While the phrase ‘time is money’ may seem clichéd, it is becoming increasingly relevant as technology-savvy but busy consumers turn to the Internet to make shopping faster and easier. News reports show that the traditional high street shopping experience is dying, and with it traditional methods of payment. In the UK, the use of payment cards outstripped that of cash for the first time recently, but very soon even cards will be much less common1. Globally, alternative payment methods (APMs) are set to oust traditional forms; research suggests the use of e-wallets will soar from 18% in 2016 to 46% in 2021 and in the same period the use of many traditional payments, including cards, will fall2. In some countries, such as China, consumers are already showing great enthusiasm for cutting-edge payment methods, such as WeChat Pay and Alipay, and vendors who fail to offer these options now risk losing a large (and growing) market share.
These trends reflect a massive ongoing shift in purchasing behaviors and demand a change of similar proportions on the part of merchants and financial service providers. Modern consumers want an enjoyable shopping experience that combines value with convenience: it is common now to see shoppers in a retail store, with smartphones in hand, comparing prices in the shop with options online. Similarly, customers research products online before going into a store either to collect goods they have paid for online, or to examine goods they have seen online before purchasing.
As a result, many shoppers now have an ongoing relationship with merchants that spans several channels. Customers interact with brands through websites, in bricks and mortar premises and social media, which is fast becoming a popular channel for consumers to find and purchase products. It is very clear that online merchants are taking the number one spot due to UK consumers becoming more and more time poor, however for the high-street to make a comeback, those with physical stores must provide an omni-channel experience or risk losing out. But what does omni-channel that encompasses physical stores actually look like?
Omni-channel: more than mere choice of format
To offer a genuinely omni-channel experience, merchants must be able to engage with customers in a consistent manner across multiple channels, which include merchants’ online points of sale, bricks and mortar, and social media. And of course, merchants must provide a seamless experience across all of these touch points. In practice, that could mean that customers who saves various items in their favorites or shopping list online, or ‘liked’ a social post showcasing a particular product, could be greeted by name on entry to the bricks and mortar store (via the use of artificial intelligence and facial recognition) and swiftly sent offers to the relevant items, but also other product suggestions, for example. These could be paid for online instore using an e-wallet at a kiosk and collected or delivered straight to their front door as the customer prefers. The aim is to make life easier and the shopping experience convenient for the customer — avoiding tedious queues at all costs — and has the added benefit of freeing up staff and floor space to further enhance customer choice and service.
APMs facilitate omni-channel, international trade and security
Omni-channel engagement, and the accompanying need to provide payment at various points via APMs, has other benefits for merchants and customers alike. For example, the tokenization process (whereby sensitive data such as a credit card number or login is substituted with a non-sensitive identifier that can be mapped against it by the merchant) that is required for customers to engage with online merchants and to be recognised in-store, as well as that required to use e-wallets, can act in tandem with biometrics, PINs, etc. to recognize and authenticate the purchaser and provide a barrier to fraud. In a similar way, the analytics used to anticipate and serve customer needs have a role in financial profiling and thus in fraud prevention.
It is important to bear in mind that nations and regions already show marked differences in their preferred payment methods, and merchants — especially those operating across national borders — who fail to offer APMs are missing out on international sales. For example, any vendor who anticipates high value sales to China is taking a huge risk if they do not offer WeChat Pay and Alipay, since these are taken for granted in that market. For other markets, the provision of bank transfer or a choice of other APMs may be more important: there is considerable diversity worldwide. In Argentina, for example, customers like the option to pay in instalments, while Mexico, which has yet to show a huge appetite for e-commerce, remains loyal to the debit card2.
After all time is money, and the value consumers place on convenience is encouraging the rapid adoption of APMs in the UK as technology drives huge change in purchasing behaviours. The transition to APMs has clear benefits for purchasers and vendors alike, in terms of convenience, choice and security, but the key to gaining commercial advantage lies in prompt adoption and a genuinely omni-channel approach to sales and service. If merchants can make the use of APMs quick and easy for their customers, with clear signposting and user-friendly interface, the likelihood is that UK shoppers will take to APMs with alacrity.