Alan Irwin, VP of Product and Solutions, Europe at Global Payments, writes for Payment Expert on the various payment strategies can utilise to boost customer engagement and loyalty, from Open Banking to A2A payments.

Payment tech is the new key to securing customer loyalty  

Loyalty schemes have become ubiquitous with the shopping experience, and many businesses leverage smartphones as the hub for loyalty programs.  However, as payments become more invisible, loyalty programs still rely on the customer to perform certain steps to be recognised and rewarded from their favourite businesses.

To be rewarded for online purchases, customers need to login or download an app, and, for in-person purchases, customers need to produce a smartphone at checkout, open the app and hand it to the cashier. Both of which are a complete contrast to the seamless, almost invisible payment experience that businesses pursue today. There is an easier alternative, however, using payment data to recognise and reward the customer. 

As customers use more payment methods to shop across more channels, it’s more important than ever to recognise these customers, no matter how or where they buy.  

Customers: Gen Z – the hungriest for change 

Organisations must consider the digitally savvy Gen Z consumer as a long-term customer engagement strategy pillar. The most important way to cater to this group is keeping on top of the latest innovations and capabilities. 

Global Payments’ own research has shown that 45% of Gen Z customers would consider changing their payment method of choice if it meant a faster and more secure payment experience. Comparing this to an average of 35% across all adults, it is clear how eager this age demographic are to see increased flexibility and a wider variety of options.

More generally, the importance of getting the payment platform right is critical – over a quarter of consumers have abandoned an online purchase in the last six months because the merchant did not offer their desired form of payment. 

In this climate of sky-high consumer expectation, the ability to offer a range of payment methods, including Open Banking, which allows them to authorise a transaction directly from their banking app, will resonate better with customers and boost loyalty.

Solutions: Open Banking: delivering speed, security-and choice.  

For customers, Open Banking payments are typically faster and more secure than card payments, with transactions verified by biometric authentication.  For businesses, Open Banking transactions offer lower fees than credit card processing, and settlement can be faster.  

But importantly, the business is enabling payments in a way that suits their customer– be it by card, digital wallet or directly from their bank account, offering choice and flexibility to their customers. 

Particularly in the current economy, with rising costs and many people pushed towards secondary revenue streams or side hustles, the likelihood of purchases being made from multiple accounts or pots of money is high. For these same consumers to have peace of mind that they can choose, in the moment, which pot to use for a transaction, due to open data exchange, is a huge benefit. 

For the business, it is crucial to integrate Open Banking payments into their mainstream payments environment.  This enables a business  to offer more personalised service through meaningful analysis of customer data. 

Goals: Businesses can reap the rewards as well

Open Banking enables businesses to pay less for transactions by relying upon account-to-account payments, which removes card scheme fees from a transaction. 

Moreover, the creation of an open payment gateway creates a checkout flow that is convenient and flexible across multiple geographies, meaning businesses can significantly increase both their payment conversion and acceptance rates. 

Security is another strong area for Open Banking, with most systems exchanging financial data via APIs, a common target for cybercriminals. Research from Salt and Gartner found that 20% of respondents had experienced a breach resulting from insecure APIs. 

Ensuring that robust security architecture is in place to secure the APIs used in open banking should form an ongoing priority for businesses, further helping to win the loyalty of their customers. 

Unlocking payments for customers

Considering the landscape of consumer expectations and the wealth of competition, the importance of maintaining a loyal customer base must be top of mind for businesses. Investing in payment technology delivers complete visibility of payments across every channel and every payment method is key to driving loyalty. 

Open Banking frameworks and the ability to offer a variety of payment options, while keeping the service secure, provide the attractive benefits of quicker, easier and more adaptable payments for the consumer. And, if integrated with mainstream payments, they also unlock a wealth of actionable insights for businesses as they continue to strive for a seamless payment offering.