In a recent webinar, Jeff Kump, President of CSG Forte, and Daniel Keyes, Head of Merchant Services at Javelin Strategy and Research, shared insights on how payments have progressed this year and what we can expect in the coming months. The key takeaway is that personalization and creating a seamless payment experience are the critical factors for driving customer loyalty.
In particular, this means offering a wide range of billing options, including real-time payments, automated billing, and buy now, pay later. However, businesses must navigate the risks associated with payment personalization, such as fraud and security. Working with a reliable payments partner can help address these challenges and support merchants in meeting evolving consumer preferences while maintaining security.
Rising Consumer Expectations for Payments
Before the onset of the pandemic, consumers primarily used cash, credit, or debit cards—regardless of whether they were shopping online or in-store. But in recent years, digital and mobile wallets have emerged, offering consumers more options at checkout.
“These alternative payment methods are here to stay and will become even more popular. Therefore, it’s crucial to consider these options when designing new payment experiences in the future,” Keyes said.
Consumers want choice—whether that’s paying via a digital wallet one day and paying with cash another time. And the implications of that choice are making it a bit more complicated for merchants, Kump says, to be able to accept all of the different payment methods and stay up-to-date with consumer expectations.
“We (conducted) a survey recently and we asked consumers how they would prefer to pay,” Kump said. “Nearly three-quarters of consumers said they would rather set up automated billing than receive a paper bill and then having to act on that.”
“This goes beyond just loyalty, beyond the ‘buy 10, get one free’ punch card,” he said. “It’s about knowing that consumer and how they link to interact with you.”
Personalization Can Drive Business
Although options like payments via text or interactive voice response are important, personalization goes beyond that. It involves understanding how each customer wants to pay and being able to adapt as their needs and preferences change.
“If a customer traditionally pays through a website but starts using text-based payments, it’s essential to respect that preference and avoid bombarding them with unnecessary emails,” Kump said. “Instead, it’s about evolving with the customer and demonstrating that you understand and respect their preferred mode of interaction.”
Merchants that don’t catch on to customer preferences can push those consumers away.
“If I’m a consumer who never pays over texts, and I keep getting these texts asking me to pay for something that’s frustrating, at the very least it doesn’t build a relationship—it can also damage one,” Keyes said.
Where to Begin
Companies may often look to create a seamless and frictionless payment experience for customers but don’t know where to find inspiration for designing that journey. According to Kump, they should look at Uber.
“Uber has set a trend and expectation by providing a seamless experience where customers can call for a ride, get in the car, and not have to worry about the payment process,” Kump said. “The payment happens in the background, making it less transactional and more integrated with the overall brand experience. This approach aims to enhance customer loyalty by fostering a positive and interactive interaction with the brand.”
There are many ways to reduce friction in payments. Instead of having to manually enter payment details on a website, businesses can provide a bill with a QR code that customers can scan to make a payment. Or, if a customer calls into a call center, they don’t have to read off their card number to an unknown individual. That experience can be enhanced so the customer receives a text message with a payment link instead of having to share card information over the phone.
Risks to Payments Personalization
When consumers make a payment online or over the phone, there’s often an associated risk. Personal information, including credit card details, could be intercepted by fraudsters. This consideration is especially important in call center environments, where agents may be working from home, making it harder for businesses to ensure the security of customer information. Customers may also be reluctant to share their sensitive information with call center agents who are working remotely.
“When customer service employees are in a less controlled environment, businesses aren’t able to see what their agents are really doing with the information,” Kump said. “From a consumer perspective, when you know that that agent may be working from home, you might be less willing to give identifying information or a credit card number to that agent.”
To address these risks, companies are developing payer engagement platforms that offer additional security measures for call center agents.
“Instead of taking payments over the phone, we can send customers a secure text message or link where they can make their payment,” Kump said. “The agent can stay on the line and guide them through the process if needed. This approach helps reduce the risk of compromised information and creates a more secure transaction for both the customer and the business.”
It also helps businesses minimize payment abandonment and build trust with their customers.
“Security measures are important to build confidence and protect against fraud,” Keyes said. “However, these measures can sometimes add extra steps, like two-factor authentication, which makes the process less smooth.”
It’s a difficult balance to strike, but it’s important to protect customers while ensuring their transactions are completed smoothly.
Finding the Right Payments Partner
To improve payment security while balancing digital and non-digital payments, merchants can benefit from working with a solid payments provider. This partner should offer ongoing support as the business and consumer preferences evolve.
“Security is crucial because a breach can damage the business’ reputation and incur significant costs,” Kump said. “It takes a considerable amount of time—around 277 days on average—to fully contain a breach.”
Dealing with fraud is complex, and merchants often lack the time and resources to address it while focusing on selling their products or services. A trusted partner can help detect and prevent fraud before it occurs, relieving the burden from the merchant.
“A good payments partner helps reduce the merchant’s PCI scope,” Kump said. “This not only helps comply with regulatory requirements but also provides peace of mind.” Additionally, a payments provider can assist in evolving the payment experience by implementing measures such as two-factor authentication, tokenization, and end-to-end encryption to create a more secure environment.
Lastly, it’s essential to choose a partner that can grow and adapt alongside the business and accommodate new payment methods and experiences without the need to switch providers every time a change occurs.
The payments landscape is continually evolving, driven by changing consumer expectations and advancements in technology. Merchants need to stay informed about the latest trends and adapt their payment strategies accordingly.
The influence of younger consumers, the diversification of payment options, and the growing preference for automated billing are key trends to consider. Personalization and creating a seamless payment experience have also become crucial for driving customer loyalty.
Working with a reliable payments partner can help address these challenges and support merchants in staying current with their customers and their security needs.
By staying informed and proactive and by partnering with the right payments provider, merchants can navigate the dynamic payments landscape and thrive in the second half of 2023 and beyond.