The Demise of Golden Age of Payment Security and What This Means for Big Brands

Posted by Steve Gilde on June 22, 2017

Over the past few weeks, there has been a veritable flood of news articles and OP-ED pieces bemoaning the impending, and seemingly inevitable, demise of Sears. For someone who grew up when the Sears catalog and the yellow pages were indispensable resources this has made me a bit nostalgic for those “good old days.”  And don’t even get me started on the excitement generated between me and my siblings when the Christmas “Wish Book” showed up in the mail once a year.

Yes, this was back at the dawn of time, before the Internet, smartphones, PCs (gasp), and even before shopping malls. We had three local TV channels and a black and white Philco to watch them on, so the Sears catalog was entertainment. The family took turns leafing through - the soon to be dog-eared - pages of the catalog, hoping and dreaming, and ultimately picking out few items, e.g. back to school clothes that fell within that year’s budget. Mom would take care of the essential items like socks and underwear, while we would get to choose a couple of shirts and a few pairs of pants. We did not worry so much about size, fit or fashion in those days, close was good enough. The nearest thing to a “designer brand” we had was Levi’s.

After consolidating the requests from all the kids, my mom would proceed to process the “order.” This meant going to the local bank branch to get enough cash to buy a money order, then going to the post office, conveniently located in the same building as the town’s only bank, then posting the order off to Sears. Several days later, a red card would show up in your post office box (no home delivery for in-town addresses in those days). If you were the kid fortunate enough to check the box that day, you took the card around to the counter and someone from the post office staff went into the “backroom” to dig out your package from Sears that was nested among several other packages from Sears bound for other local families.

Technology’s Impact on Brand Trust and Longevity

While this process may appear to be archaic by today’s standards, it all worked remarkable well for many years. True, there were not a lot of other options, but I think another important element was trust. We trusted the local bank and post office, as well as the folks working at both. After all, these were widely respected institutions and we knew the people personally. The employees all lived in the local area - no one had 90-minute commutes in those days. And we trusted Sears. They had become a part of the national fabric and we knew that if we had any problems, we could contact Sears and they would make it right.

There has been much written about what happened to Sears and what has them teetering on the brink of bankruptcy. When you boil all that analysis away, I think you will find underneath it all a trust issue associated with the Sears brand. The retail industry changed, Sears got distracted trying to figure out its role in that new landscape and lost the very elements that made it a brand we trusted.   

They tried to expand their footprint with acquisitions, did not invest in their stores, and failed to understand what was driving the changes in the market. Sears responded to decline of the brand by cutting costs, sacrificing the quality of their products and failing to maintain the customer service levels that made them a preferred retailer.

We clearly live in a different place and time than I did as a child. We certainly have a lot more convenience and choice than we did in the past, but that convenience and choice comes at a cost. Our laptops, tablets, smartphones and ubiquitous connectivity to the Internet allows us to bank while on an airplane, order from Amazon while standing in line at the supermarket and FaceTime with family across the country. However, these same devices are a pipeline connecting us to alt news, fake reviews, and more while creating a bevy of issues around privacy and data security.

Progress Still Presents Payment Security Challenges

A recent item published by estimated that more than 94 million Americans currently store their payment card information online. Compare that with data gathered by CNBC on the cost of identity theft and it would seem that almost 20% of the population who store card data online are at significant risk. Presumably they are most interested in personal convenience and lack awareness and/or concern about the well-publicized issues related to online security and data breaches.  It is not beyond the realm of possibility, I suppose, to wonder if they know what “stored online” means.

As the US continues its migration to EMV, Card Not Present (CNP) fraud will continue to expand and the payment information stored online is going to become increasingly attractive to the same criminals that have already demonstrated their skills in other settings. It seems no organization is safe from them. Retailers, e-tailers, issuers, acquirers, insurance companies, hospitals, and governments, have all been hacked and remain under attack. For those interested in more information on just how far and wide this vulnerability stretches, the industry website, Data Breach Today, offers a view to that, albeit a very disturbing one. 

Yes, we had fewer options back when Sears was at its peak. The world was smaller and many of the positive things technology has brought us were not available. I guess the question now is has trust become a casualty of these advances and, if so, who do we trust now?

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