By Vince Graziani, CEO, IDEX Biometrics ASA
The retail sector has experienced near total disruption in the last 12 months. An outsized shift to online shopping, a move away from in-store experiences and changes to customer behaviour has left retailers needing to adapt following the pandemic shake up. According to Gartner’s latest research report, 73% of CMOs will rely more on existing customers this year as opposed to growing new markets as they rebuild. This means that the retailer’s survival is going to be based on building loyalty and encouraging repeat purchases. Enhancing these relationships with existing shoppers therefore points to a need to maximise in-store loyalty schemes.
We’re quickly moving to a cashless tap-and-go society thanks to huge advancements in secure touch-free payment methods, such as contactless cards and mobile payment apps. But when it comes to loyalty programmes, with the average consumer in the US belonging to more than 14 loyalty memberships on average, our wallets, fit-to-burst with plastic, are yet to see the benefit. It’s telling that these consumers are only active in seven of these memberships on average. This reveals that customers aren’t seeing value in a large number of their loyalty programmes.
Where loyalty card programmes currently fall short
There may be numerous factors at play here. Perhaps the excess wallet weight is making consumers less likely to go in search of their loyalty card for fear of slowing down the store queue for others – a factor which may be even more prominent in the current pandemic. It may also be the case that the rewards themselves are not as inviting. Data from Merkle found that only 39% of marketers use customer data to enhance loyalty programmes. This is a missed opportunity and can cause a disconnect between the brand and the customer. It also leaves retailers in the dark when it comes to that precious commodity, customer data.
Perhaps more alarmingly, most programmes fall short where customer data security is concerned. Requiring very limited sign-up information, customers are often supplied with a loyalty card that lacks a PIN or even a name attached to it.
There are two sharp consequences of this absence of authentication. Firstly, there is nothing to stop a customer sharing the card among friends, family, or even the person in front of them at the till. This renders the loyalty data unreliable. Secondly, and more damaging to both the retailer and the consumer, it leaves the programme wide open to loyalty fraud. This occurs when fraudsters make use of stolen cards or compromised login credentials to either spend or re-sell loyalty points, ‘buy’ goods or steal customer data.
There is a huge amount of value sitting in customer loyalty memberships. For example, Starbucks has $1.6 billion of unspent cash on customer loyalty cards. Therefore, fraudsters have much to gain by targeting these cards. As a result, loyalty fraud costs the retailer heavily both in terms of goods and reputational damage.
So how can retailers improve the security of their loyalty programmes and deliver maximum value by harnessing the power of the data they provide?
Give loyalty the same biometric security as payments
Fingerprint scanning is now ubiquitous as a proof of ID thanks to most smartphones incorporating this layer of security. As a result, it has gained trust and acceptance from consumers. When added to a payment card, fingerprint biometrics provide a familiar, and secure way to authenticate payments. The biometric authentication also eradicates the need for contactless payment limits, whilst deterring fraud or theft attempts – as the card will only work when in the hand of the registered user.
It therefore seems only fitting that this level of security infrastructure is implemented into loyalty cards to protect consumers and retailers while preventing fraud. Importantly, the technology to provide this closer alignment between payment and loyalty is already available, through fingerprint biometric smart cards. Incorporating fingerprint biometric sensor technology into a smart loyalty card ties the customer to the card, ensuring loyalty data is secure, trustworthy, and personalised.
The all-in-one frictionless experience
Boosting convenience for the consumer, biometric smart cards can also provide the technology for the ‘all-in-one card’ – a huge advantage for retailers or payment providers to attain top-of wallet status and banish shoppers’ bulging wallet woes. It means that one card can provide biometric-standard security for multiple purposes such as payments, loyalty programmes, transport cards and identity.
Biometric smart cards provide a frictionless store payment experience that won’t compromise security and privacy. With the smart card easily storing all customer and payment data in one place and making it readily available, it perfectly serves today’s tap-and-go consumer. Meanwhile the retailer can have absolute confidence that the data contained within the card belongs to that individual.
Futureproofing the shopping mall
Not only do biometric smart cards provide the convenience and security that consumers and retailers need today, but it also offers a completely touch-free experience. With the fear that traditional PIN terminals and touchscreens can facilitate the spread of coronavirus; a touch-free shopping experience is now an essential part of the high street’s future.
The payments industry was already moving this way, but the pandemic has accelerated the requirement for deeper insight into customers, their lifestyles and the way they behave, but also the other factors at play when they leave a store. The future of loyalty programme, therefore, may eventually depend more heavily on brand collaborations and data sharing to restore growth.
Optimising future customer relationships
Armed with much more actionable data on how customers behave, retailers can then personalise the customer journey, provide more inviting rewards and generating repeat sales. And with a loyalty card this is guaranteed to be tied to the user, it is easier than ever for retailers to leverage personalisation, optimise future customer relationships and reward customer loyalty.
Without a doubt, the way that consumers shop has changed forever. The shift to a predominantly touch-free shopping experience has been accelerated and customers now expect added value from high street retailers. Therefore, new ways of making the customer loyalty experience safer, quicker, and more personal are essential. Fingerprint biometric cards offer the potential to shake up the high street experience for the future.
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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