How digitalisation is reconnecting commerce

In this exclusive interview, John Gessau, Head of Omnichannel - General Retail of ACI, looks at payment evolution post-COVID and how retail digitalisation is disrupting traditional attitudes and channels

COVID had a massive impact on retailers but how did it affect payments and the move to digitalisation? 

COVID forced many retailers to make a major shift towards digitalisation. As well as escalating their ecommerce investment, it saw them using innovative technology instore to change business models to secure revenue and create value-producing opportunities.  

We saw hybridized services like curbside pick-up, click-and-collect, and buy online, pay in-store (BOPIS) come to the fore and a massive uplift in the use of mobile payments and shopping apps. Importantly, COVID also broke down many usage barriers as less tech-savvy demographics embraced contactless, mobile payments, and apps, and switched to using new digitalisation services.  

How does digitalisation affect customer expectations? What payment challenges does this create for merchants?

More than ever, today’s shoppers want to be able to move freely between channels at any point in the buying cycle. They want to be remembered and recognised with personal offerings; to be able to browse, evaluate, and source products on their phone while in-store.  And they want to be able to choose where, when, and how they pay, collect their goods, or have them delivered.  

Omnichannel empowerment is now central to delivering choice, convenience, and creating hyper-relevant and targeted customer experiences. To do this, merchants must be able to effectively track customers on their journeys and to respond to their preferences too. That means removing barriers, unifying data, and being able to truly integrate multi-channel services. Failure to do this may not only adversely affect sales but also loyalty, revenue, and ultimately market share and competitiveness.

How is this impacting retailers’ approach to payments?

Retailers no longer think of payments as just ‘plumbing’ but as a key differentiator with a direct impact on their bottom line. Why? Because customers are proactively choosing where to spend based on checkout choice. And because payments now directly influences revenue potential, it is much more visible in the boardroom. Today’s retail business leaders are increasingly involved in payment digitalisation discussions including infrastructure investment, platform requirements, and partner selection.

Convenience, security, and compliance typically drive payment discussions but what digitalisation trends will create a buzz in 2022?

• Empowering choice will become the new battleground.   

Contactless, alternative payments, ewallets and BNPL will increasingly be used to empower customers at the checkout. Modernising the POS to accept new types of payment – from crypto and contactless to ewallets and apps – will become a #1 priority for merchants. 

• Hybrid services will continue to gain pace even after the pandemic has passed.  

The technology that enabled ecommerce to fill the gap when stores were closed will play a vital role in bricks-and-mortar recovery. Shoppers will want digital experiences in-store using artificial or virtual reality using labels, QR codes, or shelf stickers to immerse themselves in ‘connected shopping’ experiences. 

• Commerce will become more social, smart, and embedded.  

We’ll see more buying and selling of products directly on social platforms like Facebook or Instagram. And more emphasis on product discovery and off-the-page buying methods. To service increasingly fragmented channels, retailers will look to intelligent commerce to map customer journeys, predict demand, and manage stock as well as to support just-in-time supply and same-day fulfilment.

• The act of paying will become increasingly immersive – and invisible

Voice commerce and AI shopping, including auto-replenishment and VR will make headway in mainstream commerce. Customers will want to place orders through smart devices without requiring an e-wallet or payment card. Already in the US, drivers can use Alexa to pay for fuel at Exxon and Mobile or instruct Siri to pay at 7-Eleven fuel pumps with a Fuel Loyalty App.  

Where do retailers look regarding preparations for future developments? 

Merchants should invest in agnostic and flexible platforms that can easily integrate with new payment methods and technologies on an ongoing basis. Ones that are equipped with tools to support smooth customer journeys, optimise channels, increase responsiveness, and improve decision making.  

On the infrastructure side, omnichannel gateways and agnostic processing platforms are vital to support new multiple payment methods, acquirers, and channels. At the same time, APIs and software development kits (SDKs) ensure merchants embrace new ecosystems and marketplaces to keep services flexible and competitive.

Important features include secure but low-friction authentication and verification methods for CNP transactions; tokenization to track and reward customers; and data analytics and AI tools for customer insight and to aid personalisation. More sophisticated rule engines and machine learning will also help them keep risk, fraud, and chargebacks low. 

How will digitalisation affect payments long-term?

As we emerge from COVID, there’s a crucial window for merchants to rebuild their bricks and mortar businesses and regrow their customer base, using digital enhanced sales journeys to drive better transaction lift, average order value, conversion, and acquisition.  

Across demographics, markets, and sectors, payment choice, convenience, and innovation are now de facto. Today’s journeys must be seamless, frictionless, and fast – tomorrow’s must be invisible, intuitive, and immersive. 

Ultimately, payment digitalisation must empower merchants with flexibility, freedom, and joined-up omnichannel capabilities. This will enable them to adapt and tailor services and quickly launch innovative new customer journeys – instore, online, and phygital – wherever their customers prefer to shop and pay.

We are uncovering some of the payment digitalisation trends and their impact on retailers’ omnichannel strategies in this ebook.

About John Gessau

With over 20 years of experience in the payments industry, John leads the team that serves the omni-commerce needs of retailers globally, as part of ACI’s merchant portfolio team. His focus is on driving innovation and growth for merchants around the world, and he is passionate about finding ways to enable merchants to deliver optimised payment experiences to strengthen both their brand and their bottom line.

 

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