Exploring the new opportunities and greater potential in payments

With glob­al pan­demics, inter­na­tion­al con­flicts, and a loom­ing eco­nom­ic cri­sis to con­tend with, agili­ty is crit­i­cal to busi­ness sur­vival today. Against this back­ground, pay­ments sys­tems can play an essen­tial role in enabling enter­prise-lev­el and inter­na­tion­al busi­ness­es among oth­ers, to dri­ve sales, improve mar­gins and engage with con­sumers whose expec­ta­tions for fast, easy and secure trans­ac­tions are greater than ever.

“Busi­ness­es are grad­u­al­ly mov­ing away from large, enter­prise-built sys­tems in favour of small, spe­cial­ist providers that fit togeth­er seam­less­ly in the back-end,” says Col­in Neil, man­ag­ing direc­tor of Adyen UK, the glob­al finan­cial tech­nol­o­gy plat­form that pro­vides com­pa­nies around the world with end-to-end pay­ments capa­bil­i­ties, data-dri­ven insights and finan­cial prod­ucts in a sin­gle solu­tion. “This makes it much eas­i­er to piv­ot since these com­po­nents can be switched out with­out bring­ing the whole sys­tem to its knees.”

To achieve this, the pay­ments func­tion­al­i­ty needs to plug seam­less­ly into a business’s wider tech ecosys­tem with­out adding com­plex­i­ty. A sin­gle plat­form solu­tion that can han­dle all pay­ment needs across all regions and chan­nels is an advan­tage. This enables uni­fied com­merce, anoth­er impor­tant and grow­ing trend in which all sys­tems are con­nect­ed behind the scenes to not only stream­line busi­ness oper­a­tions but deliv­er bet­ter expe­ri­ences to the end user.

Accord­ing to recent research pub­lished by Adyen, 47% of busi­ness­es say uni­fied com­merce improves cus­tomer expe­ri­ence. How­ev­er, only 21% of UK busi­ness­es cur­rent­ly con­nect their pay­ments to oth­er parts of their oper­a­tions.

“The oppor­tu­ni­ties for busi­ness­es to devel­op com­pet­i­tive advan­tage are huge,” says Neil. “And uni­fied com­merce paves the way for oth­er inno­va­tions such as pay­ment-linked loy­al­ty. The days of wal­lets bulging with loy­al­ty cards are over. Today, your customer’s cred­it card can become their loy­al­ty card as well. It can be used to iden­ti­fy the cus­tomer, track pur­chas­es – across any chan­nel or region – and trig­ger rewards. This is much eas­i­er to man­age and a bet­ter expe­ri­ence for the cus­tomer; some­thing wel­comed by 70% of con­sumers who said that brands need to make their loy­al­ty schemes eas­i­er.”

Neil adds: “Pay­ment data is also a valu­able source of infor­ma­tion. It can help busi­ness­es to under­stand the pro­file of cus­tomers in spe­cif­ic areas. For exam­ple, a high rate of Ali­pay trans­ac­tions in a spe­cif­ic store might indi­cate a preva­lence of Chi­nese shop­pers in that area. This kind of intel can be used to inform mar­ket­ing deci­sions.”

At a more advanced lev­el, pay­ment data can be used to dri­ve effi­cien­cies in the back end to remove fric­tion. It can, for instance, be used to opti­mise card pay­ments for high­er approval rates. It can also be used to beat fraud since pay­ments sys­tems can now recog­nise known fraud­sters across a range of data points and block them before they can act. Accord­ing to Adyen, the more data that the busi­ness puts in, the more val­ue it gets out.

Meeting customer demand for fast payments

As con­sumers demand a more rapid, seam­less expe­ri­ence, fast pay­ments are becom­ing increas­ing­ly impor­tant. Accord­ing to Adyen’s recent con­sumer research, 67% of UK con­sumers won’t return to a brand if they’ve had a bad expe­ri­ence either in store or online and 76% expect busi­ness­es to main­tain the same flex­i­bil­i­ty that they demon­strat­ed dur­ing the pan­dem­ic.

“As com­pe­ti­tion for share of con­sumers’ shrink­ing wal­lets ramps up, it’s crit­i­cal that busi­ness­es remove fric­tion from every part of their con­sumer jour­ney,” says Neil. “The pay­ment expe­ri­ence is the moment of truth in any pur­chase and it’s no time to scrimp on cus­tomer expe­ri­ence, espe­cial­ly when the likes of Uber and Ama­zon­Go are set­ting such a high bar.”

Sim­i­lar­ly, with the rise of Apple Pay and Google Pay among oth­ers, con­sumers shop­ping on their mobiles don’t need to enter their card details for every pur­chase. This is thanks to the growth of express pay­ments where the nec­es­sary details are already com­plet­ed. The tech­nol­o­gy behind this is tokeni­sa­tion, in which sen­si­tive card data is replaced with a secure token which is use­less to any crim­i­nal if inter­cept­ed. Busi­ness­es can offer express pay­ments with­out wor­ry­ing about the safe­ty of their cus­tomers’ card data.

Neil urges busi­ness­es to embrace next gen­er­a­tion Strong Cus­tomer Authen­ti­ca­tion (SCA), the man­dates for which came into play in March this year. How­ev­er, the recent Adyen sur­vey data shows that 44% of UK busi­ness­es are still not ready for it. “This not only makes busi­ness­es vul­ner­a­ble, since they lose the ben­e­fit of a lia­bil­i­ty shift, it also dam­ages their con­ver­sion as more and more issu­ing banks are declin­ing non-com­pli­ant trans­ac­tions,” he says.

Thanks to eas­i­er authen­ti­ca­tion flows which use bio­met­rics rather than rely­ing on a hard-to-remem­ber pass­word every time, these lat­est SCA man­dates should be seen as means of reduc­ing fric­tion for cus­tomers.

Rise of the conscientious consumer

Busi­ness­es also need to recog­nise the rise of the ‘con­sci­en­tious con­sumer,’ accord­ing to Adyen sur­vey results which show that 26% of con­sumers want the abil­i­ty to donate to char­i­ty while they’re pay­ing. “That’s why we intro­duced our Giv­ing fea­ture,” says Neil. “It’s eas­i­er than ever for busi­ness­es to enable dona­tions at check­out. In Adyen’s case, 100% of the dona­tion goes direct­ly to the char­i­ty and we absorb the pro­cess­ing costs.”

Anoth­er inter­est­ing inno­va­tion in pay­ments that Adyen is help­ing to dri­ve is embed­ded finance. For con­sumers this comes in the form of buy now, pay lat­er meth­ods such as Klar­na and Clear­Pay.

“From a busi­ness per­spec­tive, embed­ded finance can be found with­in your com­merce plat­form,” says Neil. “Plat­forms are increas­ing­ly look­ing for ways to remove oper­a­tional bur­dens and cash flow restric­tions from their users. That’s why we can expect to see the grow­ing use of issued vir­tu­al and phys­i­cal cards in order to stream­line mon­ey flows and speed up pay­outs.”

Pre-approved cap­i­tal loans based on busi­ness users’ pre­vi­ous per­for­mance on the plat­form will also help to keep the wheels of com­merce mov­ing dur­ing dif­fi­cult times by quick­ly unlock­ing cap­i­tal for busi­ness­es when they real­ly need it.

Adyen recent­ly announced that it is expand­ing its ser­vices beyond pay­ments into embed­ded finance prod­ucts for its plat­form cus­tomers.

Neil says: “Pay­ments must play their part in ensur­ing the cus­tomer comes away hap­py. Now’s the time for you as a thriv­ing busi­ness to invest in the tech­nol­o­gy that will ensure that buy­ing from you is as easy as it can be.” As the cost-of-liv­ing cri­sis ratch­ets up, busi­ness­es must think care­ful­ly about the expe­ri­ences they’re offer­ing and ask whether they’re pro­vid­ing real val­ue in exchange for people’s hard-earned cash.

How payments can build customer loyalty

The chal­lenge in devel­op­ing pay­ments sys­tems that deliv­er greater cus­tomer loy­al­ty is real. Over a quar­ter (26%) of con­sumers stopped using or buy­ing from a busi­ness in the past year, a fig­ure that ris­es to 32% among Gen Z, accord­ing to PwC’s Cus­tomer Loy­al­ty Sur­vey 2022. On the oth­er hand, the sur­vey also revealed that more than half (51%) of respon­dents said that they’re less like­ly to be loy­al to a brand if its online shop­ping expe­ri­ence isn’t as easy or enjoy­able as shop­ping in per­son.

Con­nect­ed pay­ments enable brands to build a com­plete pic­ture of their cus­tomers and cre­ate cross-chan­nel loy­al­ty and rewards pro­grammes. Adyen’s recent research found that 61% of con­sumers would down­load a retailer’s app to receive bet­ter loy­al­ty rewards. And 63% want brands to con­nect their loy­al­ty to their pay­ment method.

Adyen cus­tomer Joe & The Juice knows first-hand the pow­er of con­nect­ed pay­ments. “By link­ing our app to the cred­it card ter­mi­nal, cus­tomers get greater trans­paren­cy of their pur­chas­es, mes­sages, and rewards in the app,” says the company’s VP of strat­e­gy & busi­ness devel­op­ment, Thomas Evald. “On the oth­er hand, we gain a clear­er under­stand­ing of who our cus­tomers are and how we can pro­vide them with bet­ter ser­vice and prod­ucts.”

Pay­ments tech­nol­o­gy is also help­ing the brand by enabling it to con­nect its online and in-store chan­nels in one sys­tem. By cen­tral­is­ing its pay­ments, Joe & The Juice can pro­vide a con­sis­tent expe­ri­ence across both chan­nels; a key fac­tor for engag­ing cus­tomers, improv­ing per­son­al­i­sa­tion and build­ing loy­al­ty.

“We’re uni­fy­ing the ecom­merce and phys­i­cal store expe­ri­ences,” says Evald. “You can pre­order from your home, or you can order in store. You can pay via the ter­mi­nal or in-app. It does­n’t mat­ter. We’ve cre­at­ed this flex­i­bil­i­ty by con­nect­ing our pay­ment data in the back end. It lets us con­nect the best of both worlds to deliv­er an even bet­ter ser­vice. It also lets us see the whole pic­ture in one place and eval­u­ate our per­for­mance. That’s amaz­ing for us.”

For more, please vis­it adyen.com

Pro­mot­ed by Adyen