The future of payments | What does the consumer expect from companies?
Standing in line for checkout, waiting until the cashier scans your products and paying the total amount at the card machine. More and more shops find out that this is no longer the standard. From self-scan check-outs to invisible payments via a mobile app. The customer is increasingly in control, but also wants to pay as quickly as possible and that offers opportunities. We talked about this with Noor Pierik, Portfolio Manager from CM Payments.
The payment market is changing rapidly. What’s the most important trend for you?
“Payments are all about convenience for the customer. He wants to choose how he pays and spend as little time as possible by doing it. We see the demand for frictionless payments and ‘invisible payments’ increasing. Payments become an important unseen part in the customer journey. On the one hand, the customer wants to have the full control over the payment but there is also the situation where the customer doesn’t want to lose any time with the payment, for example because he is in a hurry or because it’s a repeat purchase. In that case, it’s important that the payment runs ‘automatically’ and companies must offer the desired level of convenience.”
What does this convenience mean for you?
“What matters most is the amount of actions customers have to do to make a payment. Do they have to wait in line, do they have to enter a personal code, and do they need a separate payment method such as debit card or credit card? Payments can be made easier and safer, both online and offline, by switching to mobile. The modern consumer expects nothing less from companies.”
How do companies respond to this?
“Uber is a recognizable example of how ‘automatic’ payments are initiated via an app. You register one time in the app from a store or restaurant, after which you no longer have to enter all your details for a payment. This is an important fact for recurring payments, such as a subscription or a recurring order. After registration in the app, customers can easily make payments, and if authentication still needs to take place, this can be done quickly via fingerprint or even facial recognition. The tap-to-go solution from Albert Heijn and CM.com is also a very good example. After registration in the app you will no longer be bothered with payment transactions and you will be able leave the store with your fresh croissant within 20 seconds.”
You’re talking about fingerprints and facial recognition. What’s the role of biometrics in payments?
“Paying can be easier with face recognition or the sound of your voice. An authentication check is much easier and faster via biometrics then, for example, with a username and password. And also safer, as biometrics are unique characteristics of humans.”
Why are such authentication methods important in payments?
“These are particularly important in the context of the PSD2. The PSD2 is expected to come into effect in the Netherlands early next year. The complicated rules and high requirements for authentication can have a threshold-increasing and a conversion-reducing effect. PSD2 requires strong customer authentication, which means that you have to do at least 2 of the 3 checks. These checks are ‘something you know’, ‘something you have’ or ‘something you are’. Biometrics occur in that last check. You can still opt for identification with just something you know and something you have, for example a username and a login code. But entering your password over and over again can get bothersome. Especially because it can be done much easier. Biometrics as an authentication method can make payments less complicated for the customer after the arrival of PSD2. “
We now talked mainly about the benefits of mobile for the consumer. What is the advantage for companies?
“There are a number of big advantages here. Of course, it’s important to simplify payments for the consumer and to enrich the customer journey. This makes it easier for the customer to make a purchase (increase conversion) and to bind them to your brand (customer retention). The switch to mobile also offers opportunities for cost savings. No more money needs to be spent on the purchase, maintenance and periodic replacement of card machines and terminals. But more important is perhaps the possibility of mobile for customer loyalty. The data coming from mobile payments, as with in-app payments, gives you valuable insight into the customer and how to bring them back to your store.”
What kind of data do you mean?
“For mobile payments you usually have a registration process, so the customer has to create an account. This means that you can already request some interesting data from the customer to measure the behavior. What kind of purchases do they make, do they have subscriptions, at what times do they buy and which combinations? This gives companies the opportunity to provide a better service and make product suggestions based on previous behavior with data driven commerce. With a Customer Data Platform you can fully optimize your service based on behavior and customer profiles. Mobile opens new doors for loyalty and retention.”
Which payment solutions are most relevant for companies?
“Ultimately, the customer wants to determine how he pays. Companies that want to service their customer better have multiple possibilities. It also depends a bit on the industry. If you have a website, you can offer many different payment methods, depending on the needs of your customers. You can also let customers pay seamlessly with the help of tokenisation (whereby the card number from the credit or debit card is replaced by a token) for repeat purchases.
The ‘to go payment solutions’ are becoming more and more relevant for offline shopping, for quick and easy in-app purchases. QR payments can also be very interesting, for example in the hospitality industry. Simply order in advance and pay via a QR code, in-app or via an order column. The customer goes automatically to the secure payment environment from his online banking on his own mobile phone. Even a tip can be added. The role of the payment column is increasing in the retail sector. The customer selects his product, scans the QR code with his telephone and goes to the secure payment environment.”