience. Have we seen a continued upswing of members that are looking to add e-commerce capabilities to their record?
Chris Kirk: Yeah, absolutely. I don’t have that number right in front of me, but we have absolutely seen through RWS and Site On Time to the Nationwide platform. We have seen more and more members turning on that cart functionality where it used to be kind of shop online, buy in-store. Now they’re giving that customer the option just because they’re used to it, in this day and age.
Rob Stott: Are there any hurdles there still? I imagine retailers understand the importance of it now because they see, coming through a pandemic, that consumers are willing and want to shop online more, and complete their purchases online. Are there any hurdles, that you’re still seeing them? That they feel like there’s challenges why they wouldn’t?
Chris Kirk: I hope not. So if there is and-
Rob Stott: Yeah, they can just talk to you. [crosstalk 00:07:19]
Chris Kirk: Because we certainly need to hear about it. We’ve worked really closely with RWS Site On Time, and even Tailbase and other providers out there, to make sure we can integrate our credit card processing programs, our consumer finance programs. We’ll talk about it in a second, but we have a new PayPal program out for Nationwide members. So all of these are being seamlessly integrated so that members say, “Yeah, I want to process online and take payments.” We have all those options built in for those members.
Rob Stott: You think it’s easier today than it was, to turn on e-commerce, maybe two, three years ago for a retailer?
Chris Kirk: Absolutely, hands down. Yeah, especially for our platforms. And if you look at the [00:07:58] Shopifys and the [00:07:59] Magentos out there, they have their own services built in, that you can turn those on. Now, we can’t integrate the Nationwide supported products on there, but they still have it where you can accept payments or get set up with a payment provider for those different, various ways the customers want to check out.
Rob Stott: See, we can get down in the weeds on payments and financial services, not a big deal to do that, we can do that on these podcasts. I like-
Chris Kirk: You don’t want to put anybody to sleep.
Rob Stott: Well, turn it up to some innovative payment options. That is a two-term phrase out there that does exist. So let’s talk about those alternative payments. You guys have a lot of things going on right now in that space, and you mentioned it. I know you’re talking about PayPal, we’ve got QuadPay is another thing that’s been happening. So how has this space really been changed over the last two to five years?
Chris Kirk: Yeah. PayPal has been around since like the late nineties, all right? So everybody’s pretty familiar with that, but I don’t think everybody knows that they have almost 400 million active… Yeah-
Rob Stott: That number keeps going up, man.
Chris Kirk: That’s right. It keeps growing and they’re estimating somewhere… And I say, “They are…” The industry estimates, PayPal doesn’t put it out themselves, but about 20% of purchases are coming through a PayPal account or using the PayPal credit terminal that’s in there. So it’s not brand new, it’s been out there for a couple of decades now, and people are used to that. They’re used to checking out and clicking on that familiar PayPal logo and button and clicking out with it, checking out with that. So making that option and that program available to members as they can identify with that, make that check out process easier, has been a real big accomplishment thing for Nationwide to put this program together.
Rob Stott: And then I know there’s others too, that exist, right? So you mentioned Klarna, is a name that people might see in their own online shopping. There’s some stuff happening around that for us as well, right?
Chris Kirk: Yeah. So Klarna, Afterpay, Affirm, we’ve heard of Apple Pay, everybody who has Apple phones. So those are all different kind of Buy Now, Pay Later services. And what the Buy Now, Pay Later is kind of condensed to, is people get their product today, and almost like traditional consumer finance, except where they shorten the term into like a four, six week term. So take our Zip program, which is now Zip, you speak [inaudible 00:10:18]. What you do is, let’s say it’s a $600 dishwasher purchase, you would put a $150 down today via a credit card, and then you set up a schedule so that every two weeks after that, it takes another 150, 150, 150. So it takes you four different payment sessions over six weeks and you’ve got your $600 payment that’s in there.
Rob Stott: Now, the interest like that… I mean, there’s so many different ways for a consumer to pay now, for a product. For one, it’s… For a retailer it might sound confusing. Like, “Why do I need so many different payment options? Can’t they just make a transaction, make it happen and let’s go?” What’s the reason, or why would it be so important for a retailer to consider all of these different options and making them available?
Chris Kirk: So the one that stuck with me most is, it said that about 60% of the customers will abandon the cart if they don’t have their preferred, that customer’s preferred, payment method on there. So if you can’t pay how they want to pay, and maybe they have an account with PayPal, or maybe they have… This payment selection already set up through a firm or Zip or whatever product that’s out there, if they can’t do it, they don’t want to go and pay with this selected, here’s your only way to make this payment. So giving that customer the option to check out how he wants to, much like we’ve had to do on the marketing side of… We’ve had to go to that customer and bring them in how they wanted to come in, whether it’s digital or phone or whatever method. We also want to make that a seamless transaction for the next of the store, with the product they want.
Rob Stott: No, that’s crazy. That’s a massive number.
Chris Kirk: Isn’t it?
Rob Stott: Yeah. That’s crazy. Did not know that myself. So, that’s crazy to see.
Chris Kirk: Yeah, when you think about a bunch of the Gen X and Gen Y, some of these guys don’t have credit cards, like I do, like a bunch of America does. I know the Baby Boomers are still paying with credit cards. But that’s the other reason that’s out there is, you want to make sure for that customer base, it’s starting to get into our market and buying couches and beds and appliances, that if they don’t have a credit card, they need a method to pay. And it’s not hard to implement these through some of these Nationwide programs, our programs available in the market. So you want to make sure that you have that payment method available for them.
Rob Stott: Now, when you say it’s not hard, I’m sure the retailer themselves are signing up for a program, it’s one thing or another, but I mean, is it as simple as just saying, “I want to add this to my site.” And it’s done on the backend? What does adding these, look like?
Chris Kirk: Yeah. So for RWS and Site On Time, RWS is still completing some integration with Zip, and as soon as they finish that, what you would do is indicate they wear our Primetime show. They indicated they want to get signed up, so we have a back log that we’ll have to fulfill, but as soon as we do, they have the paperwork that’s signed up with that vendor. Once they get an account number, they plug that into the RWS [inaudible 00:12:55] platform and they already have that ready to turn on for them. So same thing with PayPal, same thing with Wells Fargo, Synchrony Financial, we’re working on the lease-to-own providers, which is like the secondary, tertiary market that are out there, available for our members.
Rob Stott: These alternative payments, there’s got to be some data out there and this is me, again, throwing you on the spot with a numbers question that you probably don’t have right in front of you. But I feel like there’s got to be… If you look at traditional payment methods versus these alternatives, there’s got to be almost like an equaling. Not that they’re equaled out now, but I feel like they’ve got to be getting closer.
Chris Kirk: Yeah. They’re still relatively new. So it’s, even at, I think it was last time I saw for these buy now, pay now services will equal a hundred billion dollars in total sales. So it’s a big number, but it’s still a small, looking at the total retail market. The Buy Now, Pay Later market typically their average tickets, much lower than we’ve seen our members that are in the furniture, bedding, outdoor space. These are $100 items are splitting up into $25 payments, instead of that $600 item, I split up into $150 payments. Now, those providers will go up to 1500, $2,000 for your… Available that you can do it. So most of our purchases would be covered under one of those Buy Now, Pay Later services, but we traditionally kind of see that most of that market is still at a much lower average selling price.
Rob Stott: Got you. Now, is there ever a situation where adding these types of services wouldn’t make sense for retailer?
Chris Kirk: Ooh. I guess if we go back to that kind of average selling price, I mean, if that average selling price is much lower, we’ve got it covered on that Zip program and through PayPal too, they have a Buy Now, Pay Later service. But through those services, can go up to that higher average ticket, but members can set those thresholds of where they want to be. So if you wanted your Buy Now, Pay Later solution to be offered on all transactions under $600, you could do that and then introduce your 12 months financing from $600 to $1,500. And then the next price we need to be, is a step up for those members to help that average ticket keep going up. So they can set an 18 month at the 1600 above.
So I think that there’s a way… I know there’s a way we can work with just about any type of retailer, to make sure something works for them. But going back to that staggering stand earlier that we said about those customers leaving your cart, basically, if you don’t have this payment method or allow them to check out that way, it just makes sense as you continue to see that segment growth, that you’ve got a solution for that customer.
Rob Stott: Got you. What other questions are you hearing from retailers? I’m sure there’s got to be some out there, I can only… Me not being a business and financial services expert like yourself, I’m sure you hear quite a lot of rant, crazy questions from some retailers that are considering these things.
Chris Kirk: Yeah. So integration’s probably the number one, like, “Is it easy for me to get set up?” And we’ve tried to remove every variant we can to make it as easy as possible for members to get signed up on those programs. So once we get past integration, it’s cost, “What is this going to cost me?” Everybody’s paying around 1.8 to 225 percent for a credit card swipe. So that’s kind of our watermark, if you will, where we try to set some of these programs, whether it’s 12 months no interest, whether it’s the Buy Now, Pay Later. But we know, especially in the appliance industry, we’ve got a little more wiggle room once we get into furniture and bedding, that don’t want to go too much higher than that, as what their discount rate is. So cost is a big one.
We’ve gotten to get Nationwide negotiate programs for PayPal, for Zip, for all of our secondary and tertiary programs. We’ve got, we feel like, that piece very, very competitive compared to where the market is. So once we check those three boxes, most members are pretty much ready to move. If they’ve made that decision, that they are going to offer a full cart online, which still…
I hear back and talk constantly with the RWS and Site On Time teams. But that’s a big question for a lot of members is, do I need to have a full shopping cart experience on my website? And if so, do I have the manpower to do it? And the staff, we all know staffing is an issue, finding labor right now. So you’ve got to have someone that’s completing that experience for that customer. You can’t take that order online and then not get back to the customer for two days. So someone’s going to be at a full job looking at that cart, making sure they’re treating that just like an in-store customer. So that’s the biggest decision I’ve seen so far, of members deciding, if I want to accept online payments.
Rob Stott: Got you. Now, all of this has been very digital focused, right? Do some of these apply to in-store as well? Can we see some of these services, these alternative payments come in-stores?
Chris Kirk: Absolutely. Absolutely, yeah. It’s pretty seamless to carry these through. PayPal, you think about online, they do have an in-store process that [inaudible 00:17:43] it’s very, very small. You don’t see a lot of people come in, trying to log into their PayPal account when you walk into any type of retailer, or not that I can think of. But yeah, some of these services are available in-store.
Rob Stott: The situation I think of, over the summer… Because I used to carry cash, not like boatloads of money, I’m not sitting here sitting in a bucket of cash or anything, but I used to carry around some cash, but over the summer, and particularly COVID, you think people don’t want to exchange paper money nowadays. But I think of going to… You know, my son did Tee-ball for the first time this year and the snack stand, they actually offered a little Venmo Scan Me to pay just as a different way to pay at in-store or… Well, at a snack stand. [crosstalk 00:18:27]
Chris Kirk: … A PayPal product. It’s offered through the payment systems and can do that in-store, they do have some terminals that are available. If you look at our credit card processing vendors, through Wells Fargo and [inaudible 00:18:40] both those guys have some tap to pay, things like that, that can go in-store, absolutely use online, but also in-store.
Rob Stott: No, that’s awesome. So obviously you mentioned it, I mean, heck, those product merchants, they don’t see much innovation in their space compared to what you guys are seeing here in the business and financial-
Chris Kirk: [inaudible 00:18:59].
Rob Stott: Yeah, well, we’ll be nice to them but… Now, obviously, a lot of innovation happening in your space. How are you staying on top of it all? How do you kind of stay up to date with what’s coming down the pike and where you need to kind of focus your attention?
Chris Kirk: Yeah, good question. So, first off, I’d say the team that’s… Helps what I work with every day. So everybody’s very involved in this, they’re looking out for what’s coming down the road and trying to figure out where the put’s going to be. And so we’re constantly chasing after that. The NRF, National Retail Federation, puts on a great show in January that we usually go to and we can see a lot the kind of innovative-
Rob Stott: The Big Show, is that the one? Yeah.
Chris Kirk: The Big Show, yeah. That’s it. So, I try to go to that every other year. I don’t miss too much in between the years, but if I can go every other year and kind of keep my finger on the pulse and talk with different payment providers or point of sale providers, digital price tags, things like that. So we’re constantly looking at what’s coming out. Some of that stuff sticks, some of it doesn’t. We’ll come back from those shows all jazzed up and ready to start 10 new programs and then pull the members and they’ll say, “Focus on this.” So we’re driven a lot and then, I guess, the member interaction that we have, so Primetime, not only that, but we’re on conference calls frequently with members, they’re telling us, and they’re not afraid to tell us where we need to have new programs or services. So we’re constantly listening to the membership because they’ll always point you in the right direction.
Rob Stott: No, that’s awesome. A great point, and if you’re not talking to the members, how can you have your finger on the pulse? So that’s a incredible point and one to take home and go home with, so I appreciate that. Mr. Kirk, this has been fun. I think we’ve made talking about financial services, a fun and, dare I say, sexy topic. But I appreciate your time and certainly look forward to catching up and seeing what more innovations are coming down the pike for you guys.
Chris Kirk: Okay. We’ll be back to you shortly. Good to see you, Rob. Thanks.
Rob Stott: You too.