Merchant’s Check list for Payments
Payments used to be “the simple part” of retail. You just accepted cash and cards and all the consumers were satisfied. That is not the case anymore. Retail Payments are in disruption. FinTech booms, regulation changes and consumers digitalize their behavior. The following checklist will give merchant an insight where to focus with payments.
1. Do You offer the right payment options to your clients?
Consumer behavior changes rapidly and the payment preferences in different demographic groups variate and change. Millenniums want to use mobile and instant payments. Cash is still king in some areas but vanishes rapidly on others. Cards are preferred but more and more with NFC/Contactless. In certain product areas consumer finance based payments are a must. Payment options are important reason consumer to abandon their cart especially in online stores. According to recent study 40 % of consumers consider not to buy if the preferred payment method cannot not be used. Merchant has to be aware of the preferred payment options of his clients. If the payment portfolio is not uptodate, it will be a big hinder to sales.
2. Can You provide same user experience and smooth payments cross the channels?
Brick & Mortar and eCommerce merge to become omnichannel commerce. Consumers want to have similar access to retailer’s offering in online, in mobile and in physical store. Omnichannel access means that consumer may be able to order online and pick up the store; order at store and arrange delivery online, It also means that merchandise bought online can be returned to store and is refunded there and vice versa. Consumers want same payment options in all channels and the merchant must be able to handle also the exceptions like add value / refund payment transaction cross the channels.
3. Does your settlement and reconciliation process cover all channels and all payment methods?
The most successful merchant’s I’ve worked with are very cost conscious and have automatized all routine work like settlements and reconciliations. By doing this a merchant can create significant savings both in labour and in bank payments. This will become even more important in the fragmented payment scene of the future.
4. Are You sure that you are in the same cost level as your competitors?
New regulation in EU-region, like Multilateral Interchange Fee (MIF) regulation in card payments and the coming PSD2 in all payments, has increased and will increase competition, which will decrease the prices. But price reductions are not given to you. It requires activity. By putting out to tender will on average create a 5-10 % savings on yearly payments costs paid to external service providers.
5. Do You have a Plan?
Environment changes rapidly and the number of Payment Service Providers and Payment methods will explode in the coming years. This create a challenge to merchants. To choose the right payment methods and to keep the costs related to payments in control is vital for success. This requires planning and proactivity. A payment strategy or at least a roadmap how to react on changing environment has to be in place..
The writer Päivö Eerola is payment professional and serial entrepreneur. He is a board member of Certitrade AB.