Merchants meet customers
Payment connectivity strategies for banks and financial institutions
9 MINS READ
A contactless, virtual way of life
The last couple of years have been nothing less than a rollercoaster ride, thanks to the COVID-19 pandemic. Almost overnight, businesses and consumers had to reorient themselves to a contactless, virtual way of life. But what started as the need of the hour soon became the very nature of interactions and transactions. Consumers may have taken to digital payments purely out of necessity but now prefer it for the convenience it offers.
We have seen unprecedented technology adoption in the past few years, with financial institutions aggressively pursuing analytics, automation, and cloud technologies to enable hyper-personalized but contactless services. Digital adoption took a quantum leap.
As per the World Economic Forum, digitization will drive the transition to a new model for supply chains. As the process integrates with the larger data ecosystem, it will offer a holistic view of availability, trends, and demographics. This approach helps organizations in shaping their growth strategies.
Companies already undergoing digital transformation fared better as they were acclimated to technology preparedness around cloud adoption, cybersecurity, and identity and access management (IAM). However, most financial institutions, payment, and merchant services companies adapted quickly.
Shoppers prefer contactless technology, and they aren’t going back
Merchants, retailers, and consumers had new opportunities in the post-pandemic environment. Retailers could provide more flexibility and build value and affinity. Customers realized they had much more payment flexibility and physical and financial safety. Contactless shopping and checkout-less technology were appealing to shoppers. As per a consumer survey, 87% of shoppers preferred to shop in stores with touchless or robust self-checkout options during the pandemic. Self-checkout options remain popular, as nearly 75% of shoppers say they will continue using them to pay for groceries frequently.
Retailers found increased sales and marketing, and affinity opportunities with customers by connecting cloud data with new, more flexible payment opportunities. Connecting financial institutions’ payment data to merchant services increases loyalty, drives hyper-personalized offers, and opens opportunities for increased product adoption and card use. On the merchant side, it allows increased purchase incentives, marketing, and affinity engagement to build customer trust and repeat business.
Social commerce will also be one of the most prominent digital trends in the retail industry, which paves the way for building more immersive experiences. This will be further accentuated by strides being made in livestream and virtual reality shopping and the increased adoption of the metaverse. Financial institutions must consider this and implement secure and seamless payment systems to enable a superior customer experience.
Key insights driving digital transformation
Cashier-less technology has arrived
For brick-and-mortar retail, checkout lines remain a significant point of friction. They are bringing seamless checkout experiences to consumers at scale.
Solution: NFC payment via embedded chips, tokenized wallet, pre-pay, buy now pay later (BNPL)
The distinction between offline and online has become irrelevant
The digital infrastructure is set to thrive. Shoppers will prefer convenience, and retailers will expect better relationships with rich data generated by digital transactions.
Solution: Omnichannel journeys, geotargeted relevant offers, and messaging hyper-personalization
Installments will become more common
Tightening household budgets—due to inflation and rising gas costs—and increased convenience have allowed pay-as-you-go, buy over time, and buy now, pay later options at the point of sale. This will be a game changer in making purchase decisions.
Solution: Pay per use and buy now pay later (BNPL), multi-payment sources
From subscription to recurring relationships
Brands are creating deeper customer relationships and enduring revenue streams with recurring payments.
Solution: Subscription sales models, personalized rewards, affinity offers, philanthropy, and cause
Future of payment connectivity
Merchant services and payments merge into a shared ecosystem of opportunity
When financial services providers connect merchant services to customers in the payment space, they open an opportunity to share payment data to help the retailer build loyalty while increasing the likelihood that customers will use their payment services and keep revenue within the bank.
Leveraging platforms and APIs to create a seamless, integrated experience
Rewards and loyalty, geotargeting of offers, and omnichannel messaging delivery are powerful influencers in driving response. Imagine a platform that combines this data across the entire bank ecosystem and shares it with merchants as an incentive to use merchant services. It would create opportunities for point of purchase (POP) credit acquisition, multiple payment options like buy now, pay later, discounts, and even opportunities to use digital services like e-statements and bill pay. These separate services usually are not connected to the retail experience. However, once consumers use and trust the technology, the opportunities for deeper relationships and brand loyalty are enormous.
The way forward
As we forge ahead with technology innovation as a solution to mitigate risk, we will see opportunities to create stronger relationships through a deeper understanding and use of data. Delivering value across multiple ecosystems will increase the trust, loyalty, and adoption of a more connected ecosystem.