In the current era of rapid technological progress, the retail industry is undergoing a significant transformation, driven by innovations reshaping consumer behaviour and business operations. Choosing a payment provider has evolved from a mere operational detail to a crucial strategic decision.

In 2021, cards accounted for 57% of all payments, and this share rose to 59% in 2022, according to a report by UK Finance. This surge in cashless transactions, fuelled by consumer preferences for convenience and security, highlights the importance of selecting the right payment provider. Businesses slow to adapt to this shift risk falling behind.

The impact of a retailer’s choice in payment provider goes beyond transaction processing; it’s a pivotal decision that can profoundly influence competitiveness, customer experience, and ultimately, profitability. To stay ahead, retail businesses must align with payment providers offering a comprehensive range of solutions, from traditional card payments to modern e-wallets, to meet the diverse needs of the contemporary, tech-savvy consumer.

Understanding customer needs, barriers, and strategies

In choosing a payment provider, retail businesses must prioritise three key pillars aligned with customer expectations, forming the foundation for a robust payment system:

  • Stability ensures seamless transaction processing, minimises disruptions, and guards against potential downtime that could harm customer experiences. It’s crucial to acknowledge that, while payment providers aim to provide stability, unforeseen outages can occur. Therefore, businesses should seek a payment provider committed to preventing such issues and, in the event of any disruptions, demonstrates a high level of reactivity to resolve them swiftly and effectively.
  • Resilience signifies the provider’s ability to adapt to emerging technologies while maintaining operational continuity in various circumstances, a critical differentiator amid technological advancements and potential disruptions.
  • Security, arguably the most crucial factor, involves protecting customer data and safeguarding a brand’s reputation and integrity. The recent surge in cyber threats targeting payment systems underscores its significance, with a 25% increase in cyberattacks on payment platforms reported in the past year alone.

By committing to these three pillars, a payment provider not only meets fundamental customer demands but also empowers businesses to navigate confidently through a changing retail landscape.

Revisiting common perspectives about payment systems

Acknowledging these perspectives can provide retailers with the insights they need to traverse the ever-changing commerce landscape.

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By GlobalData

Perspective 1: Cash transactions are not as prevalent in the modern retail landscape

The modern retail landscape prompts a reassessment of traditional cash transactions. The decline of cash usage is evident, as indicated by a UK Finance report highlighting a decrease in cash transactions and a rise in card and e-wallet payments. Globally, the shift toward a cashless society varies, with countries like Sweden and India adopting consumer-merchant-friendly payment solutions. QR codes, notably in regions like Brazil and India, have become pivotal for facilitating direct transactions, especially for small-scale vendors.

Recent data from the World Payments Report predicts a 12% compound annual growth rate (CAGR) in global non-cash transactions from 2019 to 2023. This surge is driven by the growing consumer preference for the convenience, speed, and security offered by digital payment methods. The COVID-19 pandemic has further accelerated this trend, with a Mastercard study revealing that 79% of people globally (91% in Asia Pacific) now use less or no cash since the pandemic began. Retail businesses failing to adapt to these changes may struggle to meet the expectations of a significant portion of their customer base.

Perspective 2: Current payment infrastructures meet all evolving retail needs

This prevalent view tends to overlook potential limitations in existing payment systems when contending with the demands of rapidly changing retail environments. The rise of omnichannel retailing, a strategy that offers customers a seamless shopping experience across various platforms, has shifted from being a convenience to an important requirement. Consumer behaviour now often necessitates a fully functional omnichannel solution as a key consideration for retailers. With the ubiquity of mobile devices, consumers are just a click away from online engagement and purchases, placing them in a position of power and choice.

This capacity gives consumers an unmatched range of options and flexibility, allowing them to shop whenever and wherever they choose. It signals to retailers the need to adapt to these new consumer preferences or risk losing customers to competitors who can provide the desired mix of choice, flexibility, and seamless shopping experiences. Businesses face a crucial challenge: they must ensure their payment systems are adaptable and at the forefront of facilitating a comprehensive omnichannel shopping experience. This is essential for retaining current customers and attracting new ones in today’s highly competitive retail landscape.

Perspective 3: Rapid adoption of new payment systems may not guarantee smooth transitions

The common belief that quickly adopting new payment systems is always advantageous often overlooks potential challenges. Hasty implementation without proper planning may lead to technical glitches and security breaches, risking damage to customer experience and trust.

According to a Gartner report, 75% of ERP projects face difficulties due to insufficient planning and execution, emphasising the crucial role of detailed planning and thoughtful system design in enhancing customer experiences. Given that introducing new payment systems is a significant investment, laying the groundwork for success is essential.

Industry specialists recommend a comprehensive strategy involving a thorough design and discovery phase. This stage helps formulate a detailed delivery plan, providing clarity on timelines, costs, and key deliverables to align with customer expectations—serving as a blueprint for success and ensuring a seamless process without compromising security or customer experience.

Conclusion

In the fast-paced world of technological advancements shaping the retail industry, a strategic reassessment of payment providers is essential. A retailer’s choice of payment provider goes beyond transaction processing, influencing competitiveness, customer experience, and overall profitability. Stability, resilience, and security form the foundation of a robust payment system, guaranteeing smooth transactions, adaptability to emerging technologies, and protection against cyber threats.

Recognising the trend toward a cashless society, embracing omnichannel retailing, and approaching new payment system integration with careful planning and thoughtful design are crucial for retailers. Success lies in establishing the right framework from the start, delivering a seamless customer experience in the evolving commercial landscape.

James Stark is Senior Account Director at Worldline Merchant Services