Consumers have more options available to them than ever when it comes to making a payment. Whereas in years past, a cashier may simply have had to ask “cash or card?”, today’s environment provides a range of options, both in person and through digital channels.
In store, options such as contactless cards, NFC-equipped smartphones and even wearable devices such as the Apple Watch allow consumers to choose whatever option is most convenient for them at any given time. Meanwhile, if they are conducting a transaction online or via mobile, digital wallets and chatbot payments offer alternatives to entering a credit or debit card number.
Slow-moving merchants missing out
However, a new report has suggested that these new methods of making payments are more than just a nice-to-have option for many consumers. In fact, they have become such a common way of conducting a transaction that if the latest options are not available to customers, they will take their business elsewhere.
A study conducted by Barclaycard reveals that small and medium-sized retailers in the UK that have not embraced next-generation payments technologies are missing out on up to £1.6 billion ($2.05 billion) a year in revenue because they are not providing the options consumers expect.
Almost one in four small merchants (24 percent) said they have lost customers as a result of this, while 15 percent of shoppers stated they have abandoned a purchase because they couldn’t pay using their preferred method. Among millennial consumers aged between 18 and 34, this rises to 29 percent.
It also noted that despite contactless technology having been available in the UK for almost ten years, a quarter of small bricks-and-mortar retailers still do not have this capability. As over half of millennial consumers (53 per cent) rate this as their preferred payment method, Barclaycard said contactless is no longer an option but a necessity for retailers, and added that innovative next-generation payment methods will not be far behind.
Embracing ‘invisible’ payments
Nearly half of millennial shoppers (46 percent) have also embraced what Barclaycard describes as ‘invisible payments’ such as one-click ordering, where payment details are saved in advance of transactions, allowing users to complete a purchase quickly and easily. It also highlighted growing use of ‘conversational’ payments, such as the use of chatbots or digital personal assistants like Amazon’s Alexa.
What this suggests is that merchants need to be thinking outside the box when it comes to determining what payment methods they will accept. It’s clearly no longer good enough to rely solely on chip-and-PIN solutions and cash in-store, or to ask people to input full payment card details online every time they wish to make a purchase.
When it comes to in-person sales, more than six out of ten merchants (61 percent) believe that cash will eventually become redundant, while seven percent are looking to get ahead of this and have already gone cashless.
“SMEs are losing sales by not adopting increasingly popular technologies that facilitate invisible and conversational payments,” said Greg Liset, head of small business at Barclaycard. “While it’s encouraging that many smaller retailers are becoming aware of the importance of these emerging methods, they need to turn this ambition into action to steal a march on the competition and keep up with consumers both now and in the future.”
With more options coming along with PSD2 and the publication of APIs, it is clear merchants need to make the most of the options available to them to make it easy for their customers to use the payment vehicle of their choice.