In a recent InternetRetailing Frontline article, we discussed Seven Characteristics of Innovative Merchants emerging from a new global survey conducted by Ovum and ACI. This article will explore the survey’s results on how merchants are accelerating the return on payments investment.
The modern retail experience relies on payment platforms that enable customers to pay how they want, when they want, from wherever they want. Merchants that can accommodate these expectations — digitally and physically — will thrive in a world of increasing competition and ever-changing customer preferences.
To better understand where merchants are investing to drive payments innovation for their customers, Ovum and ACI created a Culture of Innovation Index based on a global survey of merchants and other payment players. The survey responses highlighted several ways merchants are focusing their budgets to transform the customer experience through payments.
Prioritizing New and Digital Payment Options
Accelerating the return on payments investment begins with developing new, more convenient payment options for customers. Fifty-three percent of merchants surveyed claimed that offering new payment options was a top-three investment priority for in-store transactions, while 55% saw digital experiences (e.g., new apps, mobile wallets) as a top-three priority.
The rapid emergence and increasing abundance of new payment types throughout the world inevitably creates a new level of expectation from customers. Satisfying these expectations may seem like playing a game of “whack-a-mole,” but it’s essential to satisfying customers and driving conversions. ACI’s customer data shows that simply offering a third payment option can increase conversion rates by more than 25%.
By adopting new payment capabilities, merchants are also better positioned to take advantage of cross-border expansion, which relies on the ability of merchants to offer the most popular payment types for local and global customers.
Leveraging the Convergence of Digital and In-Store Payments
When it comes to in-store investments, enhancing mobile capabilities (50%) and providing a more seamless cross-channel payments experience (45%) were the highest priorities for global merchants. In particular, mobile point-of-sale and self-service technology were seen as keys to encouraging repeat customers that are the lifeblood of physical merchants.
A perfect example of this comes from the U.K., where a leading convenience food retailer developed an app that allows customers to scan products on their own mobile devices as they shop. When finished shopping, product costs are automatically deducted from a customer’s Apple Pay or Google Pay account with the touch of a button. This not only offers customers a new way to pay; but it also delivers a simple, convenient experience like that of a world-class eCommerce retailer.
Creating a Competitive Advantage Through Payments
Trailblazing merchants, the most innovative merchants benchmarked by the survey, have either put in place the pillars for continuous innovation or are already on the leading edge. Their core business functions feature modern and flexible payment systems, enabling them to rapidly innovate and bring new offerings to market faster than competitors.
An example of this comes from the world of hospitality, where a large water park implemented a new, innovative RFID wristband that allows guests to tap to pay for items throughout the park. The wearable allows guests to enjoy the park without having to worry about losing their wallet or soaking their cash.
With entertainment dollars at a premium, this type of convenience helps add to the theme park experience in a way that is sure to create repeat visitors. Merchants of all types who can replicate this level of payments innovation will be well positioned to reward customer loyalty while winning new customers from competitors whose payments are dated and full of friction.
Want to learn more about the Culture of Innovation Index survey?