The Race for the Ideal Retail Payment Solution
The payments market is expected to increase by more than 50% in the next five years. What is driving this growth?
There are a lot of players in the digital payments market right now. They’re competing to provide convenient options that consumers love. Industry experts predict that the payment processing solutions market will be valued at $147.4 billion by 2027—more than a 50% increase over 5 years.
Consumers aren’t using cash as much as they used to, but the digital boom is about more than that. It’s also about considerations like flexibility, freedom, and convenience.
Digital payments flourished during the pandemic, with 71% saying they plan to continue using these methods. And 73% of consumers say that when given a choice, they’ll opt to shop at a store that offers their preferred payment methods.
Consumers have a lot to choose from with the recent boom of payment options, including e-wallets, QR codes, retailer apps, payment transfer, biometric authentication (face, palm, finger, etc.), mobile payments via smart phone or watch, and “walk out” technologies (like Just Walk Out by Amazon) that use cameras and artificial intelligence. Even BNPL and cryptocurrency play a part in the new retail reality.
Who comes out on top in the payments race partially depends on what retailers offer. Customers can’t use a solution no one accepts, but retailers often defer to what their customers want. In return for offering a payment method to customers, retailers would like:
- Low fees
- Minimal investment
- Easy implementation
- Fraud protection
- Integration with other tech
The integration aspect is important, especially in regard to inventory solutions so retailers can track online and in-store numbers in real time. While you want to make your customers’ lives easier, you also don’t need to make your work any more difficult.
What consumers want
Consumers will ultimately determine who wins the race to the ideal retail payment solution. They have a lot of preferences when it comes to the new realities of shopping. They want:
- Convenience. Some customers love the convenience of not having to carry a wallet and being able to pay with a smart phone. Some don’t want to have to go through the checkout process at all. The ideal payment method varies by customer and situation, so it’s best to offer options.
- Security and privacy. Everyone gets tired of worrying about fraud and compromised accounts. Customers want to know you’re offering secure payment methods. They also want to know what you and your partners are doing with their data.
- Ease of use. No one likes being in a hurry then being told the chip only works on the third try. No one likes holding up the checkout line as they try to create an account to pay with the app. Do everything you can to make paying easy.
- Speed. Speed overlaps with ease and convenience, but sometimes it’s a customer’s top priority.
- Accessibility. It may be less likely that you’ll forget your phone than your wallet. Some companies are working on biometrics payments that let you pay with only your body (yes, phone-free) once you’ve registered. That payment method is even harder to forget at home.
- Integration. For many consumers, the more connected their tech is, the better. They may want their shopping apps to connect with their bank cards, which they want to save in their e-wallets, which they want to work with their budgeting apps, and so on.
- Safety. There are some shoppers wary of shopping in stores or who prefer contactless payments to keep people and pathogens at a distance.
It’s important to know your customers. Their tastes vary not just by person but by consumer type. Different industries attract certain types of customers who may share many of the same characteristics and preferences—not only in products but in payment methods. For example, tech consumers probably enjoy tech and may like using their e-wallet. Busy parents who may not want to shop in store may prefer to order and pay by app. As in all areas of business, it’s imperative to know your customers. Will the payment methods you offer affect the customer experience? Probably. In fact, you may have even seen a customer walk out without their purchases if they get frustrated with the payment process.
The future of digital payments
It's a wild time for the payment industry. Time will tell if retailers and consumers embrace options like cryptocurrency or facial recognition payments. Or maybe some entirely new and different payment technology is on the horizon.
As a retailer, it’s important to be flexible right now while trying to find the ideal combination of convenience, security, and privacy for your customers. Growing pains are part of business, and vendor payments and infrastructure changes can be expensive for retailers. However, it will take strategic thinking now to come out on top since payment solutions will directly impact who succeeds in retail and ecommerce in the long run.
Do you want to know how digitization can improve the customer experience? Contact us at firstname.lastname@example.org to schedule a call.
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