Customer expectations continue to evolve, and when considering a purchase — a big ticket item or even a smaller one — they often look for flexibility in payment options. Merchants and retailers operate in an increasingly competitive space, seeking to create a better customer experience to win greater loyalty and frequency while also increasing sales. The customer/merchant relationship does not have to be one of opposition. There are solutions that can benefit both.
The Connected Commerce and Strategic Growth division of Citi Retail Services is designed to reimagine point-of-sale (POS) lending. The team conceptualizes how finance products can be integrated with merchants’ POS systems and how to make it easier for merchants to connect with Citi. The information is leveraged when building products and merchant connection points, enabling customers to access relevant lending products when checking out or buying merchandise.
Indeed, Citi’s research revealed that both consumers and merchants are looking for multiple payment options at the checkout. In fact, 90% of surveyed consumers agreed that retailers need to offer various payment options at the POS. Designed for consumers and retailers, Citi Pay® products help consumers understand the monthly cost of a product. Instead of focusing on the total transaction amount, they can assess purchases based on the associated monthly payments. This process helps consumers determine how the product or the purchase best fits into their budget.
In this podcast, Mark Johnson, CEO of Loyalty360, spoke with Terry O’Neil, Head of Connected Commerce and Strategic Growth for Citi Retail Services, about the future of POS lending, the strategic partnerships Citi’s formed to enable Citi Pay®, and how merchants shouldn’t underestimate the power of an embedded payment product in building customer loyalty.
Customer expectations continue to evolve, and when considering a purchase — a big ticket item or even a smaller one — they often look for flexibility in payment options. Merchants and retailers operate in an increasingly competitive space, seeking to create a better customer experience to win greater loyalty and frequency while also increasing sales. The customer/merchant relationship does not have to be one of opposition. There are solutions that can benefit both.
The Connected Commerce and Strategic Growth division of Citi Retail Services is designed to reimagine point-of-sale (POS) lending. The team conceptualizes how finance products can be integrated with merchants’ POS systems and how to make it easier for merchants to connect with Citi. The information is leveraged when building products and merchant connection points, enabling customers to access relevant lending products when checking out or buying merchandise.
Indeed, Citi’s research revealed that both consumers and merchants are looking for multiple payment options at the checkout. In fact, 90% of surveyed consumers agreed that retailers need to offer various payment options at the POS. Designed for consumers and retailers, Citi Pay® products help consumers understand the monthly cost of a product. Instead of focusing on the total transaction amount, they can assess purchases based on the associated monthly payments. This process helps consumers determine how the product or the purchase best fits into their budget.
In this podcast, Mark Johnson, CEO of Loyalty360, spoke with Terry O’Neil, Head of Connected Commerce and Strategic Growth for Citi Retail Services, about the future of POS lending, the strategic partnerships Citi’s formed to enable Citi Pay®, and how merchants shouldn’t underestimate the power of an embedded payment product in building customer loyalty.
Good afternoon, good morning. It's Mark Johnson from Loyalty 360. Everyone's happy to stay with you. Want to welcome you back to another edition of Loyalty Live. In this series, we speak with leading agencies, technology partners and consultants in customer channel and brand loyalty, About the technology trends and best practices that impact the brand's ability to drive unique experiences, enhance engagement and, most important, impact customer loyalty. Today we have the pleasure of speaking with Terry O'Neill. He is the head of Connected Commerce and Strategic Growth for City Retail Services.
Speaker 2:Welcome, terry. How are you today? I'm great, Mark, thanks for having me.
Speaker 1:Perfect, thank you. Thank you for joining. We'd like to start these on a more personal level, just to know the individual we're speaking with. So we'd love to know a little bit more about yourself, your current role with City and a bit about your background.
Speaker 2:Absolutely so. As you opened up with, I'm currently responsible for Connected Commerce and Strategic Growth for City. What that enables or essentially entails, is how we think about point-of-sale lending, how we think about delivering finance products into merchants' points of sale and making it easier for merchants to connect with City. It really speaks to how we start to build products and merchant connection points so that we can bring the products that customers are seeking when they're checking out or buying merchandise, and bring them at speed and operate at the speed of a retailer, so that we can move customers through that checkout process as quickly as possible.
Speaker 1:Okay, most people are obviously familiar with the City brand, but may not be familiar with some of the capabilities regarding City Pay, which launched in May of 23. For those who may not be familiar, could you share a brief overview of City Pay and some capabilities of the solution?
Speaker 2:Absolutely. As you said, you know, city's been in point-of-sale lending for over 30 years. We're one of the industry's leading and largest providers of private label and co-brand cards and we proudly serve some of the nation's largest retailers. If you think about City Pay, city Pay starts to take the core tenants of private label and co-brand cards and expand them to a broader cohort of merchants and consumers. It starts to bring capabilities like deferred financing, like monthly payment plans and like revolving lines to a broader set of merchants. It also rethinks the way that merchants can connect with us. So what we've done to take it down a level or take it more onto the ground for merchants and consumers is we've developed two new products a digital line of credit with the City Pay brand and a merchant installment loan, also with the City Pay brand. We've also enabled those products to be delivered into merchants' points of sale via APIs and standardized development kits, and we've executed agreements with enablers like Charge After, freedom Pay and Shopify, so those products can be available to retailers where they currently process payments.
Speaker 2:Traditionally, with private label products, it's a direct one-on-one connection with the merchant that requires long lead times and technology lifts on both sides of the organization. With City Pay. We've removed the heavy lift of technology from the merchants. They can grab these products from Shopify or via an enabler like Charge After or Freedom Pay and integrate them where they currently execute their transactions. What that does is it shortens the lead time to bring these critically important point of sale lending products into the merchant's point of sale. So it enables a broader set of merchants to bring these products to consumers and a broader set of consumers to take advantage of point of sale lending when they're making a purchase.
Speaker 1:Okay City recently conducted some research and some of the key capabilities and kind of starting. The key findings were that consumers are asking for more flexible payment options. In your opinion, does this continue to be an industry trend? I know I've read a good deal in the Wall Street Journal recently about a lot of the shopping done in the Q4 this last year was on kind of extended payment plans. Is this something that you see and what are merchants and consumers asking for when it comes to payment solutions? Credit financing what are you seeing?
Speaker 2:Mark, as you pointed out, what we heard loud and clear from the research that we conducted was that both consumers and merchants are looking for multiple payment options in the checkout, and, specifically, 90% of the consumers that we surveyed agreed that retailers needed to have multiple payment options in their point of sale. What that comes down to, as we've dug deeper into it, is really around flexibility. As consumers are making purchases, whether they be large ticket items, they're looking for how they fit those purchases into their budget. What the city pay products enable them to do is understand that if they're buying, you know, a gas grill or a sofa, or a piece of jewelry or a handbag or whatever it may be, what the monthly cost of that product would be. So, rather than looking at the total amount of that transaction, they can start to assess the purchases that they make based on the monthly payments that would be associated with it. That helps them ascertain how the product or the purchase that they're making best fits into their budget. That's why we're hearing from consumers that multiple payment options flexibility are key.
Speaker 2:I think that we'll continue to see that trend evolve. I think that we'll continue to see point of sale lending grow. I also think that what we'll start to see is today, and traditionally, the flexibility that we've seen in point of sale lending outside of Co-brand and private label has tended to be within e-commerce. I think what we're seeing from consumers is they're expecting to have that payment optionality and that flexibility, regardless of where they transact, whether it's e-commerce or in physical point of sale. So as we were building the city pay products both the digital line of credit and the installment loan we not only looked at ensuring that we can provide the consumers and merchants with the flexibility and optionality that they were seeking, but ensuring that these products could operate within e-commerce as well as within the physical point of sale, so that if a customer is shopping at dot com or shopping at the store, they still have those options open to them.
Speaker 1:I expect those trends, as consumers move seamlessly between digital and physical, will continue to evolve In your opinion how do you feel the city pay application process is differentiated from other digital payments or credit solutions available to consumers now?
Speaker 2:Yeah. So, as you could imagine, in addition to the consumer research that we did that uncovered, consumers are looking for flexibility and optionality and security. The other thing that we did as we were building these products is brought consumers and merchants into the design phases of the product. So we did a ton of UX testing. As I said earlier, what is critically important in point of sale lending is ensuring that the application is intuitive, that the application is easily understood and moves the customer through the checkout process as quickly as possible.
Speaker 2:So, in addition to building the products, we invested a ton in the UX, the user experience, specifically not just in how the application integrates into the merchant's point of sale, but once the customer clicks on using city pay to check out that, we move them through that application in seconds.
Speaker 2:We pre-fill information. So if you're in a logged in checkout experience, we'll pull your name, address, city, state and zip from the merchant. At that point we're asking you for three additional pieces of information that you can move through very quickly. The other piece of it is ensuring that you have a best in class UX from the customer is making sure that once you decision that application and the customer receives the approval that you enable them to execute that transaction. So within sub seconds we deliver that merchant with tokenized purchase credentials and close the transaction for the consumer.
Speaker 2:As we've gone through our UX testing, what we've heard loud and clear is that it's best in class. We feel very strongly about that. As I said, our DNA is routed in point of sale lending. We've taken what we've learned over the past 30 plus years and the investments that we've made in conversational user interface, digital account number and lookup tokenized sales credentials and built off of that to ensure that city pay could not only operate at the speed of retail but ensure that customers could move through that application as intuitively and quickly as possible.
Speaker 1:Absolutely. When you look at partnerships very important for the members of the 36010 status partnerships that either from the technology side, an agency is working with a technology or a consultant is working with the technology but also on a brand side to make sure there's alignment, make sure both brands have a good value proposition Can you talk a little bit about what you were seeing with regard to partnerships and where you see that going with the city offering?
Speaker 2:Absolutely. I think within city there are a couple of different ways that we would look at the partnerships. The first are partnerships and strategic relationships that we've taken on to enable city pay. So I mentioned charge after, freedom pay, shopify. Those are core relationships to ensure that we can deliver the product as quickly and as easily to the merchants that we partner with, again reducing the tech lift on the partner's front. We could have these products in merchants point of sale once they decide that they want city pay within weeks, and that's because of strategic partnerships with enablers like Shopify, charge After and Freedom Pay, being able to deliver the products via APIs and standardized development kits, so that the merchants we are partnering with don't have a heavy lift on their side and that the products reside where they're already.
Speaker 2:Executing transactions and executing payments are critical. The other piece of it is, if we look across city, what I think is unique is city is a partnership business. First and foremost, we have a large transaction services business. We have Spring by City, which is on the processing and acquiring side. City pay enables us, in partnership with transaction services, to serve our clients from end to end and when they think about engaging with consumers and bringing consumers, payment flexibility and payment processing in one place. When we think about partnerships at city, we're looking not only at the technology side of it, but also the merchant side of it, and ensuring that we're building relationships with our existing merchant community, but also with new merchants that we might not have otherwise served through private label and co-brand.
Speaker 1:Okay, when you look at these payment options, privacy disclosure is a big area of focus for members of the 360 privacy regulations are in 10 states and growing, and most of them, as you know, kind of code the California regulations. But how do you look at this with regard to educating the consumers on these new offers and benefits, and how do you do that in a way that's beneficial to both, because you obviously want them to continue to engage, to be responsible and prudent in their approach?
Speaker 2:But how are you looking at that Sure, I think, again, it starts with the application process and where and how the products are integrated into the merchant's sales journey. With City Pay, we are a B2B2C product. We execute and acquire through our merchant partnerships, where the product is integrated into those merchant points of sale. It starts with building awareness when a customer is shopping and considering the purchases that they're making. I think there are a couple of key components that we found in our research. Again, we referenced the payment flexibility and the payment optionality. What we've heard loud and clear from consumers is tell me how much this product is going to cost me every month so that I understand where and how it fits within my budget and can I afford it. That's the first piece of it. The second piece of it is the application process. I talked about the conversational user interface, making sure that as we bring that customer through the application, they understand a couple of key things. One of the benefits of building these products within City is we are a regulated bank. We do this in branded cards, we do this in our private label business and we do this in our co-brand business every day. Taking those core tenants and bringing them into City Pay ensures that we're not only fully compliant, but we understand where and how to communicate the product terms and conditions to the consumer, as the consumer is coming through the conversational user interface and we're collecting the data that we need to approve the application or decision, the application. There are points in the application where we reiterate if they're enrolling in a deferred promotion, where we reiterate if they're enrolling in a monthly purchase plan or a major purchase plan, so that they can understand how the product works, understand the payments that are going to be associated with the transaction, before they ever execute that transaction. The final pieces of it come down to a couple of different things. The city pay products are fully digital. We are not issuing paper, we are not issuing plastics. They reside within the merchant's ecosystem and within the consumer's devices. So we also ensure that before we execute the transaction, that the customer is aware of eSign consent and aware of the fact that they'll be receiving their statements electronically. From there we pull them through an early month on book strategy. After they execute that transaction, they go through an enrollment in account online so that they can manage their account.
Speaker 2:I think what is very unique about the city pay digital line of credit versus other pay in for products or buy now, pay later products is.
Speaker 2:It's a product that operates across our merchant ecosystem, so any merchant that accepts city pay, the customer can use that account anywhere.
Speaker 2:They can have over 100 payment strategies on that account, which means you, as a consumer, if you're buying something on a deferred promotion or a monthly purchase plan and you know that it's going to be $66 a month or $75 a month, you'll be able to see that in relation to all of the other purchases that you've made on city pay. So you can start, as a consumer, to get an idea of all of the monthly commitments you're creating when you're buying on major purchase plans or deferred. We think that really underpins financial responsibility and helps consumers get a better handle on all of the buy now, pay later transactions they're executing, because it sits in one place, on one account and they can easily access it online. We think taking them from that journey through early awareness and education all the way through helping them manage the account is what's critically important in helping consumers manage their finances Okay when you look at the state of customer loyalty, customer experience, there's a great push to evolve programs to make them more personalized.
Speaker 1:How do you envision the future of customer engagement in your client's industries, especially looking at these unique potentially very unique payment options that can be part of the loyalty and customer experience arena?
Speaker 2:Absolutely. It's a great question and I think the first thing that I would call out is merchants can't underestimate the power of an embedded payment product in building customer loyalty. I think in doing that, they have to make sure that they have the right partner standing with them at the checkout, a partner that understands how to underwrite real time when a customer is trying to buy something. Understanding how you move a customer through the transaction as quickly as possible and having a partner who can weather any economic condition is going to be critical because at the end of the day, when a customer is trying to buy something, if it's not easy, if it's not intuitive, you lose an opportunity to build and cement a long-term royal relationship with them. The second piece of it is when they're looking for a payment provider in the point of sale. They should be asking that partner how they think about building repeat purchases and how that product feeds into their own loyalty ecosystem.
Speaker 2:Within City Retail Services, again because we've grown through private label and co-brand, we embed our products in the merchant's loyalty ecosystem.
Speaker 2:Our goal is to drive that consumer back to the merchant for repeat purchases. So, in addition to closing that first transaction or driving average order value, for us, it goes beyond that. We look at that customer as a shared customer, not only a customer of City, but primarily a customer of our merchant partners. A merchant should be asking their financial providers what they're doing from a marketing perspective, from a communication perspective, to ensure that, if that customer comes through your point of sale, your financial services provider is helping to drive them back and not taking them out of your loyalty ecosystem by providing them with competitive offers via merchant-funded offers or the like. If you are a retailer and you bring a customer through a buy-now-pay-later strategy, the last thing that you want is for them to see offers from your competitors. You want your financial services provider to help you not only execute that transaction, but bring them into your loyalty ecosystem and help fuel that loyalty time and time again. Thank you.
Speaker 1:Excellent. What's next for payments? Regarding what you're seeing, are there trends that may be coming? Obviously, a great deal of development and uniqueness in the fintech space right now. What's next? What do you think is next?
Speaker 2:I think, as we said earlier, you'll continue to see the evolution and acceleration of point of sale lending. I think we've heard from consumers and merchants loud and clear that it's critical. They need that flexibility, they want that optionality. So you'll continue to see that really grow in the space. The other piece that we are very focused on is Omnicommerce ensuring that consumers can take what they've come to expect in digital and mobile channels and have that within the physical point of sale. So what we've been focused on with CityPay is we're not just a digital provider of point of sale financing, but if you're shopping in store, that you have that product and that flexibility available to you and, more importantly than that, that your user experience is as easy in the physical point of sale as it would be within the digital channels. I think you'll start to see that evolve very quickly as consumers are coming to expect the same optionality and physical channels that they have in dot com and in e-commerce channels.
Speaker 2:You mentioned personalization. I do think that we'll start to see a lot more personalization in the products that a merchant offers in the point of sale. There's a point where, as point of sale lending continues to evolve and we can do just more options and more providers that consumers can become overwhelmed by the choice. How can I, as a merchant, help you pick the product that's right for the purchase you're making at that time or your profile as a customer? So how do we start to help merchants make intelligent decisions about which products to show and when? I think will be some of the key things that we'll see coming through 2024? Excellent.
Speaker 1:Well, now we have the always fun quick fire round of questions. We'd like to be short, one word or a short phrase, or I'm getting in trouble with Nick and the contact team, so we'll start off with what is your favorite word.
Speaker 2:I'm going to go with kerfuffle. I find the word funny and it's a slight nod to a colleague, but I just like. The word speaks to disruption, which I think is critically important in what I do.
Speaker 1:Excellent. What is your least?
Speaker 2:favorite word Probably can't. When you're trying to build a new product in a large organization, you need people to get to yes. So when I hear we can't do something, it's often how do we navigate to we can do something. What?
Speaker 1:excites you.
Speaker 2:Right now, the art of the possible right seeing the potential in something and organizing around it to see how we can capture it as an organization.
Speaker 1:Okay, what do you find tiresome?
Speaker 2:Lack of curiosity. People that are comfortable with the status quo.
Speaker 1:What is your favorite place to shop?
Speaker 2:Can I go with just online? I think that that's most of where my dollars are spent. If I had to give you a specific one, I would probably go with chewycom. I have a 16 week old puppy, so I'm finding that most of my time and energy is keeping him occupied.
Speaker 1:Okay, what profession, other than the one you currently have, would you like to attempt?
Speaker 2:What profession?
Speaker 1:Architecture. Okay, what profession would you avoid?
Speaker 2:Probably anything to do with candy. So I wouldn't work in a candy store. I wouldn't be a candy manufacturer because I have a soft side for chocolate. I would probably eat all of the profits.
Speaker 1:Yeah, I don't know if you've had to prove to through the frozen chocolate covered chair.
Speaker 2:Yeah, they're in my freezer now. They don't last long. I'll say that.
Speaker 1:I agree. And if you take half the chair, just eat the chair, it's even better. But then it gets pretty expensive when you're eating 30 cherries for eight bucks. But those are great. So it's my weakness now. That and donuts, but I cut donuts out.
Speaker 2:Yeah, the truth is pretty reasonable from a calorie intake perspective, so I get fully behind that who inspired you to become the person you are today. I would say my family mostly. I grew up seeing my grandmother as my mother and my dad really kind of put in a hard day's work and instilled the value of that in me and that's kind of held true to this day.
Speaker 1:Okay, when you look at the end of the day, what do you think about?
Speaker 2:These days how much sleep I'm going to get. Okay, it is absolutely top the list for me Is that due to the dog. Oh, due to the dog and a number of other things, I try to be an early riser to get an early morning workout out. So the combination of a puppy and a 5 am wake up are a challenge these days.
Speaker 1:Try to stay true to it, though. All right, how do you want to be remembered by your friends and family? Somebody they could rely on? Okay, perfect. Well, I think this is great, terry. It was awesome getting to know you a little bit more, also regarding kind of the products that City is working on Very impactful, so thank you for taking the time to share. Thanks for having me. I really appreciate it Absolutely. Thank you everyone for taking the time to listen. Make sure you join us back for another edition of Boy through Life soon and until then, have a wonderful day.