Don’t allow your data to be held hostage
Online retailers and other merchants have been urged to read the fine print of third party supplier contracts and ensure they retain ownership of their customers’ data no matter where it is stored.
In today’s information age, we’re seeing an ever-increasing number of options for businesses to leverage SaaS in order to streamline their operations. These services have been incredibly useful in providing businesses of all shapes and sizes with the latest in specialty services and technology.
However, understanding the scope of how these suppliers integrate with your business and who retains control of the information passed between them is paramount to your business’s survival.
Tyson Hackwood, head of APAC for Braintree Payments, a PayPal company, said it’s not uncommon for businesses to signup to a payment gateway early on only to find out down the road that it’s not so easy to change providers as they won’t release their customer’s data.
“Once they go into the terms and conditions of their contracts in detail, they discover that they don’t actually own it,” he explained.
“We are going through a very fast moving stage in digital commerce. And having access to your own data isn’t important anymore, it’s vital. With Braintree, we protect your data and keep you safe from fraud. But we believe just that – it’s your data. And you should be able to access it. We don’t believe in penalising our partners. But that’s not always the case with other providers.”
Hackwood believes the situation has emerged because unlike large companies, small businesses don’t have the joy and luxury of large legal teams. Many just haven’t looked at the fine print.
“Many small business wanting to take advantage of new technologies and the opportunities they present are getting stuck with out-dated platforms who lock you in to contracts unnecessarily and restrict the growth and flexibility of your business,” he said.
Hackwood works on the payments side, but believes the same problem is being encountered in other areas of IT too and describes the situation as “constricting”.
“Today, many companies are being valued on their social media presence and user base. There is value in user and/or customer data and investors are doing more and more due diligence and want to know who owns it. If they find out the data’s not owned by the business, that could reduce its attraction.
“If you are a middle-sized or larger organisation, it never hurts to have contracts reviewed. It really comes down to customer data and retention policy within those contracts.”
But Hackwood added: “Unfortunately, we’ve seen customers getting legal advice on this issue which adds another layer of cost. We also haven’t heard any success stories from small businesses wanting to move on, resulting in some have kept two systems going. So new customers get what they want and then they try to work out how to bring the rest across – for example, when credit cards expire. Others have emailed their entire customer base advising that they have had to change providers and now have to upgrade all their credit card information. These chose to take the pain in the short-term for the longer-term gain. And some have recontracted and gotten that unfavourable clause written out.”
Before you sign a contract, Hackwood advises always asking these basic questions: who would own the data if you were to move to another provider, how is the data locked in and how will it be transferred.
“Consider if the answers are palatable to your business. If you don’t get good answers, there’s probably a lot more to the story,” he says.
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