Talk of creating omnichannel shopping experiences, and the different ways in which customers “engage” with retailers, has dominated the retail industry for several years. But precious little has been said about the one thing that happens in every retail transaction regardless of where or how it takes place – the payment.
The fact of the matter is that having a single view of the customer, a goal to which most retailers are aspiring, applies as much to payment as anything in the discovery and conversion process.
With omnichannel customers spending about 3.5 times more than those shopping via a single channel, according to payments solutution company Cayan in Seizing the Omnichannel Opportunity, it’s hard to imagine why retailers are not equipped to deliver an omnichannel payment experience today. Then again, those in the payments industry know the reason why – payment, even in a single channel, is complicated.
It will only become more complex for retailers as fast-emerging payment types take hold. With this is mind, our partner Cayan as produced a guide to help retailers understand the current nature of payments, the impact on digital and store payments and how to create a unified commerce experience with payments.
Digital payment, also known as electronic payment because it does not involve cash or a paper check, is typically conducted via an ecommerce site as a one-time customer-to-vendor payment. Because the cardholder and their verification cannot be physically viewed during a digital transaction, it is considered a “card not present” (CNP) transaction. CNP transactions introduce certain types of fraud, which has caused retailers to adopt various forms of authentication.
On the other hand, payments made in-store are considered “card present” transactions because the customer and their payment card are physically present at the time of the purchase. Store payments are broken down into three main types of payment terminal configurations: integrated payment solutions, semi-integrated payment solutions and non-integrated solutions. Each carries its own unique implications on fraud protection.
Changing state of payments
In addition to managing digital and store payments, retailers must also stay on top of the continuous changes impacting the payment industry. At the top of the list for the US in 2016 is Europay, MasterCard and Visa (EMV), which has long been the standard in Europe and other parts of the world. EMV-enabled cards have chips that users dip into a reader, instead of a swipeable stripe. It is costly for stores to adopt due to new hardware and software requirements and its “chip and signature” method is viewed as inferior, from a security perspective, to the “chip and PIN” method adopted elsewhere in the world.
The fast growing area of mobile payments is having a major impact in both the digital and physical world. Retailers find that because it relies on consumer technology and adoption of standards, mobile payments are not simple implementations.
However retailers can leverage new payment types to create a unified shopping experience.
Tokenization in an omnichannel environment is an integral factor in connecting physical and digital experiences, and is needed to streamline payments across all consumer touchpoints. When a token is assigned to a customer’s payment card, retailers are able to see behavior and spending patterns, which helps them personalize engagements.
As Cayan notes, “the once mundane portion of the retail sector – payments – has quickly become anything but in the past few years, as payment methods have become one of the most dynamic aspects of retailing.”
To learn more about how to leverage new payment types, download Unified Commerce: A New Opportunity for Payments.