Payments in 2016 And Beyond
March 22, 2016
Originally posted in Payments Quarterly, Q1.
Over the past five years we’ve seen the focus of ecommerce evolve from pure utility to inspiration. Payments are following suit. In 2016, payments will shift from focusing on the transaction to the customer experience.
Making Payments Invisible
The meteoric rise of the Uber ride sharing service has reinforced that the holy grail of making payments invisible is within reach. By reinventing the entire experience of how people get from point A to point B, Uber is quickly growing into one of the world’s most influential private businesses. One aspect of this was simply making payment much easier. Uber didn't reinvent payments, they just reinvented the experience. The first time a consumer gets out of a car without fumbling for money feels strangely criminal and then euphoria sets in and they want more. Consumers know they need to pay; they just don’t want the payment to interrupt what they’re doing. They want to get what they want and get on with their day. Uber has reset consumers’ expectations of car service and it is conditioning consumers to expect a seamless payment experience in all their transactions.
How will your business meet these heightened consumer expectations in 2016?
Get Smarter When You Can’t Make Payments Invisible
If your business isn’t ready to take the Uber payments leap, there are several things you can do to smooth the payment experience for customers.
Tailor your payment offerings to your customer demographics. Make it personal and pertinent to your unique mix of customers. Cards may be king in the United States and the United Kingdom but outside that many bank based alternative payment methods are not a nice to have but a must. For example, if you’re a fashion business seeing strong cross-border interest from Dutch customers, show them iDEAL (online banking) as a payment method and tender in Euros. When selling in Germany or China, invoice or COD payments types are critical and can drive significant uplift to you business. Optimize your payment methods offered around conversion and not the "flavor of the month" payment types. Make sure they are pertinent to the customer base you are selling to and remember more payments methods doesn’t mean more conversion, in some cases it is the exact opposite. This means you should be looking at your conversion metrics on a regular basis and asking why some methods are converting more then others and adjusting your checkout to optimize around those metrics. Payments is not a set it and forget it business. If you haven’t looked at your conversion metrics in awhile, or at all, you may be loosing good orders.
Align your payments to today’s omni-channel reality of buy anywhere, fulfill anywhere and return anywhere. As customers start orders on one channel and finish on another, then pick up goods in a store and return online, we must adapt payments to seamlessly allow that part of the process to recede into the background.
Recognize your customer across channels and minimize the need for them to re-enter their payment information multiple times. Utilize technologies like tokenization and secure vaulting to allow for sharing payment credentials between your channels in a secure fashion. Invest in making this seamless for the customer and you will be one step closer to making payments invisible.
Make sure money is taken and given back on the same payment instrument. If a customer places an order online and then returns an item in-store, refund their money to their original payment instrument and don’t make the customer-loosing mistake of issuing in-store credit. Work with payment providers that can support this securely and seamlessly. Don’t make the customer carry the burden of merging their online and offline worlds.
Optimize your checkout for mobile to take advantage of innovations like autofill, PayPal OneTouch and Apple Pay. Just because you have a great responsive site to get products in the cart, yet you have not optimized your checkout for mobile, you have lost an order or at worst a customer. Mobile initiated commerce is taking an ever larger part of the ecommerce pie with 80 percent of consumers planning to use their phone for ecommerce within the next 12 months. Make sure you are prepared to meet and exceed their needs on mobile.
Proactively manage your fraud exposure. While the new “chip-and-signature” cards will better protect merchants and consumers at the brick-and-mortar point-of-sale (POS), we will see a dramatic increase in “card-not-present” fraud in 2016. So whether you manage your fraud protection in house or outsource it, do ensure that you have a plan in place. Don't simply invest when there is a problem as that is a recipe for more headaches and higher remediation costs down the road.
Put in place strategies using an effective mix of technology and people. While merchants may always do some manual fraud checks, there are great software tools that identify both good transactions and likely-fraudulent transactions in mere seconds. These dedicated credit and debit card fraud detection solutions look for fraud in two ways:
Identifying stolen or suspect cards by reviewing billions of transactions globally in seconds to see if the card entered has been found faulty and flags the transaction as “risky”, preventing it from being completed without further examination.
IP piercing and device fingerprinting accurately tie individuals to their past purchases to help identify when cards are being used in strange places or on too many devices, which are telltale signs of fraud.
Though it may seem counter-intuitive, focus on finding your good customers instead of looking for the bad ones. With approximately 0.9% of transactions being fraudulent, fraud is difficult and time-consuming to find. So instead of picking through every transaction, start by identifying good customers, mapping their spending patterns and order history and cross-referencing with information you already have on them. By eliminating good customers from your fraud search, you will ensure that their transactions are never held up in fraud checks, providing a much better customer experience, while shrinking the stack of potentially fraudulent transactions that need further scrutiny.
So even if you can’t make payments invisible just yet, you can deliver a superior customer experience by focusing on your customer demographics, thinking omni-channel and proactively managing fraud in 2016.
About Andy Barker
Andy Barker is the Head of Payment Strategy for Global Payments at Magento Commerce. With over 20 years in the ecommerce business, specializing in payments for the last 15, Andy brings a wealth of hands on business and technical knowledge for the complex global payments landscape. With a desire to make payments easier for merchants and consumers, he continues to push the industry into thinking outside of the box and that their can be a better way. There is no longer online and offline commerce, there is just commerce and the industry needs to recognize that and adapt. Joining Magento commerce earlier this year allowed Andy to move from being the merchant to being the voice for the 250,000+ Magento merchant echo-system. “It is an exciting time in commerce and having access to help the foundational small and medium business merchants navigate the complex payments landscape is both exciting and rewarding.”
Andy enjoys life with his wife and 2 kids calling Minneapolis, MN home and is an avid outdoorsman, biker, climber, tinkerer and some say obsessed home brewer.