With card transactions now accounting for around 80% of retail spend, this is a key battleground for retailers to differentiate their customer experience from their competitors. A customer focused and agile retail payment strategy should be part of any business plan to build loyalty and enhance the customer experience. In this blog, we explore 5 key innovations emerging in retail payment solutions and how GNFR procurement can give you the edge.
Customers are hungry for innovation and convenience
Today’s consumers are demanding a more personalized experience across all stages and interactions in their customer journey. In response, retailers are implementing innovative retail payment methods to increase their engagement with customers, making things simpler and more secure.
The 5 key innovations that are bringing this payment revolution to life:
Innovation 1: Burberry maximizing revenues from Chinese shoppers
As the world gets ever smaller, retailers’ payment infrastructures need to be able to realize this new opportunity. Customers now expect to be able to pay with their preferred payment method anywhere in the world and online.
As of early 2020, Chinese shoppers account for 35 percent of global luxury goods sales and 90 percent of last year’s growth in the market, according to data from Bain & Co. To meet this seemingly ever growing demand, Burberry has ensured that its payment options align to its consumers needs; and in addition to its traditional Visa, AMEX, and Mastercard solutions, Burburry now offers PayPal, Union Pay and Apple Pay.
Innovation 2: Buy now pay later with Klarna
Klarna is taking the retail market by storm with its ‘buy now pay later’ experience and has a valuation of $5.5bn. It boasts 85m end customers, 200k retailers and 1m transactions per day, including key players such as Asos, Adidas, and H&M. Klarna claims that retailers are seeing bigger purchases, improved conversion, and global growth potential.
Innovation 3: M&S offering checkout-free payment service
M&S has started offering its ‘Mobile Pay Go’ service in 50 stores, providing customers with a checkout-free payment offering. M&S Retail, Operations, and Property Director, Sacha Berendji said: “Our customers will be able to benefit from this popular technology and enjoy a seamless shopping experience.”
Innovation 4: Data-driven customer loyalty at Café Nero
Cafè Nero and Yoyo Wallet launched a unique payments and loyalty app to provide a seamless customer experience and give the UK’s third largest coffee chain the data tools and insight to better engage, reward, and retain their customers. Café Nero, Head of Partnerships, James Flett, shared, “this is the first time that we’ve had access to basket-level information – we can now identify, recognize, and have a relationship with the customer.”
Innovation 5: Open Banking and payments with Yolt
Payment startups like Yolt are taking advantage of open banking with customers making payments through a portal that directly connects bank to bank and cuts out Visa and Mastercard. This is a developing technology that has the potential to disrupt the payment landscape as we know it today.
Your customers demand retail payments are safe
While the technology, loyalty, and unified customer experience deliver the glamorous benefits, it’s important not to lose track of fraud, security, and regulatory compliance. Retail Week found that 77% of consumers believe security is the most important consideration when buying online. A combination of tailored rules, customer profiling, fraud intelligence, and real-time screening can be the solution to providing a secure and smooth experience.
The consequences of a system not being secure or in compliance with to regulations have the potential to be massive. Under new GDPR regulations implemented since May 2018, European businesses have paid out more than €100m in fines. We expect security concerns to stay at the forefront of customers’ and retailer’s agendas for the years ahead.
What does this mean, and how do you achieve a customer-focused and agile retail payment strategy?
Retailers can no longer rely on transactional relationships with their payment partners; instead, they need to seek alignment with a strategic partner that can help shape and deliver their vision for their customer experience. Without this, they risk being left behind by their competition. However, navigating the market and finding the right partner can be quite tricky, as maturity, strengths, and strategic direction of payment providers differ greatly.
If you want to begin to planning a flexible payment strategy, a good place to start is:
- Understand frustrations with the current payment journey and experience
It is likely that both the retailer and consumer will have issues with the current payment solution, such as settlement window issues, lack of payment methods, and / or too much friction at checkout for the customer. Customer interviews and experience days can help you model the present day experience and map out your future vision of payments.
- Review supplier performance and internal reflection
Many retailers will experience some level of frustration with their supplier, so it is important to undertake a wide ranging review of performance taking into account security, uptime, payment methods, and their ability to plan for the future. Your partner should be able to articulate where the retail payments market is going and at what pace. Additionally, it is important to review any internal issues that are blocking the provider from succeeding. For example, frustration linked to slow integration of new payment methods may well be linked to lack of internal investment from the retailer to enable that change. This type of review will enable you to understand if your current partner is suitable to keep up with consumer demands and will ensure access to the latest innovation in the market place.
- Understand your payments eco-system and what you are able to do and when
Retail payments eco-systems can be quite fragmented with different providers undertaking acquiring, gateway, and fraud services, not to mention the direct relationships with new payment solutions such as PayPal, Apple, Google etc. A lot of these relationships can be historic or have draconian auto-renewal clauses or both. When planning your strategy, it is important that you understand the pace at which you are able to move. A review exercise of all current arrangements is not only key to understanding what changes you can make and when, but it will help prioritize short and long term issues that need to be solved.
- Create your road map for your retail payment solutions and experience
After fully understanding the issues, priorities, and commitments with your current solution, building a roadmap will allow you to effectively plan activities and actions based on a realistic timeframe. Actions will likely include integration and trials of new payment methods, implementation of new providers, security reviews, trials of mobile payment in-store, improving returns processes, and combining payments with loyalty.
Visualizing what the journey may look like will allow you to build in the benefits, risks, and considerations of each step.
The retail payment solutions revolution is happening. It’s time to act
Retailers must be agile to meet customers’ new payment needs and deliver a great customer experience. An effective payments strategy will help maximize sales, increase customer loyalty, and protect consumers’ security.
The retail payment revolution is a great reason to take a look at your GNFR procurement. Read more about the wider role of GNFR in improving the retail experience.