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Payments Guide to the Retail Sector

BAMBORA OPINION

04 November

Victoria Galloway

Retail is evolving. Most products, whether sold online or offline, now involve a digital path to purchase. In this post we'll look at how retailers can create clear paths to purchase, in an increasingly complex online and offline world, so your business can be part of the evolution.

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When it comes to retail, digital technologies and innovative payment methods have changed the economics of an entire industry.

You need only look as far as the streaming giant, Spotify, to see how digital transformation and smart payment bundles have disrupted global music distribution. PWC Australia project that by 2023 Australians will spend $763m on digital music distribution and $41m on its physical distribution.

Enter the smart speaker, digital's most popular listening device, with products from Amazon, Google and Apple making their way into 16% of Australian households. The smart speaker's role in this retail guide is important. While other favourite music is found via voice search and streamed via Spotify accounts, we listen through a physical device. While this end physical product cannot yet be digitised, every other part of its customer and payments journey is.

Most products, whether sold online or offline, now involve a digital path to purchase. In this post we'll look at how retailers can create clear paths to purchase in an increasingly complex online and offline world.

How has digital transformed the retail sector?

According to Salesforce, 64% of consumers don't think retailers really know them. Looking around, its easy to believe that this might be true - classic case of the customer always being right. For retailers, becoming familiar with consumers is the holy grail, but it takes a lot of work to get there. And consumers don't make it easy; jumping from device to device, searching online but buying instore, wanting to buy now and pay later and abandoning carts altogether.

The retail sector has always been about product. Historically, it involved transferring a product from a supplier or factory to a consumer. Successful retailers bought low and sold high. Everything between these steps was controlled through various efficiencies. However, digital has bulldozed every single step in the retail journey. It's challenging to buy low when you're sharing a space with big global conglomerates like Amazon. It's equally hard to sell high when there's national and global competitors all providing solutions to consumer price sensitivity.

Instead, retailers need to focus on gathering data that will optimise every step in the path to purchase. Data that offers insights into where and how shoppers are interacting, where they experience the most friction and what their behaviours mean. These trends impact every retailer - regardless of size - as shoppers increasingly dictate the retail landscape. With 73% of consumers using multiple channels to shop, tracking how and where they pay can be challenging for retailers and involve operational changes.

How instore shopping experiences are changing

Getting digital data and turning it into insights is a tricky task. The Amazon Go no-checkout trial in the States is an interesting example of how instore shopping experiences are starting to look quite different. All shoppers need to do is download an app, scan the QR code before entering the Go store and then take what they want. There's no staff or interactions but visual recognition technology instead.

While Amazon Go's technology seems a little out of reach for most, importantly it represents more of a footnote for what is to come than the actual answer to the future of instore retail. The data Amazon would have gathered on their shoppers is staggering, though. Every move documented, every product picked up and then dropped, every label read, every nod or shake of the head. All captured on camera! Creeped out? Maybe a little. The important part is the data.

Three major ways digital is transforming online retail

With eCommerce getting busier, digital has changed the way retailers and consumers interact:

  1. Smartphone shopping is on the rise
    44%
    of consumer aged 35-44 use a mobile wallet, and the number is expected to increase quickly. The digital wallet uptake in Australia has been propelled by the major banks now offering Apple Pay and Android Pay.
  2. Consumers want options
    And the options need to reflect their own respective buying behaviours - 61% of consumers start shopping on one device and finish the transaction on a different one. Understanding this is key to omnichannel and the evolving customer experience.
  3. Voice search is here
    Back to the smart speaker. NAB reports one in three Australian consumers are considering purchasing a voice assistant in the next 12 months. While research by Gartner estimates almost one in three searches will be done without a screen by 2020.


Payments are the point of difference in an evolving retail experience

"Over the past decade, the way people shop and pay has been undergoing a transformation. They are increasingly shopping online at their convenience and they expect... efficient and secure ways of doing so." So comments Michele Bullock, Assistant Governor at the RBA.

Convenience and customer experience go hand-in-hand. Measuring the value of customer experience through the entire customer journey might seem challenging but today it's the most comprehensive strategy for business growth. With customers shopping across channels, the challenge is to make the experience - including the payments experience - as seamless as possible.

Retailers must consider everything from a shopper's first exposure to the brand all the way through to purchase and receipt. When payments are considered as part of this, then they'll not only enhance the entire customer experience, but become a major point of difference.

It's important for retailers to keep up with payment innovation to remain relevant. While offering consumers every possibility seems smart, it's smarter to choose payment systems that suit your business. Omnichannel payments mean different things to different retailers but drilling down, it is essentially ensuring all your payment experiences are consistent across all channels. Consistency in terms of security, speed and convenience are paramount, whether or not you consider your business truly omnichannel.

Providing new and convenient payment options is also part of this point of difference.

Apple Pay is here to stay, because customers want to pay their way

NAB, CBA and WestPac were noticeably resistant towards Apple Pay, rendering at least a quarter of Australian consumers unable to complete purchases using the wallet functionality on their phones.

Over 14,000 CBA customers wrote to CBA Chief Executive Matt Comyn asking the bank to reverse its stance on Apple Pay and earlier this year when the bank lifted their boycott, it paid off. More than half a million people flocked to the new payment service in just two weeks after it was made publicly available. For retailers, this is welcome news, in particular because Apple Pay brings relevance and recognition into the payment experience. Knowing how customers want to pay is becoming increasingly important. Once you obtain this information, you're in a better place to make key decisions around payment platforms.

What does a superior retail payment system look like?

Most businesses are aware of the need to accept major credit and debit cards. End-to-end payment technology, which handles all aspects of payment transactions, can be a valuable partner in the path to providing a superior customer experience across all channels.

  1. It's personalised
    Using analytics tools to understand your customers will enable you to provide a personalised payment journey. 48% of shoppers will leave sites because of a poorly personalised brand and payment experience.
  2. It's flexible
    Retailers need to offer shoppers flexibility and continue to evolve with the desires of their customer base. Adopting new payment technology is a good example of this.
  3. It's secure
    Consumer safety is everything. They'll gain peace of mind knowing that they are paying on more secure POS equipment, or that an online payment page and gateway is certified for security compliance. According to Global Sign, 84% of shoppers will abandon a purchase if the website isn't secure.
  4. It's positive
    Retailers need to provide consumers a memorable, positive experience when shopping for goods or services - that's what makes loyal customers.


Retail payment processing must-haves

Taking into account the end-to-end customer experience, there are a number of boxes retailers can tick when optimising the payment experience.

Smart Checkout

PR Web report that 87% of shoppers will abandon their online carts if the checkout process is too difficult. Choosing a smart checkout, like Bambora's Custom Checkout, enables retailers to add all the important features and functionality into their customer's experience - including:

  • Accept major ways to pay
  • Alternative payment acceptance
  • Easy Mobile SDK
  • Tokenisation and 'save my card'
  • Full control of the payment experience, from authorisation through to purchase
  • Manage chargebacks
  • Risk and fraud services


Shopping cart integrations

Give consumers the payments experience they deserve by enhancing your web operations. Bambora integrate with popular shopping cart integrations, including Magento and WooCommmerce.

Opportunity to unify your POS

Shoppers see one channel and one brand. They've come to expect a shopping experience that caters to all their unique requirements. A seamless brand experience with no friction between what's instore and online, and the ability to shop whenever and however they like. Unify your data to enable omnichannel payment experiences that deliver a better customer experience:

  • Endless aisle
  • Click and collect
  • Dynamic checkout


PCI compliance

As a business, you probably already appreciate that every single time a customer hands you their credit card details to honour a transaction, there's more than just money exchanging hands. As our payments partner, you can leverage Bambora's Level 1 PCI Compliance.

Find out how Bambora work with retailers

While retailers are keen to overhaul their payment systems in line with the latest technology, they only do so with the right support and the right investment. Innovation without compromising on stability and security is key - and retaining customer trust is a must. But to deliver experiences consumers now expect, it would be a bigger risk not to innovate.

If you're interested in finding out more about how Bambora work with retailers, don't hesitate to get in touch with one of our local team or learn more about our retail payment services here.


About the author

Victoria Galloway has been writing and producing in the payments and eCommerce space for a number of years, both in the UK and Australia.