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More than Making Nice: Why Payments Execs Are Wooing Merchants

rueter_thadBy Thad Rueter, Senior Editor

Merchants, get ready. It’s your turn now.

That theme has been coming up a lot while covering my beat. This invitation for merchants to play a bigger role in crafting products that make checking out easier and perhaps even more exciting for consumers is an important one. The call to the big-boy table in payments, so to speak, is not just about making nice after a rocky EMV migration in the U.S. It stems in large part from the continued evolution of e-commerce software and marketing analytics, along with the growing tendency of consumers to shop from multiple Web-connected and easily monitored apps and devices, which has gifted merchants with enormous amounts of data.

As my upcoming report in the Spring issue of Pay Magazine will show in more detail, the payments industry wants to work with merchants more closely to turn that data into the next generation of transactional innovation. Many if not most merchants tend to see payments as certainly vital, but not nearly as important as increasing in-store and online traffic and reducing shopping cart abandonment. Besides, there’s always someone to hire who can handle the task of payments.

That’s an increasingly short-sighted view. Merchants and payments providers need to be developing new ways to pay in tandem.

For one, as shopping becomes more mobile—smartphones play a role in 67 percent of all U.S. online shopping, according to Forrester Research—shoppers will demand quick and easy checkout. Making them wait puts at risk the entire transaction, as PayPal knows. The company says 65 percent of mobile shoppers abandon their shopping carts before buying, which is one of the main reasons it introduced its One Touch feature, which enables quick check outs without logging in. It works. Eighty-seven percent of One Touch purchases are completed, PayPal says. Most retailers do not have the resources of an Amazon and Walmart to create their own payment initiatives, but working more closely with payment providers and vendors—and using all that big data to shape the future—is a promising strategy to achieve success.

Second, even beyond big data, retailers know what works best for their specific stores. And what works at the supermarket doesn’t necessarily translate to QSR. For instance, Gavin Waugh, the vice president and treasurer for the Wendy’s fast food chain, points to the example of near field communication. For years, payments experts have been touting contactless technology as the ideal means for speeding up payments, moving us to mobile payments and generally leading consumers into a new cashless utopia where efficiency and coolness reign supreme. After nearly a decade of covering the always-about-to-unfold promise of NFC, I’m skeptical. Sure, contactless payments are indeed arriving on these shores, but that doesn’t mean they will work everywhere. For drive-through restaurant transactions, NFC would offer a “terrible customer experience,” Waugh contends.

As someone covering e-commerce for six years or so, I give the payments industry serious credit for what appears to be a genuine invitation to merchants. Not all will take the industry up on the offer, and the biggest merchants may try to blaze their own trails. But I think the best solutions will come when retailers and payment providers work more closely together, efforts that will lead to more satisfied consumers and more profit for everyone at the table.

Thad Rueter is a senior editor at Paybefore and focuses on emerging payments and commerce. Rueter has more than 20 years of professional reporting and writing experience and has been working for trade publications for more than a decade. 

In Viewpoints, payments professionals share their perspectives on the industry. Paybefore presents many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.


This entry was posted on Thursday, February 23rd, 2017 at 2:37 pm and is filed under Op-Ed.


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