Michael Kamerman is CEO of Skilling
In a triumph for collective action, sparked by online forums such as Reddit, the GME saga saw retail traders and investors take on Wall Street, and the retail crowd’s influence was far greater than any of us could have expected. Robinhood faced significant risks throughout this saga and appeared “on the side of Wall Street” in light of the trading restrictions they were forced to implement.
However, as headline-generating as it all was, it also highlighted the need to educate the trading masses on more than zero commissions or how to use well-designed trading apps.
Once Robinhood buckled under trading pressure and blocked investors, shares were down 79 percent, leaving many retail investors nursing big losses. The frustration felt by customers, unable to execute their positions, led to public outcry and allegations of market manipulation in the favour of the very Wall Street magnates that Robinhood was marketed as being morally against.
Moreover, by appearing to be working with the Wall Street establishment, rather than working for novice traders as they purport to serve, Robinhood appeared to undermine their business model and reputation.
While the event left analysts divided, undoubtedly the movement highlighted that looking ahead, investor education covering numerous topics, requires vast improvement and attention. The onus is now on brokers to respond accordingly, through the employment of clear and consistent customer communication. Without it, the underlying forces of the market might mean next time a Reddit rebellion comes around, it will not play in favour of the retail investor in the same way.
Risks for the brokers
For those with industry experience, the decision of Robinhood to limit the positions of its customers made sense. Too many customers stockpiling into trades, all in one direction, can prove very dangerous to the brokerage and its traders.
Those who have been account holders with brokerages will relate to the frustration of having orders rejected or slipped to unfavourable prices. Faced with the frustration of being told your position is unable to execute, it is natural to look for someone to blame in that situation. However, Robinhood’s plight was not being able to find common ground on that topic with its customers and consequently, leaving the brokerage with a black eye.
Lessons for the traders
Whilst years ago, stock trading was a time- consuming process that required a real human broker, now, thanks to mobile investment apps, we are witnessing a new age of retail trading. However, the ease and accessibility of these apps should not distract from understanding the decisions you make on them. We witnessed this with Robinhood when customers felt frustrated by having orders rejected or slipped to unfavourable prices.
Therefore, one of the key lessons that traders should take from the GME saga is the importance of research. Day trading is not a strategy people can jump into without doing their research first. When deciding where to invest, a company’s stock price is only one part of the equation. In the case of GME, the price did not match the company’s overall financial situation, demonstrated by its plans to close 1,000 stores by the end of the year.
Ultimately, investors need to look at the big picture. When a company is consistently struggling financially and suddenly, its stock price surges, that is a red flag.
New era of retail trading?
Mishaps in communication and perception can sting for a long time. Undoubtedly, Robinhood now faces a healthy share of ‘detractors’ offering warning messages to would-be account holders when they seek advice online. Whilst those who went through the GME saga as traders will likely tell their tales for years to come.
As a result, this has acted as a prime case study around marketing messaging and crisis communication. For Skilling who watched the Robinhood reaction with curiosity, it prompted us to carefully consider our stance and how we educate and communicate with our customer base.
Overall, whilst opinion may be divided following the GME saga, the reputation of retail trading has in fact improved. If we are discussing equities, their volumes have grown in significance. Today they are a major percentage of the overall daily volume and retail traders now have a seat at the table. Moreover, with social media chat rooms resembling the squawk boxes on fast-paced trading floors, this new generation of retail traders will undoubtedly continue to gain influence over the stock market.
THE ACCELERATION TOWARDS A MOBILE FIRST ECONOMY
By Brad Hyett, CEO at phos
Over the last year, we have seen a big shift towards contactless payments. Fuelling this has of course been the coronavirus pandemic, which has made the public hesitant to handle cash due to the health concerns.
As multiple national lockdowns forced physical stores to close, and customers demanded easy, cash-free payment options, merchants had to quickly adapt. The result? An increased provision of pay and collect services.
In the UK alone, 83% of people use contactless payments according to data from the Office of National Statistics.
So it’s vital that merchants are equipped with the most efficient payment solutions, as the UK heads towards a mobile-first economy.
Proliferation of contactless payments
In 2020, 90% of UK card payments were contactless. This equates to an increase of 12% on the year prior, despite the total number of payments made falling by 11% from 2019 to 2020. Moreover, the affordability of smartphones has increased significantly over the last decade. And it’s estimated that 84% of UK adults now own one.
We’re Seeing merchants embrace more efficient and cost effective payment methods in response. While physical payment terminals are often too expensive for many small businesses, software point of sale, or SoftPoS, enables merchants to turn hardware that they already own – i.e. their mobile device – into a point of sale terminal.
With merchants increasingly adopting these innovative technologies, contactless payments will continue to gain popularity among the general public. In 2020, 13.7 million people in the UK either didn’t use cash at all or only used it to make a single purchase. That’s double the same figure from the previous year.
Changing consumer demand
Now more than ever, consumers are aware of how innovative payment solutions can add efficiency to their daily lives. As such, consumers now demand better payment services, including reduced queuing times, checkoutless stores, and bespoke loyalty schemes.
Businesses such as Mercedes offer an end-to-end digital car purchasing service, so customers can go through the whole car purchasing journey from the comfort of their own home. This includes car deliveries, financing, insurance and more.
Meanwhile, eCommerce giant Amazon has started trialling checkoutless ‘Go’ stores, speeding up the shopping experience by eliminating the queuing process altogether. The days of waiting for a table at a restaurant are also over, as more people have grown used to booking in advance.
Hence, it’s important that we empower small businesses to remain competitive and provide them with the payment solutions to meet customer demand.
The digital payments revolution isn’t slowing down anytime soon. By 2026, only 21 percent of transactions will be made using cash.
The US might have been slow out of the gate, but it’s starting to see increased adoption of mobile payments. In-store mobile payments grew by 29% in the States last year alone.
This growth was primarily fuelled by Gen Z-ers and millennials. Latest projections show that there will be 6 million new mobile wallet users by 2025, with millennials accounting for 4 million of this figure. These two generations, the former in particular, have grown up with mobile banking.
For most Gen Z-ers, their first foray into financial services was with a challenger bank like Starling or Monzo. These banks are able to offer online features such as ‘split the bill’, fee-free withdrawals abroad and much more to cater to the modern financial needs of the younger generation.
The Middle East experienced similarly sharp increases in contactless payments. From 2019 to 2020, there was a 200% growth in contactless transactions. This shift towards a mobile-first economy in the region was inevitable; the pandemic merely accelerated this shift. A recent study showed that 80% of people living in the Middle East planned to continue using contactless payments post-pandemic, with speed and security being the main draw.
The future is mobile
As parts of the world now start to come out of lockdown, there’s an openness to new solutions and a widespread acceptance of new technologies.
It is now a case of when, rather than if, we’ll see a permanent shift to cashless in the future. For businesses, embracing digital innovation will be key to remaining competitive and keeping pace with consumer demand in this fast-changing payments landscape.
HOW MERCHANTS CAN IMPROVE THE ONLINE PAYMENTS EXPERIENCE
By Alan Irwin, Senior Director of Product at Global Payments UK
The dramatic increase in online shopping over the past 18 months has encouraged many businesses to invest in developing their omnichannel shopping experiences. The reasons vary – some are keen to capitalise on the trend of older shoppers migrating towards ecommerce and some are trying to make up for loss of sales in brick-and-mortar stores during the pandemic. It is also true that many businesses are shifting their models to sell direct to consumers to avoid high marketplace fees and are therefore building their ecommerce channels for the first time.
The checkout experience is arguably the most important and delicate part of the ecommerce transaction, as it can make the difference between a happy customer likely to return, and a shopping cart abandoned out of frustration and confusion. A survey from March 2020 suggested that 88% of online shopping orders were abandoned, i.e. not converted into a purchase. A seamless, customer-centric online payment experience is therefore critically important in ensuring completed transactions. But with so many payment providers available, what should businesses be looking for when trying to keep friction to a minimum?
Keep clicks to a minimum
Less touchscreen interaction equals less abandonment. Adapting the payment page to fit any device and supporting popular mobile digital wallets like Google Pay ensures a seamless, stress- and hassle-free checkout experience for the customer and keeps clicks to a minimum. Friction can present itself in the most minor features – for example, when the customer is navigating the payment form, the appropriate keypad should be shown to the customer when required. It’s much easier to enter a card number using the dial pad instead of switching between QWERTY keypad layouts.
Simplifying online forms with autofill and tokenisation also significantly reduces friction at checkout and shortens necessary time taken. Ensuring checkout forms are tagged correctly for “autofill” is a great way to offer customers a single-click to input the payment, shipping, and billing data that they have stored in their browser profile. Similarly offering a guest checkout option will help convert customers who are in a hurry or looking for a one-off purchase. This can also be achieved by offering to store the payment details (called ‘tokenisation’) for express repeat and one-click purchases.
Make it easy to understand
A tailored payments approach can increase both domestic and international global sales. By offering a checkout experience in the customer’s language, the option to pay in their currency of choice, and use their preferred method of payment (whether it’s PayPal, Alipay or card), businesses can build loyalty quickly and put customers at ease. It is equally important for merchants to ensure they always display simple direction and information about next steps to instil confidence and prevent customer drop-off. The customer should be informed of what is happening at every stage in the process, for example, whether they will proceed to SCA (Secure Customer Authentication) next or go straight through to completion.
In addition, validating forms in real-time means merchants can highlight potential errors to the customer early on, and payment providers should provide this functionality. This could be an invalid expiry date, an incorrect digit in the card number or incorrect CVV number based on card type. When issues are only flagged at the end of the process, this forces the customer to go back through the steps to figure out the error. Real-time signposting of problems removes this potential friction and reduces the potential for a declined transaction.
Ensure seamless security
Merchants should work with a payment partner who offers the right blend of security and compliance management without it coming at a cost to the end-to-end checkout experience for the user. Instilling trust and security in your checkout flow while utilising the right solutions to drive seamless authentication flows will increase customer confidence and help prevent drop-off.
The greatest level of security and control comes from either utilising hosted payment fields that the
merchant can natively integrate into their checkout flow, or a hosted payment page where they can
manage the look and feel. Showcasing your brand on the checkout page with trust signals and logos also adds to building trust with the customer.
Staying ahead of regulations is also important. Secure Customer Authentication (SCA) will soon be mandatory in the UK for all eligible digital transactions, and this doesn’t have to be a friction-full process. Tools like Transaction Risk Analysis (TRA) and Exemption Optimisation Service (EOS) can quickly score transactions and drive exemptions where there is the right blend of transaction risk.
The devil is in the details
These three rules for successful ecommerce checkout experiences may seem straightforward, but it is important to apply them at a micro level. It can take only one minor point of friction to cause a customer to abandon their cart, and this will inevitably be replicated across other similar customers. It is critical to identify friction points early on and anticipate customer needs throughout the process. Discussing these points and any opportunities to improve customer checkout experience with your ecommerce team and payment provider is an important first step towards ensuring your entire shopping experience remains competitively seamless and loyalty is won. It may be that your payment provider cannot address them, in which case it could be time to move on in order to stay competitive.
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