Writing for Payment Expert, Alex Reddish, MD of Tribe Payments describes the current state of play for crypto payments and consumer desire for them as an alternative user experience.
How much do people really care about how they pay? Quite a lot, as it turns out. Recent research from Klarna revealed that people demand better retail technology, to the extent that they expect retailers to continually invest in that technology. The change in how people pay for goods and services has led to a demand for ongoing change.
The demands of consumers are broad. They want more accurate recommendations based on their tastes and previous purchases. They want a seamless online and offline experience. And they also want “better payments”.
Throwing everything at the wall
Of course, any business wants to respond to its customers’ demands. But increasingly there are challenges in giving customers exactly what they want when it comes to payments. The choice of cash or a couple of card schemes is relatively simple compared to the current payments landscape that now contains a raft of new payments methods and technologies, including mobile wallets and cryptocurrencies. How far should merchants go to please everyone?
It might seem like a no-brainer to offer as many payment options as possible. If a consumer reaches that final checkout page and discovers that their preferred payment option is unavailable, they are very likely to simply abandon their purchase. Since the beginning of ecommerce, merchants have been trying to reduce abandonment – to reduce the number of customers who drop out at that final hurdle. Offering an extensive choice removes one potential objection.
It also means more customers. Accepting, for example, JCB and UnionPay cards means attracting customers from around the globe, while mobile wallets and cryptocurrencies can mean attracting those customers that are keen to use new technologies. Cross-border shopping has always been popular, but the growing market in digital goods means customers truly can be based anywhere, making offering choice even more important. But offering this wide range of payment options is not without potential issues.
Offering multiple payment methods depends very much on your payments partner. If they don’t offer all you want, then this could mean working with multiple partners and increasing admin times and costs. Plus there is the problem of bringing different data together to uncover insights. The data around a transaction is extremely valuable to both the retailer and partner, giving insights that can be used by both. This data is no good if it is siloed.
There is also the thorny issue of acceptance rates. All payment types, whether card, mobile or other, will have a different chance of being declined due to a number of factors. Some are more unpredictable than others, and some are too new to really have a good idea of how they will perform. Switching out a high abandonment rate for a low acceptance rate is not a good choice.
Plus, there is always the possibility that too many payment options at the checkout can have the opposite effect and cause customer confusion and ruin an otherwise simple, user-friendly customer experience.
A better approach
How then should merchants balance customer demands with an increasingly complex payments landscape?
One way is to balance responding to demand with creating demand by providing new options. Some consumers will want access to new payment options – those who are evangelists of new technologies are also likely to be louder than an average consumer. So it’s important to understand how much demand there really is for particular payment methods. This should be part of ongoing decision making—a payment option that makes little sense today may pass a tipping point in a few months.
Looking at what competitors are doing is also instructive. While merchants may not want to simply follow the crowd, there’s a difference between leading and going way beyond what the market is offering right now. If competitors are starting to offer alternative payment methods, it may be time to start asking why—but the same applies if no one is offering a payment method that appears to be gaining popularity.
The most important consideration is to understand the nuances of each market and customer segment. Payment method popularity varies significantly across customer demographics and between markets. If, for instance, a fashion retailer is trying to attract young customers to their website, Buy-Now-Pay-Later options at the online checkout can offer a significant uplift in conversion rates.
In another example, if a cross-border merchant wants to expand appeal to shoppers in the Netherlands, offering the country’s most popular payment method, iDeal, can help build trust and familiarity with that target customer base.
The acquirers and payment processors that merchants rely on should have the most useful insight into what payment methods are being used and which are mostly hype, which are up-and-coming and which are dead on arrival. The insights and data that partners can give to a merchant means they’re adding value beyond acceptance. Ongoing dialogue with these experts should mean merchants have the right information and find the right balance for their customers.
It is balance that is crucial. There is no single answer to this question, as it depends on a merchant’s customers, its target customers, how much it wants to be seen as a leader and the risks it can afford to take. It’s also an ongoing discussion, where the answers may change in just a few months. Acting on this intelligence—and the changing answers – is also a key challenge for merchants and for those who support them.
This is where the ability to tailor payments acceptance and quickly adapt to evolving consumer preferences becomes increasingly vital. Merchants can only create this optimised approach if they have access to modern technology that enables fast, easy integration to new payments methods and the ability to tailor for their customer base.