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Future of Retail — Payments Innovation
issue 02
way from purchase to delivery and returns. Amazon’s plans for delivery drones certainly catches the eye, but the innovation taking place at the level of payments should also be cause for great excitement. For many e-commerce providers, which
already have highly mature payment processes, it is simply a case of tweaking and improving the all-important final five percent, using technology to do so. These technology innovations can invariably be broken down by two distinct categories 1. Front end, the technologies and services that customers see, use and feel. 2. Back end, the behind the scenes tech which makes everything actually work.
FRONT END SIMPLICITY It’s no good setting up a payments service and standing still. Technology moves fast and all e-commerce providers need to move with it – keeping pace with consumer behaviour and demands. We’re seeing new IT devices such as laptops with in-built NFC card readers, which promise to bring the same effortless payment experience from in-store to home. Online stores can’t afford to ignore these users. A payment option which is a ‘nice to have’
now, may one day be a necessity as users become accustomed to the technology. Better to cater to demand now than have users demand changes in future – or go elsewhere of course, if others provide the experience they want. The same principle applies to the introduction of all new devices and services. Likewise, consumers no longer want to be
bound to the confines of their home. Whether it is browser or app-based mobile payments, dedicated services like Apple Pay and Android Pay, or customers finding online deals via QR codes, consumers are using their mobile devices more and more for e-commerce. As such, stores need to make sure they offer a seamless mobile payments journey as a top priority. Cart abandonment rates for smartphone and
tablets are incredibly high and keep increasing. This is not entirely the fault of retailers, since only 39% of web/mobile visitors intend to buy. However, stores still need to provide a positive
experience if they want visitors to come back. A similar percentage of users (38.5%) plan on spending money but leave, with poor usability often the culprit. For many retailers, the path to changing this lies in providing a more responsive design, and ensuring the checkout is as simple and painless as possible.
BACK END MAGIC Unbeknown to users when they enter their card details, click ‘buy’ on their mobile or touch their iPhone fingerprint sensor, there are countless back end systems in place that are responsible for creating a truly frictionless experience. This is where the magic really happens. Given the costs involved in finding new
customers, improving conversion rates is on the wish list of every e-commerce provider – from giants like Amazon to fledgling online stores. For e-commerce providers looking to squeeze every last inch out of their already highly mature payment operations, adding tokenisation can have a small but powerful impact on conversion rates. Tokenisation is the process in which sensitive information is replaced with a randomly generated unique token or symbol. By replacing sensitive data, specifically
customers’ card details, with a token (or reference number) it can then be securely stored and transmitted to a payment service provider. This increases the security of credit card and e-commerce payments, and crucially reduces the amount of data a business needs to retain. The ability to store card details ensures
that customers do not have to enter their information every time they wish to make a payment. With tokenisation the retailer retains the token, not the card data, allowing returning customers to make further purchases without having to enter the card details again. Providing a “single-click payment” option
improves customers’ experience and increases conversion rates. As repeat customers can checkout quickly and easily, it’s perfect for the omnichannel as users swap between locations and devices. Tokenisation even improves efficiency when managing refunds, an oft-
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