The time to improve the payments experience is now

Increasingly, merchants are realising that payments strategy plays an important part in the customer experience – capable of delivering far more commercial benefit than simply securing the value of the transaction. We talk to Andy McDonald, VP merchant payments, ACI Worldwide, about how the right payments strategy can optimise the customer experience to deliver competitive advantage and enhance customer loyalty – and how merchants can do this while keeping costs manageable.

Why has the payments process become more important for merchants and what part does it play in the overall customer experience?

Today’s consumers want to pay quickly, easily and securely, using the payment methods they prefer. If they can’t, they will simply go elsewhere.

Ecommerce cart abandonment rates continue to run at around 70% and – rightly or wrongly- the payment experience is often blamed for that abandonment. Technical glitches, complex checkout processes, a lack of familiar payment methods, security concerns and processing lag times are all certainly issues that put consumers off, resulting in lost sales and customer attrition. This means that keeping up with payment preferences, innovations and the latest security measures is now more important than ever before - and getting the payments experience wrong can be costly.

The industry continues to struggle with the challenge of striking a balance between frictionless customer experience and strong security. What advice can you offer?

In our recent survey, we found that fraud prevention is usually prioritised over a frictionless experience - with only 22% of merchants actively working on a compromise between the customer experience and fraud prevention.

Of course, the problem here is that many merchants will be losing out on revenue and growth opportunities by employing overly stringent fraud measures or, worse still, relying on ineffective fraud tools and getting hit from both sides. In fact, with the right data, tools, profiling processes and closely tailored fraud strategies, fraud prevention solutions can be geared to support conversions and growth. By ensuring that the data security and authentication processes are fast, robust and seamless, friction in the customer experience is minimised without compromising security.

We explore this topic more in our paper on fraud and conversion which is worth a read for any merchants struggling in this area.

How important are innovations such as Alternative Payments and Immediate Payments and what is the commercial impact for merchants?

In our recent whitepaper, ‘A Payments Playbook for Multichannel Executives’ we explore some of the current payment trends and their commercial impact. We found that Alternative Payments, including Immediate Payments were considered the most important issues for merchants in the next few years.

Merchants need to be able to assess and implement the right payment methods for their customer base and create consistency across channels – and, of course, there is a cost for this process. But there are also many advantages. For instance, Alternative Payments can open up specific customer segments and geographies. They can also help to drive higher transaction values, bring the purchasing decision forward, deepen information about customers and personalise shopping experiences. Immediate Payments can also offer some significant benefits to merchants that card payments can’t – including faster receipt of funds and potentially lower processing fees.

 How can merchants keep up with the huge amount of technological and regulatory change?

With such a fast-moving and continuously evolving payments landscape, there is so much to keep abreast of and while we found that merchants were well versed in some areas of payments, it was clear that there are others where awareness and understanding is not as strong. For instance, our survey identified that many merchants were unclear on the importance and commercial impact of PSD2 and valuable tools such as machine learning and tokenization.

This does mean that many merchants are potentially missing out on important opportunities to enhance their customer relationships and reduce costs. Enlisting the help of expert payments partners can deliver real value in helping merchants understand and evaluate all the challenges and opportunities around the payments process, delivering the tools and expertise merchants need to meet customer and regulatory demands, while reducing complexity and cost.

What else can merchants do to successfully balance a low cost to serve with the right customer experience?

While customer experience is critical to retention and revenue growth, it needs to be delivered at a cost that doesn’t cripple the business. The key to this challenge is agility – the ability to adapt and deploy changes quickly and with minimal resources.

Tools and technology which are based on open architecture and a single payments platform are two critical components of a successful payments strategy for today’s merchants since they offer the chance to continually enhance the omnichannel customer experience without the drain on costs and resources that comes with large-scale technical redevelopment.

SaaS or cloud-based solutions can also help to minimise infrastructure costs and increase merchants’ ability to launch new products and services quickly and with ease. Payment solutions that are vendor independent and acquirer agonistic can also help merchants to control costs by offering the flexibility to negotiate fees, while ensuring they don’t get locked into technology that may soon become outdated.

About Andy McDonald

Andy McDonald is Vice President of Merchant Payments for ACI Worldwide, running both direct and indirect channels to market. He works closely with the product and marketing teams to take ACI’s integrated UP payments solutions to merchants in the retail, gaming, telecoms and travel sector as well as payment companies. Andy has 20 year experience in helping companies grow in line with long-term strategic plans; his current focus is to grow ACI’s eCommerce payments business across Europe and the UK.

About ACI Worldwide

ACI, the Universal Payments company, powers electronic payments for more than 5,100 organizations around the world. More than 1,000 of the largest financial institutions and intermediaries as well as thousands of leading merchants globally rely on ACI to execute USD 14 trillion each day in payments.