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800 Speedway Stores After Deal Closes FTC Casts Doubt Over 7-Eleven’s Purchase Of 3

FTC Casts Doubt Over 7-Eleven’s Purchase Of 3,800 Speedway Stores After Deal Closes

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https://www.pymnts.com/news/retail/2021/ftc-casts-doubt-over-7-elevens-purchase-of-3800-speedway-stores-after-deal-closes/
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A massive deal in the convenience store industry has been thrown into doubt after the Federal Trade Commission called 7-Eleven’s purchase of 3,800 Speedway stores and gas stations “illegal” and “anti-competitive” putting the $21 billion deal that closed Friday (May 14) in jeopardy.

In a press statement released alongside the company’s announcement that the nine-month-long transaction was complete, FTC Acting Chairwoman Rebecca Kelly Slaughter and Commissioner Rohit Chopra called the closing declaration highly unusual and extremely troubling.

“We have reason to believe that this transaction is illegal,” the FTC statement read, noting the significant competitive concerns it had in hundreds of local markets across the country.

In addition, the two FTC members said the Commission had spent significant resources investigating this transaction, and that 7-Eleven, its Japanese parent company Seven & i Holdings, and Speedway owner Marathon Petroleum had not yet received majority support from the five-member antitrust panel.

“[7-Eleven] and Marathon’s decision to close under these circumstances is highly unusual, and we are extremely troubled by it,” the statement read, adding that “the parties have closed their transaction at their own risk” and that the FTC would continue its investigation with the help of state attorneys general.

7-Eleven Refutes FTC Claims

In addition to its deal-closing announcement, 7-Eleven released a separate statement refuting the FTC’s comments.

“7‑Eleven is disappointed by the statement as it fails to acknowledge the facts that led to 7‑Eleven closing the transaction,” the statement read. “To be clear, 7‑Eleven was legally allowed to close on the Speedway transaction [Friday May 14] and statements or implications to the contrary are false.”

Specifically, 7‑Eleven said it had negotiated and signed a closing settlement agreement with FTC staff at the end of April that resolved all of the Commissioners’ anti-competitive concerns, and would have seen the sale of 293 fuel outlet locations.

However, less than three days before the deal was set to close, 7-Eleven said Acting Chairwoman Slaughter and Commissioner Chopra indicated that they wanted more time to review the settlement agreement.

“7‑Eleven took the request very seriously, but such a last-minute delay would have created enormous disruption to the lives of our new colleagues at Speedway and to the business,” the parent company of 14,000 U.S. retail locations said. “Given that there was no legal basis for such a delay and given that 7‑Eleven was abiding by the negotiated settlement agreement, we closed [Friday May 11] on schedule.”

So Now What?

With both sides entrenched in their positions it seems clear that the convenience store spat will continue, if not also escalate and expand, and in turn, delay a final FTC vote on a purported agreement that would have left 93 percent of the stores involved in the deal intact.

In addition, if further litigation and/or federal court appeals were to occur, it would also burden the transaction with ongoing and additional legal costs as well as possible integration delays.

In the meantime, 7-Eleven CEO Joe DePinto is moving forward as planned.

“Speedway is a great brand and a strong strategic fit for our business that significantly diversifies our presence throughout the North American market, particularly in the Midwest and on the East Coast,” DePinto said. “Together, we have the opportunity to redefine and enhance the customer convenience experience nationwide. This is a groundbreaking moment in our company’s proud history.”

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May 17, 2021 at 04:00PM
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Walmart’s Q1 Results Will Show If Its Omnichannel Transition Is Winning Or Waning

Walmart’s Q1 Results Will Show If Its Omnichannel Transition Is Winning Or Waning

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https://www.pymnts.com/news/retail/2021/walmart-q1-results-omnichannel-transition/
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When Walmart last met with investors in February, the owner of over 11,000 global stores had just wrapped up a record quarter — and year. Even as it proclaims to be “winning” the battle, the retail giant said it is raising the stakes in its omnichannel transition strategy via a 30 percent hike in its capital expenditures budget.

This strategy marked the voice of a new Walmart, executives of the 60-year-old company told investors — the dawning of a bolder, brasher, more confident iteration of its former self that would be almost unrecognizable even to those who know it best.

“Walmart is different than it was three or five years ago,” Walmart CFO Brett Biggs told investors three months ago. “It’s faster, it’s more creative, it’s less risk-averse. Now is the time to play even more aggressive offense — we’re winning and we intend to keep pushing the ball aggressively down the field.”

Fast forward to the present, and proponents and critics alike will be looking to see how that battle plan, which is backed by a record $14 billion bankroll, is playing out as Walmart reports its results — not only for the first three months of the new year, but for the first 90 days of this new omnichannel era.

Beyond the Top and Bottom Line

While “the Wall Street crowd” will be looking to see whether Walmart can beat average expectations of $1.21 per share on $132 billion in sales (which, for the record, is just a few pennies above the $1.18 per share it delivered in the year-ago quarter and actually down $700 million or 0.5 percent on the sales front). If the analysts are right, then Tuesday (May 18) will not be the kind of transformative result that the “retail crowd” is hungry to see.

When CEO Doug McMillon commented in February that the capabilities the company had built in previous years had “put us ahead, and we’re going to stay ahead,” one might think that the release of Q1 performance results should more closely resemble “a gender reveal” rather than further perpetuation of the flattish trajectory that has allowed rival upstart Amazon to catch Walmart — and pass it — in several key categories over the past 10 years.

Although Walmart has pledged to improve and increase its digital sales — and has invested heavily in the launch of its eight-month-old Walmart+ free delivery annual membership program — the fact remains that $9 out of every $10 it generates is still being done through its massive footprint of physical stores.

Depending on your viewpoint, Walmart’s legacy brick-and-mortar dependency can either be seen as a problem OR as a low-hanging-fruit opportunity to move the needle on its comparatively small eCommerce business.  

The fact that Amazon and almost every other major eCommerce player has already said that the meteoric online sales growth rates of yore (e.g., the past 14 months) are not going to be repeated in post-pandemic 2021 has also set up an interesting dynamic. Given that Walmart is uniquely leveraged to the success of both “bricks and clicks,” so to speak, its ability to seamlessly and simultaneously attract customers to its physical stores and digital properties is critical.

The Digital Transformation

To be sure, the digital side — aka Walmart.com — is on the move, with U.S. eCommerce sales rising 79 percent during the COVID-ravaged year that just ended, albeit off a small base. In addition, the retailer continues to invest in people, products and processes that will help grow sales and efficiency.

In fact, nary a week has gone by this year in which Walmart did not unveil some new initiative or undertaking that would further that goal, including last week’s acquisitions of the MeMD telehealth and Zeekit virtual fitting firms.

The king of the supercenter big-box store has also made no secret of its budding love of social media selling — especially on TikTok, where it has enjoyed some early success at tapping into an important new way to reach young consumers (while also looking kind of cool).

In March, Walmart signed a deal with A-list fashion designer Brandon Maxwell to revamp two of its private-label clothing lines — and to oversee seasonal style refreshes — in a pact the retailer called a “first-of-its-kind” move for the company.

Future FinTech

However, for all its twists and turns, nothing has drawn more curiosity — or fewer details — than Walmart’s plans to become its own banking platform and offer a suite of modern FinTech conveniences, in a bid to attract new customers and give existing shoppers more reasons and ways to spend.

Investors will be eager to hear any updates on the company’s bank plans after having just recruited two Goldman Sachs executives to oversee the project, which has largely been kept off the radar since the announcement of a pact with FinTech firm Ribbit Capital in January.

Nearly half a year later, with the hunt and need for new sources of revenue growth intensifying, any news of progress on the FinTech front would be welcomed — especially given the surge in COVID-era credit trends such as buy now, pay later, real-time payments, international money orders and same-day payroll.

Product Assortment 

Walmart is not only working to make it easier to spend and send money, but also to increase the volume and variety of merchandise available on its website — including a larger assortment of new products from first-time vendors, as well as third-party merchants who pay commissions to sell through the Walmart.com platform.

To that point, Walmart is in the process of committing $350 billion in products made, grown or assembled in the U.S. as part of its plan to support the creation of more than 750,000 new jobs.

Prior to Tuesday’s progress report, shares of Walmart have fallen 3.5 percent over the past three months (compared to a 6 percent rise for the S&P 500), leaving the retailer with a market value of $390 billion.  

The company will report its first-quarter results for its fiscal 2022 year on Tuesday morning (May 18) followed by a conference call for analysts and investors.

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May 17, 2021 at 04:00PM
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Redbox Strikes Deal To Go Public Via Merger With SPAC

Redbox Strikes Deal To Go Public Via Merger With SPAC

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https://www.pymnts.com/news/retail/2021/redbox-strikes-deal-to-go-public-via-merger-with-spac/
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Redbox, which operates a nationwide network of entertainment kiosks, said on Monday (May 17) that it has entered into a definitive deal to merge with publicly traded special-purpose acquisition company (SPAC) Seaport Global Acquisition Corp., according to an announcement.

The deal has gotten the unanimous green light from the boards of directors of Redbox and Seaport Global Acquisition. It is anticipated to be completed in Q3 2021, “subject to the satisfaction of customary closing conditions,” the announcement said.

Redbox will become a publicly traded company with a $693 million enterprise value. Upon completion of the deal, Redbox’s common stock is anticipated to trade under the “RDBX” ticker symbol on the Nasdaq. The move comes a few years after Redbox’s parent company was sold to a private equity firm.

“In Redbox’s next chapter as a public company, we will be focused on delivering a differentiated, affordable entertainment experience for our millions of loyal customers, and seeking profitable growth for shareholders,” Redbox CEO Galen Smith said in the announcement.

Redbox said it serves clients by the way of 40,000 kiosks across a minimum of 150 retail partners, offering “lowest-priced rentals for new theatrical releases.” Roughly seven in 10 of those customers identified as late adopters of novel technology. That gives Redbox “a unique opportunity to convert customers to its digital platforms over time,” according to the announcement. In addition, the company interacts with and incentivizes 39 million members via its Redbox Perks loyalty offering.

We’ve long admired Redbox’s team for the incredible reputation they’ve established in the industry, as well as the innovative, scalable business model they’ve built. Over the past year in particular, the resilience Redbox has demonstrated through the challenges associated with the COVID-19 pandemic reaffirms our confidence in the value and growth potential of the business,” said Seaport Global Acquisition Chairman and CEO Stephen Smith.

As reported late last year, Redbox introduced on-demand movies and TV programming to its ad-supported streaming service, Redbox Free Live TV.

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May 17, 2021 at 03:45PM
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Bain Says Luxury Goods Sales Returning To Pre-COVID Levels

Luxury Goods Sales Returning To Pre-COVID Levels, Bain Says

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https://www.pymnts.com/news/retail/2021/luxury-goods-sales-returning-to-pre-covid-levels/
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Sales of luxury goods could rebound from the effects of the coronavirus as early as this year, thanks to shoppers in the U.S. and China, according to a new report from the consultancy Bain & Company.

“Bain now sees a 30 percent probability that sales of high-end handbags, clothes and jewellery will return to or exceed their 2019 level of 280 billion euros ($340 billion) this year, depending on how quickly vaccines are rolled out and tourism picks up,” Reuters reported on Monday (May 17).

However, the more likely outcome is a full rebound next year, which is still a quicker turnaround than Bain’s prediction from November 2020, when the firm said that luxury goods would need to wait until 2023 to return to their pre-COVID state. The sector saw its sales drop by 23 percent last year, its biggest decline in history and the first in more than a decade, thanks to pandemic-related store closures and a nearly complete halt to worldwide tourism.

“But the crisis does not seem to have had a lasting impact on consumers’ appetite and spending power for high-end wares,” Reuters noted, with soaring sales in China and stimulus payments in the U.S. helping to fuel a recovery in the first quarter of 2021.

“The U.S. market has been the unexpected bright spot,” Bain said. On the other hand, Europe is still struggling, thanks to tourism restrictions and a slower pace of vaccinations.

The report noted that this recovery doesn’t apply to every luxury brand. Labels like Hermes and Kering have already surpassed their 2019 levels, while some smaller labels like Ferragamo have yet to catch up. COVID-19 has forced brands that would not have otherwise sold their goods online to embrace eCommerce, “which is set to become the leading channel for luxury purchases in the next few years,” per the report.

That’s in keeping with larger retail trends. As PYMNTS reported earlier this month, global eCommerce soared to $26.7 trillion in 2019 and accounted for nearly 20 percent of all retail sales last year.

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May 17, 2021 at 03:42PM
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Purple Reports Surging D2C Wholesale Revenue Amid Strong Demand Early In 2021

Purple Reports Surging D2C, Wholesale Revenue Amid Strong Demand Early In 2021

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https://www.pymnts.com/news/retail/2021/purple-reports-surging-d2c-wholesale-revenue-amid-strong-demand-early-in-2021/
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Digitally native mattress company Purple Innovation posted a 54.8 percent surge in direct-to-consumer (D2C) revenue and a 47.6 percent surge in wholesale revenue from Q1 2020 to Q1 2021 as the mattress brand saw formidable demand at the start of 2021.

In announcing Purple’s Q1 2021 results on Monday (May 17), CEO Joe Megibow said the company “experienced strong demand early in the year, particularly in our digital channel, followed by a sharp acceleration in our wholesale business as the first quarter progressed.”

Purple reported that net revenue surged by more than 50 percent from $122.4 million in Q1 2020 to $186.4 million in Q1 2021. The company reported that operating expenses as a percent of net revenue were essentially flat — 37.9 percent in Q1 2021 in contrast to 37.3 percent in Q1 2020.

It also reported that adjusted net income soared from $4.6 million, or 8 cents per diluted share, in Q1 2020 to $12 million, or 17 cents per diluted share, in Q1 2021.

Purple said it was raising its 2021 outlook based on its Q1 results. To that end, the company now anticipates full-year 2021 net revenue to range from $860 million to $900 million. By contrast, Purple’s previous range was between $840 million and $880 million.

“Looking ahead, our plans are firmly around providing customers with innovative comfort solutions through our omni-channel retail strategy. This includes upgrading our digital capabilities in order to better integrate our multiple product categories and enhance the online shopping experience, accelerating the rollout of Purple showrooms, and strengthening our wholesale relationships,” Megibow said in the announcement.

Purple also said it anticipates capital expenditures for 2021 to be between $45 million and $50 million.

The news comes as Sleep Number saw its sales climb by 20 percent to $568 million for the three months concluding on April 3, headed up by a 116 percent jump in online sales. “Our digital ecosystem is enabling Sleep Number to efficiently acquire new customers,” CEO Shelly Ibach said on the company’s conference call.

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May 17, 2021 at 02:57PM
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Connected Devices Have Brains And Heart In The Anatomy Of Consumer Payments

In The Anatomy Of Consumer Payments, Connected Devices Have Brains And Heart

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https://www.pymnts.com/consumer-payments-2/2021/in-the-anatomy-of-consumer-payments-connected-devices-have-brains-and-heart/
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It took a pandemic shove, but digital payments took flight over the past 15 months, soaring at the speed of economic urgency as consumers and businesses relearned shopping and paying.

PYMNTS’ May 2021 Anatomy Of A Consumer Payment Playbook: Consumer Devices edition done in collaboration with FIS, is latest in this ongoing series exploring the consumer payments journey along digital pathways — in this case, mobile devices and their connected potential.

Per the Playbook, one recent study found that “45 percent of millennials bought groceries and other household goods via mobile devices in Q4 2020 compared to just 35 percent in Q2. Consumers’ growing comfort with mobile shopping is also affecting where they go to find and buy products, with many scoping out potential purchases on social media platforms. Forty-eight percent of respondents in one survey reported that they had made at least one purchase via social media, while 67 percent stated they had clicked on retail ads hosted on these platforms that later resulted in their making purchases.”

Additionally, 46 percent of consumers in a recent PYMNTS survey said they “prefer to shop and make payments digitally because they do not have to wait in line — and they are expecting brick-and-mortar retailers to upgrade their point-of-sale (POS) payment processes accordingly.”

These expectations extend to a number of devices now, from smart speakers to wearables — not to mention the all-important smartphone — and will continue to as connections grow.

The Fourth Industrial Revolution Is Connected

Saying that “Connected devices are at the heart of the current landscape of digital innovation that many are labeling as the Fourth Industrial Revolution,” FIS Head of payment solutions Kelly Beatty told PYMNTS, “We are also seeing a major spike in alternative shopping methods like livestream shopping and ghost kitchens that likely would not have existed without connected devices.”

That’s all good. However, Beatty added that “FIs and merchants need to ramp up investments and focus on digital delivery, advanced analytics, dynamic loyalty programs and better, more contextual engagement. This … needs to be done with scale and agility in mind so when the next big technology advancement comes along, you are ready to make a quick pivot.”

Anatomy Of A Consumer Payment Playbook provides numerous examples of innovation around connected devices, noting that “Smart speakers have begun to take on a more prominent role in the consumer payments space. [One] study found that 37 percent of consumers have used smart speakers or other connected home devices to make payments within the past 12 months, including Amazon Echo, Google Home and Samsung SmartThings products.”

That finding hints at a larger trend of shoppers “beginning to place more trust in voice assistants and connected devices in their homes, creating more opportunities for businesses to entice consumers to their brands with experiences tailored to contextual commerce.”

Wearables And Voice Commerce Gaining Consumer Trust

Wearables are another connected device category that’s finally finding its footing with touchless payments pilots dotting the in-store and ecommerce landscapes.

Per the May Playbook, “Smart speakers have also begun to take on a more prominent role in the consumer payments space. The study found that 37 percent of consumers have used smart speakers or other connected home devices to make payments within the past 12 months, including Amazon Echo, Google Home and Samsung SmartThings products. This indicates that shoppers are beginning to place more trust in voice assistants and connected devices in their homes, creating more opportunities for businesses to entice consumers to their brands with experiences tailored to contextual commerce.”

All of this activity is leading to yet more breakthroughs and innovations. For example, biometrics are being explored from every conceivable angle, yielding vital results.

“The spike in consumers’ usage of emerging technologies like smartphones and smart speakers for retail shopping and payments is also leading to new security developments,” according to Anatomy Of A Consumer Payment Playbook: Consumer Devices edition. “One recent study predicted that biometric identification measures will become commonplace in the mobile payments space within the next four years. Researchers noted that 1.4 billion consumers worldwide are expected to use biometric facial recognition technology to authenticate their transactions by 2025, for example, compared to the 671 million who did so last year.”

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May 17, 2021 at 02:30PM
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Gig Apps Apply For — And Get — New Chart Positions In Latest Provider Ranking

Gig Apps Apply For — And Get — New Chart Positions In Latest Provider Ranking

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https://www.pymnts.com/news/2021/gig-apps-apply-for-and-get-new-chart-positions/
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Did you know that the word “gig” in its original form had zero to do with working?

To musicians, a “gig” is a performance. For troublesome Army privates, a “gig” is a penalty, like much-hated latrine patrol. Historically, a “gig” was also a two-wheeled horse-drawn buggy.

Meanings have commingled over time to yield the modern definition of a mutual money-making opportunity — with few strings attached. This update to PYMNTS’ Provider Ranking of Gig Economy Apps shows movement in the gig app sector getting intense, as more workers do more downloads ahead of extended unemployment benefits expiring a few months hence.

Now, for a “gig” of our own, we present the latest Provider Ranking of Gig Economy Apps.

The Top Five

Not much has changed at the very top of the charts since we last checked in, but don’t be lulled into a false sense of serenity. There’s lots to cover and much has happened, but most of our top-ranked apps held their positions.

Let’s start with DoorDash at No. 1, where it’s been for some time now, reporting in May that revenues grew 198 percent year over year to $1.1 billion, with total orders up 219 percent.

Likewise, Uber Driver keeps its No. 2 spot, with a new booze service toasting the fact that active delivery merchants rose 76 percent year over year in recent financials. No. 3 remains the turf of Instacart Shopper, being helpful in the recovery by adding SNAP payments acceptance.

The Fiverr freelance services app sticks at No. 4, after earlier this year posting strong revenue growth as more active buyers engage with the indie contractor platform.

Entering the top five for the first time is the Upwork app, whose gross services volume expanded 23 percent YOY to $654.5 million as recently as Q3 2020.

That’s a wrap for the top five.

The Top 10

In this region, we often see more jockeying for position, and that’s the case again in this update to PYMNTS’ Provider Ranking of Gig Economy Apps.

Up one spot to No. 6 this month is the Freelancer app, which connects people with gig work.

A tie takes No. 7 as Lyft Driver elevates one chart position, and Amazon Flex falls two spots to share that space. Lyft is unloading its self-driving vehicle arm, Level 5, to focus on rideshare.

There’s another tie at No. 8, this time between local labor app TaskRabbit, rising one spot, and gargantuan Grubhub for Drivers rising two spots, as Netherlands-based food delivery platform Just Eat Takeaway closes in on its acquisition of Chicago-based Grubhub.

New at No. 9 this month is the hourly staffing platform app Snagajob. Welcome to the big time.

Closing it out is one final tie, for the No. 10 position. Place your bets (but you’ll never guess).

New to the Provider Ranking of Gig Economy Apps Top 10 is the data-collecting Gigwalk app, splitting the space this month with another newcomer, on-demand staffing app Wonolo, whose head of supply Monica Plaza predicted a number of 2021 gig economy trends with stunning accuracy in this memorable 2020 PYMNTS TV episode.

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May 17, 2021 at 02:00PM
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Blockchain Finds A Space In Industrial Procure-To-Pay

Blockchain Finds A Space In Industrial Procure-To-Pay

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https://www.pymnts.com/news/b2b-payments/2021/engage-mobilize-blockchain-oil-gas-data-procure/
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The oil and gas industry has had a difficult past few days amid supply chain disruptions stemming from the ransomware attack on the Colonial Pipeline.

While the event has raised awareness as to the importance of corporate cybersecurity measures, it has also revealed the delicate nature of the supply chain of such a massive, yet complex, industry: one point of failure has widespread ramifications.

Procure-to-pay workflows in industries like oil and gas as well as waste management can be immensely complicated. Industry giants like BP are managing massive volumes of invoices to both send out and pay, but as Engage Mobilize CEO Rob Ratchinsky told PYMNTS, that’s far from the only area of friction that can stifle B2B payments in the industrials arena.

Sectors like oil and gas face some unique hurdles in streamlining the procure-to-pay process, but such challenging pain points also present an opportunity for some of the most innovative technologies, like blockchain, to step in and ramp up efficiency.

Middle Of Nowhere

Industrial workflows involve a high volume of documents that, like many industries, have historically involved a lot of paper and manual workloads.

Yet what makes procure-to-pay processes for firms in markets like the oil and gas sector especially challenging is that the work and purchase orders being generated often involve difficult-to-price services that occur in remote locations, with little opportunity for oversight.

“You’re out in the middle of nowhere,” said Ratchinsky. “You’re dropping supplies, you’re doing things nobody can watch and remit.”

By the time an invoice is submitted to the accounts payable (AP) department, finance leaders can be weeks or even months removed from when the actual service occurred. Oil and gas is an industry heavily reliant on a “cyclical workforce,” added Ratchinsky, meaning the cycle of professionals coming in and out creates an even greater challenge to gaining visibility into operations, matching what was ordered or purchased to what was actually provided, and how much was paid.

“They’re dealing with millions of records and millions of work orders per year,” he noted. “It’s hard to validate what took place in a timely manner.”

Blockchain Steps In

One of the biggest pain points surrounding the procure-to-pay processes in this industry involves data. Such sectors not only require management and integration of data from work and purchase orders, invoices and payments, but must also take into consideration a high volume of tertiary data points.

Ratchinsky offered an example of facilitating the payment for a commodity transfer between an oil and gas hauler and a client like BP. Key information including validation of that pickup from a third-party trucking company, as well as information from Internet of Things (IoT) devices including shipment location, timing, volume and temperature, are all essential to ensuring that billing and payments are done correctly.

Historically, the sector has relied on paper and snail-mail to move that information into the right hands. But as digitization progresses, the opportunity to embrace technology like blockchain can help to consolidate and streamline collection and management of that information.

“These multinational corporations need to get a handle on the way they aggregate their data,” said Ratchinsky.

As blockchain proliferates in such industrial spaces, there will be other use cases for the technology. B2B payments are another major opportunity, particularly considering the cross-border nature of industries like oil and gas. While today, blockchain has not yet reached the scale required to facilitate transactions, Ratchinsky acknowledged that such a future may not be too far off.

In the meantime, Engage Mobilize might consider exploring collaborations with payment technology providers to complete the procure-to-pay cycle, which it built out earlier this month through the launch of ENGAGE E2E and enhanced eInvoicing capabilities. But in the coming years, said Ratchinsky, blockchain-powered functionality will find a space to optimize both data flows and payments.

“Overall, it does not exist at large scale commercial efforts today,” he noted, “but I can see it entering the ecosystem in the next five to 10 years.”

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May 17, 2021 at 01:00PM
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Corporate Ransomware Rears Its Ugly Head Once Again

Corporate Ransomware Rears Its Ugly Head Once Again

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https://www.pymnts.com/news/b2b-payments/2021/data-digest-ransomware-fraud-payments/
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Ransomware is once again top-of-mind for corporate finance leads in the wake of the Colonial Pipeline attack.

The event has become a painful reminder of the widespread ramifications of a successful attack and the consequences of corporates failing to prepare. It has also given rise once again to the debate over whether businesses should make ransomware payments.

Increasingly, experts advise against paying up.

“You need to ensure that you don’t have to make the decision to pay or not pay,” said Black Kite Chief Security Officer Bob Maley in an interview with PYMNTS. “One preparation can be to have a bitcoin account set up. But the caveat is that you have already emotionally decided to pay, and the ramifications of paying are far more than just paying off bad actors.”

Colonial Pipeline’s troubles weren’t the only recent case of ransomware this week. Reports Friday said the Irish health service also fell victim to the fraud, forcing a widespread shutdown of its computer systems.

Speaking with CNBC, Proofpoint Regional Director of Public Sector U.K. and Ireland Peter Carthew warned that healthcare providers are particularly susceptible to ransomware attacks because they “have the highest motivation to pay up to restore systems quickly.”

It has yet to be seen how Ireland’s healthcare service will navigate the event, but it’s yet another revelation as to just how pervasive — and damaging — ransomware crime has become.

This week’s B2B Data Digest digs into the latest research on ransomware, as well as into other B2B payment fraud risks.

$220,000 became the average ransomware payment value for the first quarter of 2021, a 43 percent increase from Q2 2020 amounts, according to Coveware’s latest report. The intensifying ransomware threat continues to play out in the public eye, most recently with the attack on the Colonial Pipeline in the U.S. But large enterprises are far from the only businesses at risk, according to researchers, who noted that financial losses are not the only consequence of an attack. According to the report, 77 percent of all threats included threats to leak stolen data, a 10 percent increase from the previous quarter. Remote desktop protocol compromises and phishing email attacks remain the most common strategies of attack.

$300,000 was swindled from a shipper due to invoice fraud, according to the International Transport Intermediaries Club (ITIC), which is now warning the transportation and freight industry of such scams. In this particular event, a broker received an invoice from a bunker supplier, but the next day received an email also supposedly from that same supplier notifying the broker that the bank details on the invoice had changed. It was a scam, however, and the broker passed that invoice along to the shipper, which failed to perform due diligence to check that the invoice was accurate (the fraudulent document had reportedly misspelled the bunker supplier’s name). It’s just one of several cases of B2B payments fraud that have hit the industry as of late, the ITIC warned, advising industry participants to check invoice details before payment and check for other red flags.

49 million checks were written by California’s state controller in 2018 totaling about $320 billion for the year. According to The Epoch Times, California remains the only state unable to provide documentation of those payments as requested by Open the Books, which promotes transparent government spending, meaning evidence of line-by-line payments to state suppliers could not be produced. A legal representative for the state controller explained that the State Controller’s Office outsources vendor payment workflows in order to streamline that process, resulting in a lack of internal records about those transactions. While there are no claims of fraud made, a lack of record keeping may make it difficult for a government entity or private enterprise to effectively monitor risks and combat any malpractice.

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May 17, 2021 at 01:00PM
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Deep Dive: Examining The Factors Driving Debit Use Among Millennials And Gen Z Consumers

Deep Dive: Examining The Factors Driving Debit Use Among Millennials And Gen Z Consumers

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PYMNTS.com
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https://www.pymnts.com/next-gen-debit/2021/deep-dive-factors-driving-debit-use-among-millennials-generation-z-consumers/
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Consumers have different payment preferences depending on which stage of life they are in and what their current financial goals may be.

Studies have found that millennials between the ages of 25 and 40 and Generation Z consumers between the ages of 18 and 24 tend to prefer debit, while older generations often prefer credit. Millennial and Gen Z consumers average 14 percent fewer credit cards than adults over the age of 35, in fact.

Millennial and Gen Z consumers prefer to use debit rewards programs as they experience many firsts — such as buying their first cars, being hired for their first jobs and having their first children — and they are often looking for financial partners that can support them through these stages with flexible rewards options. These tech-savvy digital natives also prioritize mobile and digital payment options, especially mobile wallets and contactless cards.

Each generation’s payment preferences reflect their life experiences, and banks have the opportunity to put the right products in front of them to meet their needs every step of the way. The following Deep Dive examines the factors that drive the use of debit among millennial and Gen Z consumers and how they choose to pay.

Debt Wariness And Obstacles To Credit

More mature U.S. consumers tend to value credit because they have used it in the past to afford expensive purchases, such as buying a car or a home. Millennial and Gen Z consumers have been most impacted by financial crises, including the Great Recession of 2008 and 2009 and the past year’s pandemic, which both devastated many individuals’ credit and caused unemployment rates to skyrocket. The pandemic prompted credit card issuers to scale back credit lines, and consumers have become more at risk of being delinquent on credit card payments.

A survey of more than 2,000 U.S. adults reported that 14 percent of those between 18 and 34 years old described their credit profiles as “limited/no credit history/score,” while only 2 percent of consumers older than 35 said the same. Many debt-wary millennials and Gen Z consumers are eschewing credit for debit and are therefore slower to build their credit scores.

There are several other reasons why it has been difficult for younger consumers to obtain credit cards. The formidable credit card owning restrictions of the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act made it even harder for Gen Z individuals to obtain credit cards. The CARD Act required consumers under the age of 21 to obtain a co-signer before applying for a credit card or show proof of independent income. Credit card companies were also required to evaluate new applicants’ “ability to pay” before approving them for cards.

The number of college affinity credit cardholders dropped 40 percent between 2009 and 2012, according to the Government Accountability Office (GAO). This was due to issuers no longer marketing to students on campus, leaving college-aged consumers to seek out credit cards themselves if they wanted them. Many have also been left in limbo in the past, as nearly 7 percent of Gen Z consumers and more than 6 percent of millennials have had their credit card applications denied.

Budget Concerns

Debit cards help younger consumers spend only what they have, making them less likely to rack up debt. These consumers tend to make less money than their older counterparts and are therefore likely to be more budget-conscious and to look for methods to help manage their finances. This is the same reason why prepaid cards are another popular payment method that helps consumers keep their spending in check and why they tend to select buy now, pay later (BNPL) options most of all generations.

This budget consciousness could explain why more than half of millennials chose more cash back credit cards than other generations, on average, and why they are more likely to choose attractive rewards programs. It could also explain why Gen Z consumers tend to be those least likely to have maxed out credit cards, with just 44 percent having done so. Another study reported that Gen Z was the only generation to name price as their second top brand-loyalty motivator after quality, while it also compared millennials’ frugality to that of their grandparents in the Great Depression era.

A Security-Focused Future

Data breaches are constantly in the headlines, making security more important to consumers of all ages. One study found that 27 percent of millennials chose payment methods based on how safe and secure they are. Debit cards can allay some of these concerns, however, as they can be paired with PINs that customers must punch into point-of-sale (POS) systems to initiate transactions.

Nearly 28 percent of Gen Z consumers were concerned about credit card fraud and scams when applying for new credit cards, on the other hand. Younger generations have reason to be worried, too. Gen Z consumers are the most frequent victims of fraud and identity theft, according to reports gathered by the Federal Trade Commission (FTC), which noted that fraudsters likely target this group for their supposed lack of experience with financial tools.

More and more merchants are beginning to realize that younger consumers have a noticeable appreciation for debit solutions. Merchants and card providers can also do more to help defend these consumers with fraud protection tools and through education on how to better protect themselves from risk if they want to continue to encourage uptake.

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May 17, 2021 at 01:00PM
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