How merchants enable and streamline payment acceptance is now at the forefront of the shopping experience. For a merchant acquirer —a once stable and steady background business helping retailers accept and process debit and credit cards at point-of-service and remotely (such as via telephone and mail)—is now a key differentiator for businesses.
The more shopping behaviours change—from in-store to the Internet of Things and a mix of anything in between—the bigger the implications for the way we pay. Now in addition to multiple channels from which we buy, there are a plethora of tenders: cash, card, alternative payments and a wide variety of options for using that tender (card, mobile wallet, QR code, contactless, card-on-file and so forth). Research by Statistia projects that an estimated 11 million households in the US will scan a QR Code in 2020.
As consumers demand more from the payments experience, more of the industry infrastructure will need to change to provide businesses (and consumers) with a seamless, frictionless experience. Many forward-looking businesses are starting to shift their view of payments from being a cost centre to an integral part of the way consumers interact with their brand. They are using the payments experience to differentiate from competitors, providing an experience that is safe, secure, simple and seamless. Shoppers want frictionless and fast payments and merchants understand that they must be fully connected with consumers to compete. As such, merchants are demanding more from their traditional acquiring partners to help them stay relevant and profitable.
Yet, novel players are looking to attract merchant attention and grab market share with their creative payments propositions. Fintech providers, newcomers in new payments service provider (PSP) roles and even card issuers are connecting directly with merchants to improve the payments experience, from innovative point-of-service interaction to merchant-funded rewards programs.
So what can incumbent merchant acquirers, themselves, do to stay relevant, competitive and profitable? Execute new payments strategies that focus on value-added products and services, rather than price. As a merchant acquirer finding new ways to solve specific problems for merchants and consumers. Players in the payments acceptance ecosystem need to think differently about the services and capabilities they offer. Businesses are looking for a partner to help drive business, and payments can do that today as never before.
Take fraud, for example. Nilson reported that a staggering $24.26 billion was lost in 2017 due to payment-card fraud globally with a projected growth to more than $35 billion by 2020. The cost burden to merchants is high, including the initial dispute amount and fees for payment gateways, acquiring bank processing, network and interchange. According to LexisNexis, for every dollar of fraud committed, US retailers incur $3.13 of costs—a 6.5 percent increase over 2018. One payments provider is addressing the challenge by using intelligent, data-driven anti-fraud technology to tightly integrate fraud detection with checkout and payment. The solution is proving valuable in appropriately identifying fake accounts, mitigating payments risk and permitting more qualified transactions to occur—thus lowering merchant cost and increasing revenue.
Omnichannel payment is a phrase we have used for years in this space, but how easy is it for merchants to accomplish it, working with payments partners? The payments acceptance ecosystem needs to rethink how it works with merchants. Payments have the power to be a differentiator in a business’ overall experience with shoppers and in the way that each product and service offered enhances the overall buying experience.
The mandate for traditional merchant acquirers is clear and single-fold: Adding value as a merchant acquirer and helping solve problems is how you can survive and thrive in the digital economy.
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