Are you keeping up with the changing payment preferences of your customers? From Buy Now, Pay Later (BNPL) to digital wallets, if your payment strategy isn’t evolving, you might be missing out on where your customers want to be.
Welcome to today’s episode, where we’re exploring the rapidly changing landscape of online payments with Will Mavromichalis, Director of Sales, Identity and Fraud at Kount, an Equifax Company.
We’ll dive into the technology and generational shifts impacting payment behaviors, and discuss how retailers can stay ahead of the curve while managing fraud risks.
About Will Mavromichalis
William Mavromichalis is a 10-year technology sales veteran and has been with Kount for the past five years. During his time at Kount, Will has held a variety of roles geared towards revenue growth and strategic partnerships. As a sales leader, Will is focused on growing the global footprint for Kount and Equifax by leading a team of seasoned account executives. While leadership is his passion, Will enjoys rolling up his sleeves with his team to solve the complex identity and fraud business challenges that merchants face on a day-to-day basis.
When he is not working you can find Will spending quality time with his wife Kathryn, and two daughters Mila, and Viola.
Resources
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Transcript
Greg Kihlstrom:
Are you keeping up with the changing payment preferences of your customers? From buy now pay later to other methods, if your payment strategy isn’t evolving, you might be missing out on where your customers want to be. Welcome to today’s episode where we’re exploring the rapidly changing landscape of online payments with Will Mavromichalis, Director of Sales, Identity and Fraud at Kount, an Equifax company. We’re going to talk about the technology and generational shifts impacting payment behaviors, and discuss how retailers can stay ahead of the curve while managing fraud risks. Will, welcome to the show.
Will Mavromichalis: Yeah. Hey, Greg. Thanks for having me. Excited to be here today.
Greg Kihlstrom: Yeah, yeah. Looking forward to talking about this with you. I know we chatted when we were ETL Boston a few months back now, at this point, but you know, looking forward to bringing you on and talking in some more depth about some of these topics. And just before we get started here, if you could just give a little background on yourself and your role at Kount, that would be great.
Will Mavromichalis: Yeah, absolutely. And again, thank you for having me today. So, you know, my name is Will Mavromakalis. You know, I got my start at Kount. We’re located out of Boise, Idaho. You know, Kount was a fun, cool technology company when I was going through college. And so when I got out of college, I’d always kind of kept my tabs on the organization. And then when I jumped in, there’s been no looking back. So I’ve been at Kount now for seven years. We were acquired by Equifax three years ago. And really what we do is we tackle the fraud challenges that all merchants, retailers, financial institutions, banks face on a day-to-day sort of strategy and so love being able to tackle the fraud challenges that they face.
Greg Kihlstrom: Yeah, yeah, that’s great. Yeah. And seven years at a company. That’s that’s great. Great to be able to say that. So, yeah, let’s let’s dive in here and want to talk about a few things with you, as I mentioned. First, I want to talk about generational shifts in payment behavior and, you know, just changing payment landscape, as I mentioned, and what retailers should do to adapt. So, you know, this Payment landscape is shifting as younger generations adopt new payment methods like BNPL, buy now pay later. How should these generational shifts influence the way that retailers plan for the future?
Will Mavromichalis: Yeah, Greg, that’s a great opening question. And even though I have been here for seven years, it feels like, you know, I’m learning new stuff every three to six months with new fraud trends change or new payments. You know, the landscape is always changing. So there’s always fun things to learn about. We saw a huge shift, particularly out of COVID. And now that Gen Z is starting to grow up and they’re starting to do more interactions online. You know, there’s a couple of things that I think about from a retailer’s perspective. Gen Z and millennials typically prefer digital wallets. It just makes their life easier. And so when I think about it from a retailer standpoint, you’ve got to have an omni-channel approach. And you know, that really just means, I know we’ve all heard omni-channel for years and years and years, but, you know, just beating the drum, as to say, is by having an omni-channel approach and being able to integrate digital payment methods into both a physical and an online space, It’ll just help that retailer capture the younger consumer base. It’s interesting because what we’re also seeing with the younger consumer base is they are really into the incentives and loyalty programs. And so as you grow this omni-channel approach, you have accounts that you can create at a retail website. It’s really important, especially for the Gen Zers, to have incentives and loyalty programs that they can take advantage of. We have found and we have seen, and I’m sure you can read about how younger generations love to gamify things. And for them, they love sort of, you know, having that little carrot dangling in front of them, or if I buy X amount, I get a free coffee, or if I do this, I get that. And so being able to really have, you know, an incentive program, I think is key, as well as the omni-channel approach. And then really finally, when I think about the topic as, you know, payments are shifting, how do we get the younger generation to come shop with us? It’s just having the flexibility in your payment offerings. While that could be cumbersome from a retailer to set up different payment channels in their ecosystem, right? Like having a buy now pay later channel. Do I have one? Do I have two buy now pay laters? Do I allow digital wallets? Do I allow cryptocurrency? Right. It can become complex really quickly, but it makes it very easy for people who are shopping because then they have their preferred option available at that point of checkout, which will help capture sales. Right. One thing we know about Gen Z is they love the flexibility. And so those are just a couple of points that I would consider when you think about how do we adopt for generational shifts.
Greg Kihlstrom: Yeah, and so, you know, along those lines, I mean, you know, when we’re talking about these platforms, we are, you know, often talking about Gen Z, maybe even younger millennials, you know, as the alphas are approaching, you know, having more of disposable income, all those kinds of things. But, you know, what about some of the older generations, you know, Gen Xers, Boomers, you know, are they Do you see them eventually adopting some of these things that are now favored by Gen Z, or are we just going to keep seeing more fragmentation in the payments landscape, or maybe both?
Will Mavromichalis: Yeah, it’s a bit of a loaded question. You’re definitely going to see both. that with the older generations you are seeing a gradual adoption into these new payment types, right? I do think that they still have their preferred methods to pay and you know they’ve been doing it this way for so long, why would they change? So I wouldn’t see necessarily the older generations in particular use something like a buy now pay later or they tend to not opt for payment options that provide credit terms. For the longest time, you could walk into a retail store and you could say, Hey, you get 10% off now and you purchase. And yeah, that’s still, that still works great, but you lose a lot of that interaction online when you’re just presented with the credit offer. And so I think particularly with the older generations, you will, you know, just going back to it, you’ll see the adoption of things like digital wallets, being able to purchase, you know, with more flexibility, but. I think we’re seeing a slower pace than maybe we anticipated. But that being said, to your question, I do see the payment landscape fragmented, not only by generations, but by geography, right? In different geographies, people, they buy in certain ways, and in other geographies, and especially for retailers across borders, or they’re trying to grow. It’s one thing that pigeonholes into a generation, but now you got to think about where people live regionally as well. So I do think you’re just going to see a continuation of a fragmentation in the market, which is why it’s so important for these retailers, unfortunately, to have these complex ecosystems on the back end to make it easier for their customers to purchase.
Greg Kihlstrom: Yeah, yeah. And so then, then building on that, so, you know, we’re, we’re talking about some, some fragmentation, we’re talking about the benefits of brands providing all these options. But, you know, there’s, there are some costs to this. And one of those is the impact on fraud. and potential fraud. And so, you know, when I talk a little bit about the, you know, how newer payment methods or just additional payment methods are kind of changing the fraud landscape. So, you know, with the rise of methods like Buy Now Pay Later and others, how has the fraud landscape evolved?
Will Mavromichalis: Yeah, I think, you know, historically, you have sort of third party fraud, where I steal credit cards, or somebody, you know, gets a batch of stolen credit cards, I think that will never go away. Regardless, with retailers having sophisticated fraud solutions in place, that’s sort of just like your baseline, right? Like, the easy fraud that they could try to get away with has always remained the same. The fraud landscape really took a change once COVID hit, right? That was when we saw a huge increase or we started to pay more attention to call it the first-party fraud. Especially with Gen Z, we found that’s just compiling on top of first-party fraud because again, they like to gamify things. So just because it is fraud or you are doing nefarious activity towards an organization, the young generation doesn’t see it that way. They see it as a game or something to take advantage of. And I actually have a personal story I can share about that just from last week. It was my wife’s birthday. I bought her a new sports band for her watch that she wears. And, you know, I kind of just guessed online because, you know, I’m a dude and I bought a watch and I bought a band I thought my wife would like. And so it showed up and, you know, shocker, my wife didn’t love it, which is OK. So I went back to the website to try to issue a refund or like get an exchange for a new watch band. And the retailer messaged me back pretty much immediately, which is great customer service. And you know what they said, Hey, we’re going to issue the refund and just keep the band as a souvenir. We don’t even want it back. And so on one hand you look at that like, wow, this is great customer experience. And yeah, I’m definitely going to go back and I went and I bought another band regardless. But on the other hand, you would see something like that as simple as that. Next thing you know, you see it on social media, you see it on group, you know, chat programs online. Now, people are going to try to gamify it. Like, I 100% bet if I made a video about that and put it on social media, somebody else would try it out there. And the next thing you know, it would spread like wildfire. And so, from that standpoint, we’ve particularly seen a huge increase in the first party fraud You know, another huge thing that we see in terms of friendly fraud is return abuse. So, you know, you may not be stealing credit cards, you may not be doing criminal activity, but you are just returning things to no end, meaning There was a clothing brand we work with, and the clothing brand, you know, they would see multiple times where you would buy, call it 10 t-shirts. The 10 t-shirts would show up to your house, you would try all 10 of them on, you know, I want to keep two of them. And the next thing you know, you return eight back to the clothing brand. And the clothing brand, they have very strict policies, like when they get, you know, refunds on their shirts, now they can’t sell them as new. Right. And so now they’re losing the money on what they could have made. But in order to have that customer experience, they’ve been letting it slide because they want to capture greater revenue and try to grow their buyer base. And so definitely times are changing. And with that, the fraud is changing. You know, so there’s just sort of recap what I said. I think third party fraud is always going to remain constant. But the first party fraud is something that I think is is increasingly challenging for merchants. Now, on the Equifax side of the house, if I may, on the Equifax side of the house, what we see in the industry is synthetic ID fraud. Synthetic ID fraud is the fastest growing fraud out there. I don’t think anyone would really debate that. Synthetic ID fraud is taking over and I do think that will affect retailers in a numerous amount of ways from a synthetic ID fraud Retailers may think they’re safe, right, because they’ve been so primarily focused on third-party fraud and first-party fraud, and they might say, oh, synthetic ID, that’s really targeting FISA banks. Where we’re seeing it hit the retailer is that sort of point-of-sale financing, especially for buy-now-pay-later services. you know, a fraudulent account is opened, they could exploit the loyalty programs, they can exploit the discounts, and all behind the scenes, it’s not the actual person that you thought it was. And so, you know, just taking a step back, synthetic ID is I take pieces of PII or pieces of identity from across and I create a new. Identity and that you know that is synthetic ID and it’s very hard to track because it’s how do we find who’s actually behind? You know the keyboard and so that I would say is is probably the fastest growing thing of fraud out there and definitely something we’re tackling on a daily basis
Greg Kihlstrom: There’s quite a few different ways to maybe answer this question I’m going to ask, but what are some proactive steps that a retailer can take to protect themselves against maybe focus on synthetic fraud, since that’s an area of focus?
Will Mavromichalis: Absolutely. So being proactive is, you know, I think all retailers are doing a good job of trying to stay proactive. I think it’s table stakes these days for a retailer to have an advanced fraud detection tool in place. Like everyone you talk to has one. I do think some retailers may be lagging behind if they’re relying on their, the processor’s built in tools, right? I mean, we’ve seen If you’re using a fraud tool within your processor, we have found that it works to a certain extent for retailers, but often they will outgrow the capabilities of the fraud tool just because, you know, advanced fraud detection tools, that’s all they do is we work on fraud. We try to find new types of fraud. How do we detect it? Whereas through processors, we find it’s more like a bolt on. And so I would always just ask, like, Benchmark what you’re doing to the industry. So like that’s step one, right? And so that’s one way you can be proactive is just even if you have something and it’s working well, just benchmark it against there. I mean, today fraud solutions have to have AI. If they don’t have AI, I mean, they’re just going to fall behind. The other thing when you think about like synthetic ID fraud is it’s important for retailers, merchants, FIs, banks, you have to regularly monitor and update your fraud policies, right? Just because something worked today, something worked at the beginning of the year, doesn’t mean it will work six months from now or a year from now. We find that the fraud tactics are changing, and so you have to be able to stay ahead of the game with that. And I understand that You know, changing fraud policies is cumbersome and it’s hard. And so most advanced fraud detection tools offer services where they help their partners with that. And so I would say, you know, benchmark your solution and then even talk to your current provider. See what they are doing to stay ahead of the fraud challenges that are out in the market. I think those are two of the big ways to stay ahead of it. And then sort of going back to the synthetic ID, it’s really important to do the next step where you’re not only just doing risk detection, but now we’re doing more of an identity verification. And so unfortunately it does add cost to a retailer, to a merchant, and a lot of them need to weigh, does the cost outweigh the fraud that I’m seeing? Right? That’s one of the things we hear all the time is, yeah, I could go out and buy all the fraud tools, but if my fraud tools cost more than my fraud, why would I do it? And so that’s why I would think for synthetic ID, you still see it primarily on banks and FIs, but as it does trickle down to retailers, it’s just being able to look at your solution and say, OK, this is a risk based fraud prevention solution. I need to start looking at identity verification solutions. You know, the big bureaus, Equifax being the one I work at, we all offer them. And so just being able to, you know, sort of look at what you have on the shelf today and what else could you add, I think is always important.
Greg Kihlstrom: Yeah, yeah. And so you touched on some of this already, but, you know, part of delivering that successful online payment experience is having the right partners in place. And you talked a little bit about that, but I wonder, you know, what should retailers be looking for in an online payments partner? And, you know, how do they know when they’ve found the right one?
Will Mavromichalis: Yeah, so if I was a retailer today and I needed to go out and find a new fraud prevention solution or something to help me mitigate the fraud on my payments experience for my customers, really, there’s three things I would do. Number one, I would I would talk to my peers in the industry. I would ask them what are they doing, right? What are they doing? What have they found successful? What hasn’t worked? Particularly in their vertical. And I know like that used to be taboo, like going and talking to the competition. And while I agree it used to be, I don’t really see that anymore, right? Like I have seen regardless of what vertical you’re in, people are getting together. Peers are getting together because yes, they compete for sales, but they all want to stop fraud and they all want to help each other. Because if I can help stop fraud at, you know, retailer A, it’s going to only help me at retailer B. And so I think communicating with your peers. And then when you’re talking to fraud providers, I always think it’s important to say, okay, so you have a solution today, but what is the R and D you’re putting back into your technology? How is it helping me tomorrow? I think that is key. And then the last piece is stopping fraud is one, like one line item, right? But every company cares about revenue, every company cares about growth, every company cares about acquiring new customers. So I think it’s one thing to look at a fraud solution, right? And then be like, okay, they’re putting the R&D into the technology. So they continue to increase what they can do from a fraud. capability, but what are they doing to help me understand the needs of my business? So I think that’s the other piece of the puzzle is, yeah, they can stop my fraud, but are they helping me grow revenue? Yes, they can decline transactions, but is that really what’s best for my business? And so I think being able to talk with a partner that understands their business goals is vital for success of a fraud solution.
Greg Kihlstrom: Yeah, and I think that’s a good segue to the last topic I wanted to talk about, which is just, you know, how do retailers stay ahead in this landscape? You know, so we talked a bit about, you know, the consumer preferences and Well, we all know that is that that’s going to continue to evolve and, and, you know, and then, you know, certainly fraud is a component of that as well. And so, you know, for retailers that want to ensure that their brand is staying at the forefront of payment innovations, again, whether that’s, you know, risk mitigation and fraud prevention, or just consumer preferences on how they want to pay, you know, what advice would you give them to stay ahead of where consumers want to be?
Will Mavromichalis: Yeah, it kind of meant to my last question, unfortunately, another great sideways, I think you have to talk to your peers. Like, what are my peers in the industry doing? And you do that by attending shows. You do that by listening to podcasts such as yours. You do that by sitting on, you know, forums. But also you need to talk to your processors, talk to your gateways, talk about what you’re, you know, they are doing to stay ahead of payment innovations. And do you need to be a part of them? So those would be really the big three things I would probably recommend from that standpoint.
Greg Kihlstrom: Yeah, yeah. And so, you know, what are your thoughts on how important is it to, you know, adapt to the current state of things versus, you know, anticipating those, those future things that, you know, that we’ve talked about a bit?
Will Mavromichalis: Yeah, I mean, I think it goes back to what is the goal of the business, right? And I think when you talk to a business, if they are just, if the roof has fallen off and they are just leaking and they are losing money to fraud and They need to get a handle on it. I think that is always step one. Let’s stop the fraud. And then it’s OK. How do we help you grow your business? What are the trends that are coming in and how could that potentially impact you against your growth for the business? And everything has a sort of a risk reward. Right. And so just being able to look at it and if you say, hey, you know, we have to grow 20 percent this year, then, OK, maybe we want to to take a little bit higher of a chance for fraud, but keep these things in mind. And so I think it just goes back again to having that partner that understands sort of what your business needs are and how to help you mitigate as much fraud as possible. That would definitely be what I would recommend. When I think of like the future of payments, I do think that you’re gonna start to see fraud move uptrend, right? So I think, being able to have an identity verification solution, being able to understand who is Will when he’s at the door, first letting Will through the door and allow him to start making transactions. I think these are all key things we have to consider.
Greg Kihlstrom: Yeah, yeah, absolutely. Well, well, thanks so much for joining today. One last question. I like to ask everybody here, you know, what do you do to stay agile in your role? And how do you find a way to do it consistently?
Will Mavromichalis: Yeah. And you know, before I answer that, Greg, thanks so much for having me today, man. Um, it was great to be a guest on a show and honored to connect and talk honestly about a topic that I love. And so, um, what I do to stay agile in my role is I have the privilege of talking to, you know, clients and prospects daily. They’re always keeping me on my toes, right? Um, you know, one day I’ll have a meeting with a huge retailer. The next day it’s an FI, the third day it’s a processor. And so being able to just, you I have the fortunate position of being on the side of the house where I’m helping fix problems, I think allows me to see the trends and things shift over time. So that way I’m a better resource for my partners. Another thing I do to stay agile in my role, love listening to podcasts, love going to shows, but really at the end of the day, it’s just talking to customers.
