One of the biggest challenges in the payments landscape is that customer expectations are constantly evolving. Thirty years ago, customers knew they could expect one experience when shopping from a catalog and another when shopping in-store. But then, Amazon came along and redefined the process, shifting customer expectations forever.
Now, the evolutionary wheel has landed on omnichannel payment solutions. As Don Apgar, Director of Merchant Services at Javelin Strategy & Research, explains in his report, The Evolution of Omnichannel Payment Strategies, omnichannel has created a seamless experience for shoppers across various touchpoints. However, with the ongoing evolution of the payments environment, merchants can’t afford to rest on their laurels.
Putting the Customer First
No matter where a business is on its omnichannel journey, payment technology is always evolving. Every change in technology presents an opportunity to enhance the customer experience. In general, customers do not notice the payment process until it causes them problems. However, they have come to expect consistency in their payments across different venues and platforms.
This consistency plays a major role in maximizing the customer experience.
“Let’s say I bought something in the store with my credit card,” said Apgar. “Then I go to use that credit card online, but it’s not available. Why doesn’t the online shopping process recognize me as an existing customer? Because I didn’t buy online, I bought in-store.”
Multiple sales channels are hardly a new concept in retail. When merchants operated catalog sales, consumers understood that catalog sales and store sales were separate entities—even if they fell under the same brand. As a result, consumers were willing to accept differences in how these channels handled payments. They didn’t expect the store to know anything about their catalog order, or vice versa.
Tackling Online Inconsistencies
The internet changed everything. As e-commerce replaced most catalogs, consumers no longer viewed shopping as separate experiences, and the idea of distinct shopping methods faded. For many retailers, the challenge became maintaining the consistency that consumers now expect. At this point, retailers needed to be extra cautious just to avoid frustrating customers.
“You don’t want to say, ‘OK, I take Apple Pay in-store, but I don’t take it online,’” said Apgar. “Or let’s say I want to buy a bike for my kid that costs $300. I can do buy now, pay later on the website and split it into four payments, but if I go to the store, I can’t do that.”
Too many retailers are still struggling with these inconsistencies. Their processing infrastructure was initially built to support a many brick-and-mortar stores, but 20 years ago, they realized they needed to transition to e-commerce as well.
In their search for the best e-commerce solution, many retailers found that their current processor handled in-store transactions well, but struggled with card payments on their website. So, they decided to adopt a processor specifically designed for e-commerce.
“That’s how you wind up with these siloed service stacks,” said Apgar. “You’ve got the best retail solution that there is and the best e-commerce solution that there is, but now the problem is they don’t talk to each other.”
A rise in fraud, combined with new data security requirements and emerging payment types like digital wallets, pushed payments deeper into siloed sales channel. While consumers increasingly expected a seamless omnichannel experience, retailers inadvertently moved their payment operations in the opposite direction—addressing channel-specific challenges with channel-specific solutions.
Opening Lines of Communication
For large retailers, there are additional considerations to ensure their systems communicate effectively with each other. These systems not only track payments but also manage inventory and monitor customer behavior. Retailers have started using this data to offer rewards or special offers, but it also presents the risk of damaging customer relationships if not handled carefully.
“Let’s say I went into a store, bought something with my credit card, and never signed up for anything,” said Apgar. “Then when I go buy something online and enter my card number, a box pops up that says, ‘Hey, I see you just bought something at the local store.’ It gets to be a little Big Brother-ish, and it freaks people out.”
Another concern is fraud. One of the biggest challenge in e-commerce is verifying that the shopper actually owns the credit card they’re using for the transaction. The omnichannel solution, with its ability to exchange information across all areas of the business, can be an advantage in addressing this issue.
“There’s an easy way to verify that,” said Apgar. “If a cosnumers bought something in-store with their card, and they’re using it online a month later, it’s a pretty safe bet that it’s their card. I don’t have to spend however much it costs to go out to different fraud prevention algorithm vendors and run the transaction through. I’ve already seen you as a customer. Even though I haven’t seen you on the e-commerce side, I’ve seen you in my store.”
Planning for Expansion
With a few exceptions, it’s generally better for retailers to build for omnichannel from the start, rather than focusing on one specific channel and later adapting the process for others. Even if full omnichannel implementation isn’t feasible initially, it’s beneficial to plan for it during product design. This approach will save both time and prevent headaches in future implementations.
At the same time, the complexity of changes in payments often leads to a more focused approach on the issue at hand. When retailers address an immediate problem, they can minimize risk by limiting the impact of the change.
As problems arise, Apgar recommends addressing the issue at hand and containing the scope of change. As he often says when it comes to changes in the payment processes, “don’t try to boil the ocean.”
