In the dynamic world of e-Commerce and point-of-sale (POS), payment providers are crucial for the success of merchants who sell both online and offline. With the rise of the demanding customer and new technologies, the focus is shifting from separate online and POS payment systems to a seamless Unified Commerce experience. This presents challenges but also offers opportunities for merchants to better serve their customers and increase revenue.
Unified Commerce is a strategy that integrates all sales channels, data, and back-end systems into one platform. The goal is to provide a seamless, personalized shopping experience across all channels, including physical stores, e-commerce websites, mobile apps, and social media.
By implementing a Unified Commerce strategy, you integrate various sales channels such as physical stores, online stores, and mobile apps into one seamless brand experience for the customer. Translating this into the checkout process requires integrating payment methods and payment systems across all channels, allowing customers to shop and pay whenever and however they prefer.
An example of this is the ‘endless aisle,’ a digital portal accessible via tablets or kiosks that provides access to a retailer’s full range of products, even from physical locations. Endless aisles can also boost ‘showrooming,’ where retailers display a sample product in the store, customers complete their purchase via tablet or kiosk, and then have the product delivered to their home.
The Importance of Payment Providers
Payment providers, also known as payment gateway providers or payment service providers (PSPs), play a crucial role in facilitating transactions between merchants, customers, and financial institutions. They provide the technological infrastructure necessary for processing payments, securing transactions, handling refunds, and mitigating fraud.
Payment terminals, POS terminals, mobile card readers, and online payment systems are just a few examples of the various ways your customers can execute transactions. Offering relevant payment options through these systems is essential to meet the needs of different customers and maximize conversion.
Express checkout options and pay by link functionalities streamline the payment process and improve the customer experience. By enabling customers to checkout quickly and easily, you can improve conversion and optimize brand perception.
Buy Now Pay Later (BNPL) is another example of a payment method that can enhance conversion. The concept is simple: customers can pay after receiving their products. This increases customer trust and can lower the barrier to making a purchase. However, for merchants, it can lead to a higher risk of non-payment, especially among younger customers, as noted by the Dutch Authority for the Financial Markets (AFM) in its annual report.
With the rise of digital wallets and softPOS solutions (tap-to-pay / pin-on-glass), it also becomes possible to accept new payment methods and respond flexibly to changing customer trends. Digital wallets, such as Apple Pay and Google Pay, allow customers to pay with their smartphones, while softPOS solutions enable smartphones and tablets to be used as payment terminals, eliminating the need for physical hardware.
The Added Value of Unified Commerce Payment Providers
Companies that recognize the value of Unified Commerce are those looking to enhance customer-centricity, address operational inefficiencies, and remain agile.
A Unified Commerce payment provider specializes in facilitating payments across multiple sales channels. Unlike traditional payment providers that may focus solely on online or physical stores, a Unified Commerce payment provider offers solutions that seamlessly integrate with both online and offline sales channels.
Unified Commerce payment providers offer an integrated payment gateway (for online and offline transactions). These providers offer a wide range of services and technologies that enable merchants to accept and process payments across various channels, including e-commerce websites, mobile apps, physical stores, social media, and more. They process transactions securely and efficiently, offering reporting tools, fraud prevention tools, and tools for conversion improvement.
These payment providers aim to equip merchants with the technological infrastructure needed to operate successfully in an ever-changing payment landscape, thereby increasing customer satisfaction, improving conversion rates, and optimizing profitability for both the merchant and the payment provider.
Insights from Data
Gaining insight into who your customers are and understanding their shopping behavior across different channels is invaluable. Data convergence allows companies to create a unified view of their customers and develop targeted marketing strategies. Retailers have access to valuable data on customer purchasing behavior, both online and offline, which presents opportunities for business intelligence and personalized offers based on customer preferences. Mobile apps can even deliver these offers at the right time and place. With a Unified Commerce strategy, you can consolidate payment data from all customer-facing and back-end systems, giving you a unified view of all your customers and enabling informed decisions for retargeting, regardless of the sales channel. Although retargeting remains challenging due to GDPR and the use of different payment methods by the same customer, loyalty offers benefits for both the customer and the retailer.
System Integration
In addition to providing a Unified brand experience to your customers, you can also benefit from unifying the front and back end of your business. Unified Commerce makes it possible to capture all customer interactions on a single platform, allowing you to recognize and serve customers across multiple channels. Payments play a crucial role in this. By consolidating all payment systems and data across each channel, you can better identify your customers, understand their needs, and facilitate seamless cross-channel experiences.
Brand Engagement
Through loyalty programs across multiple channels, you can encourage interactions with your customers and better personalize your service, thus promoting brand loyalty. A ‘unified’ loyalty program can offer enormous opportunities. In a unified loyalty program, customers are rewarded not only for being loyal to the physical store but also for purchases made online. When customers can view and redeem accumulated discounts and offers in-store via their mobile or tablet, it provides extra motivation to make a purchase.
As customer experience becomes increasingly important and customer expectations continue to rise, we know that ensuring a personalized, seamless, and pleasant client journey is essential for building loyalty. This is precisely what a Unified Commerce strategy facilitates: it offers the customer the same brand experience, regardless of the chosen interaction channel.
A happy and satisfied customer is a great ambassador for your brand. There is no more effective advertisement than a customer who spontaneously promotes your business! It gives a significant boost to your Net Promoter Score (NPS), which will certainly see a substantial increase.
Challenges with Unified Commerce Payment Providers
Implementing Unified Commerce requires a thorough assessment of existing systems, choosing a payment infrastructure, integrating systems, implementing cross-channel capabilities, personalizing the shopping experience, and monitoring performance.
SLA
Once you have chosen a Unified Commerce payment provider, all “eggs are in one basket,” leading to complete performance dependence on the selected Unified Commerce payment provider. Therefore, ensure that the guaranteed quality of service is well-documented in a solid SLA with concrete performance parameters.
Technical
Avoiding technical lock-in, where your business is dependent on one specific technological solution, is only possible by using open standards. However, some payment providers use proprietary communication protocols, without open standards. Technical lock-in can only be avoided by implementing a redundant solution as a backup for business continuity.
Commercial
Another common issue is the aspect of “commercial lock-in,” where the technical complexity of the Unified Commerce payment solution ties you to one specific payment provider, and the monthly costs for this provider are actually too high. However, the migration costs to another Unified Commerce payment provider do not quite outweigh the monthly overpayment. As a result, you continue to pay too much month after month.
Conclusion
The rise of Unified Commerce payment providers reflects a shift in the landscape of e-commerce and point-of-sale (POS). In this evolving environment, where customer needs and technologies continue to change, the emphasis shifts from separate online and POS payment systems to a seamless Unified Commerce experience. Payment providers have developed good solutions for this. While this transition to Unified Commerce offers ample opportunities, there are also plenty of considerations for you as a merchant.
The implementation of Unified Commerce, for instance, requires a thorough assessment of existing systems, choosing a payment infrastructure, integrating systems, personalizing the shopping experience, and monitoring performance. Relying on a single Unified Commerce payment provider can bring risks of technical and commercial dependence (lock-in). This underscores the importance of establishing robust service level agreements (SLAs), periodic commercial benchmarking, and considering backup solutions for business continuity.
To manage this effectively, you may consider seeking provider-independent advice from a specialist who has repeatedly negotiated, contracted, and implemented these payment solutions for merchants. This specialist can help you avoid common pitfalls throughout the entire process, from selection and contracting to implementation.
An extensive part of this article has also been published on Frankwatching.com (31st July 2024).
