Combining Payment And Loyalty Innovations For The Retail Sector
In the last two years, the retail industry has faced the brunt of the pandemic’s impact on society. In the first half of this year alone, over 8700 stores closed down. With lockdown restrictions having eased up, some might have expected a strong recovery in the sector, however, retail sales fell by 0.9% in August, following a 2.8% fall in July.
Pete Howroyd, CEO of Swapi, explains how the real sector can benefit from combining payment and loyalty innovations.
With many stores facing the prospect of not being able to survive a slow recovery, they must investigate innovative ways payment systems can benefit their business and help them retain customers, whilst also taking stock of what has been working and take that into account.
Even prior to the pandemic, contactless payment was already booming among consumers, but with social distancing measures being introduced, this payment method that does not require much physical touch has become immensely useful to retailers too. Solving many of the pain points for both retailers and customers alike, it’s no wonder that contactless payments accounted for 88.6% of total card payments in 2020.
Retailers can reduce the costs associated with time spent maintaining and purchasing payment terminals and instead focus on the product they are selling. Contactless allows for faster check-outs, meaning an improved customer experience due to decreases in queues and allows retailers to dedicate greater resources to customer satisfaction. Additionally, the contactless system is being continuously updated therefore ensuring more secure transactions. As retailers digitalise their payments, they open the door to further technological integrations which will improve the customer’s experience with the brand. Supporting this shift towards contactless payments ensures retailers are not left behind as consumers continue to edge other payment methods with this method due to its faster transaction times, convenience and payment flexibility.
Digital wallets, such as Apple Pay, Google Pay and PayPal are becoming increasingly prevalent in the industry with research revealing that 20% of people used a digital wallet for the first time or started using one regularly in 2020. With customers adopting the system, forward-thinking retailers should look into how offering digital wallets into their payment mix can streamline authentication and boost revenue.
The benefits that come from integrating eWallets into retail systems are a good way of ensuring consumers have the payment options they need when making purchases. Being digital, these wallets have various security protocols which mitigate the risk of security breaches. These protocols can come in the form of two-factor or biometric authentication among other systems. Digital wallets also allow retailers to keep transaction cost down for the customer and themselves. Using a closed wallet system, some retailers have been able to eliminate other costs such as banking transaction fees, therefore also reducing fees for the customer.
Increased customer engagement and experience is also the most significant benefit attributed to digital wallets. With retailers having their own payment platforms, they are free to communicate to customers regularly to build long-lasting loyalty, whilst also being afforded the opportunity to integrate further systems and extensions into the platform to better serve customers.
One key example of a possible integration to digital wallets that has been rising in popularity during this pandemic is the introduction of the “Buy Now Pay Later” feature which allows part-purchase with delayed payment directly from the wallet. Though it is still a work in progress, with 37% of Brits already using the BNPL service, the potential offering that BNPL and digital wallets can give both retailers and customers alike is an exciting prospect to look forward to.
Mixing Payments And Loyalty
Taking it one step further to hit the peak of possible customer loyalty, retailers often introduce a loyalty programme as a way of giving back to loyal customers. This often comes in the form of a physical loyalty card which allows customers to accrue points and receive coupons and discounts in exchange for those points. These are quickly becoming outdated now with fully digital loyalty schemes taking precedent given the ‘mobile-first’ norm.
No one can fault the benefits this approach brought with it in the past, however, the idea nowadays often falls flat due to the lack of technological innovation it embraces as well as the low quality of rewards, discounts or prizes being offered for accumulating points. With 33.1% of people finding rewards within loyalty programmes to be uninteresting, it’s clear that brands need to update their offerings and create a more integrated system.
This evolution can be done by embracing the payment innovations which have already been helping retailers throughout this pandemic. Using contactless and digital wallet technologies, brands can maintain the best levels of customer engagement and experience. Retailers with digital-wallet-based loyalty programmes are able to collect data on customer spending and offer tailored promotions, discounts and prizes personalised to each and every customer.
To truly maximise the use of these technologies and make loyal customers feel like their reliable purchases through a brand is meaningful, retailers can then aim to provide an integrated platform allowing for points to be accrued & spent across different industries instead of just their own stores or websites. Retailers shouldn’t fear greater collaboration in the future. This option provides the ultimate level of choice whilst also showing customers that their chosen retailer cares about providing the best possible payment and loyalty experience for them.
Being forward-thinking is the best way for retailers to recover from this pandemic; whether this means adapting to new payment systems, providing app-based platforms or improving loyalty offerings, retailers that are set on embracing technologies that customers are using will be doing the most they can to see themselves come out of this pandemic with a loyal customer base, and in time, rewarded with better revenue.