Home Slider How COVID-19 Is Accelerating the Need for Omnichannel Payments

How COVID-19 Is Accelerating the Need for Omnichannel Payments

by internationalbanker

By Nicholas Larsen, International Banker


The last few years have seen retailers prioritise the customer experience above almost all other objectives. Part of this goal for many sellers has involved providing a consistent environment for customers across a variety of touchpoints—in-store, online e-commerce channels, smartphones—and this has meant providing an omnichannel retail experience, particularly for payments.

Omnichannel typically refers to the capability to accept payments through a multitude of channels, whether via point of sale (PoS), online, near-field communication (NFC), mobile app, QR (Quick Response) code or simply in person. But more importantly, rather than simply taking payments separately through these walled-off channels, omnichannel payments facilitate an integrated experience across all touchpoints such that consumers are able to conduct transactions according to their preferences, with each channel offering the same quality of service and convenience. This means the customer can buy and pay via an app but may also have the option to pay online or collect the product at one of the seller’s physical retail outlets. Or perhaps the seller will prefer to buy the product in person but have it delivered separately to the customer’s house or workplace at a convenient time.

The proliferation of smartphones, online retail solutions and many other emerging technologies has meant that convenience for customers is now being achieved through a variety of channels. And as customers continue to expand their options from physical stores to mobile shopping and online commerce, the omnichannel strategy also provides sellers with the opportunity to reassess their sales strategies and ensure they continue to correctly anticipate where their customers are most likely to spend and, as such, their most popular payment methods.

“Put simply, an omnichannel payments platform is a comprehensive solution for payment processing,” explained FIS, one of the world’s leading payment firms. “It integrates all of a business’ payment processes together, giving a single view of your customer interactions, while also providing revenue-driving solutions across the entirety of the payment’s ecosystem. Used properly, it can deliver an engaging, personalized and consistent customer journey across any shopping channel.” Normally, the operation of the omnichannel platform depends upon the specific industry in which the seller operates, with payment facilitators providing an offering that aligns with that industry and the specific individual needs of the customer base.

It should be mentioned, however, that omnichannel payments differ in a few important ways from multichannel payments. “Multichannel payments are about offering your customers different online or mobile channels to pay. If you have a brick-and-mortar store but also allow customers to purchase products on your eCommerce store, on a marketplace such as Amazon, and on social media networks such as Facebook, you’re offering them multichannel payments,” according to online payments-processing firm Bambora. “Omnichannel, on the other hand, is about fusing shopping experiences (and payment touch-points) across your brick-and-mortar store, eCommerce site, mobile app, and more.”

“A payment platform that can transcend sales channels will ensure uninterrupted customer journeys,” according to S&P Global Market Intelligence’s February 2021 publication “Gaining a Competitive Advantage with a Strategic Approach to Payments”. “It will also offer a centralized view into customer behaviours and activities, and a means for launching new shopping experiences (e.g., buy online pick up in store/click and collect) with greater ease.”

A June survey of 3,000 consumers from the United States, United Kingdom and Australia by BigCommerce and PayPal found that a majority of respondents still preferred in-person shopping, although 62.5 percent of respondents reported doing most of their purchasing online. Nearly half said they were discovering new products on social media at least once a month, and 66.7 percent of respondents said they’d made a purchase directly through their phones at least once in the previous month. As such, the report highlighted the growing need for retailers to implement omnichannel strategies to satiate the growing appetite for convenient and consistent payment facilities across a variety of platforms. And the trend towards omnichannel payments is very much a global one. A 2019 survey by Visa revealed that 88 percent of customers in the United Arab Emirates (UAE) preferred a retailer that accepted different modes of payments, while 77 percent favoured shopping at a retailer with an online presence.

“For years, we’ve seen ecommerce continue to gain ground on traditional shopping. Online and digitized experiences have required retailers to quickly adapt to changing consumer shopping behaviors, and this was expedited in the pandemic,” said Greg Lisiewski, vice president of Global Pay Later Products at PayPal. “Now more than ever, consumers want to be in control of how they pay, and they have a desire for friction-free, seamless digital shopping experiences regardless of which channel they are shopping in.”

The COVD-19 pandemic has only expedited this need for convenience, making omnichannel solutions crucial to reducing physical interactions between buyer and seller. Indeed, according to the “Voice of the Connected User Landscape: Connected Customer, Disruptive Technologies” 2021 survey by 451 Research, part of S&P Global Market Intelligence, around 30 percent of consumers tried a contactless payment method for the first time during the pandemic. What’s more, one in four consumers bought something online and picked it up at the store for the first time due to COVID-19 and registered 96 percent customer satisfaction from the experience, while one in five consumers tried mobile order-ahead for the first time, again because of the pandemic, with 95 percent satisfaction levels recorded.

The evidence also suggests that those sellers without omnichannel-payment capabilities struggled to satisfy their customers’ expanding requirements for payment during the pandemic. “Merchants without an omnichannel payments platform struggled to bring these experiences to life in an operationally efficient manner. Others were challenged to manage the high rates of fraud often associated with expedited, cross-channel fulfilment. A key challenge at hand are siloed processes,” according to Jordan McKee, research director at 451 Research, writing in Forbes. “It’s no wonder that 73 percent of merchants report that integrating sales channels to obtain a unified view of customers is a high priority for their organization. Omnichannel payment platforms are a critical ingredient for execution.”

Indeed, many retailers were forced into pursuing a more omnichannel approach to suit their customers during lockdown periods. “Major brands shuttered storefronts and dove headfirst into a variety of omnichannel experiments, including services like curbside pickup; same-day home delivery; and buy online, pick up in-store (BOPIS),” Dr. Michael Ketzenberg and Dr. M. Serkan Akturk of Mays Business School explained in Harvard Business Review in May 2021. “By the end of last summer, the share of retailers offering curbside pickup jumped to 44 percent. Brands that had long avoided prioritizing ecommerce, such as Costco and TJ Maxx, scrambled to set up online stores. Walmart launched two-hour home delivery in April of 2020, and Walgreens pharmacies implemented a BOPIS option in May.”

And with COVID-19 ushering in a new normal in the way much of the world does business from now on, having the omnichannel infrastructure in place only seems to make more and more sense. “Customers are accustomed to online and omnichannel shopping experiences, and they are not going to go back,” Drs. Ketzenberg and Akturk asserted. “The good news is, leveraging digital solutions does not have to mean foregoing the advantages (both to the customer and to the retailer) of in-store shopping. Rather than trying to fight against the tide of digital transformation, our research suggests that the BOPIS approach may be the key to helping retailers engage their customers—both online and in stores.”

Ultimately, then, it would seem that as long as competition persists over maximising the customer experience, the world will continue to embrace the omnichannel experience in greater numbers. And in return, retailers can realise tremendous benefits by understanding their customers’ behaviours, which can only help them align their marketing, costs and inventories more accurately.

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