Payment methods are becoming a highly effective branding and customer retention tool for merchants. As the following article relates, consumers have a wide set of payment choices that can influence their buying habits and choice of merchant.
It’s a sign of how complex, and critical merchants payments have become that the person in charge now often reports to someone in the C-Suite, said Michael Roberts, chief marketing and digital strategy officer, at Bank of America Merchant Services.
Merchants are turning to banks to ask for guidance in navigating the increasingly complex payments environment, he added.
“The customer experience you’re trying to create with your brand has everything to do with choices around payments, how to think about digitizing the customer experience and what role do payments play. Payment professionals are not used to balancing user experience, cost and security, yet the answer could hold the future of the company in the balance.”
“When you get to medium size and large merchants this is where from B2C perspective there’s not really a gigantic advantage. They are more concerned about security and how it integrates with customer experience because their cash management capabilities are a heck of a lot more sophisticated.”
Merchants are taking some imaginative approaches to reduce the costs of payments. Kohl’s has a private label card, Target’s Red Card is a debit card whose 5% discount reflects the store’s savings on interchange fees, and Starbucks uses gift cards to pay an interchange fee on a larger sum, like $50, rather than on separate $5 charges. Others are encouraging payment directly from a bank account to avoid interchange fees.
Roberts thinks that greater choice is coming, probably multiple choices on a mobile phone. It would let a consumer choose to pay with a store’s app, debit, credit, Apple Pay or TNFP — the acronym he invested to cover The New Faster Payment.
Consumers often look for speed and convenience when shopping in person or online. Simply witness the rapid adoption of mobile order and pay, as well as on-demand services such as ride hailing, as prime examples. Successful B2C businesses that can integrate engaging payment methods as part of their brand, such as Starbucks and Uber, will find increased sales and customer loyalty.
Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group
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