Preparing for the disruption in payment systems

Payment is a strategic tool, which retailers can leverage to optimise financial costs and IT systems, increase their revenues and capture more customer data. That’s according to Gregoire Toussaint, principal at Edgar, Dunn & Company (EDC) and Gilles Bourron, payments expert at Total France. Presenting at the NACS Convenience Summit Europe, Toussaint and Bourron explored disruption in payments and the future of payments and underscored the importance of the customer experience. If payment is not simple, convenient and quick, retailers will disappoint, the duo warned.

Toussaint went on to highlight the current payment trends and how they can help inform retail strategy in terms of the customer experience.

The payments industry is being shaped by four key drivers, Toussaint said. These are: changing customer expectations, new entrants, regulations and new technologies.

There have been dramatic changes in how people choose to pay, which can be anyhow and anyway, Toussaint said. This drives a seamless customer experience and enables personalisation with e-vouchers and coupons, for example.

Mobile payments and contactless payments have become increasingly relevant and especially for millennials, Toussaint added.

The payments landscape has been transformed too with a large number of new entrants after 2000 and the advent of the internet and mobile. Retailers must therefore consider which payment methods they need to accept to meet the needs of their customers. Toussaint suggested Apple Pay, for example, had not taken off as Apple would have wanted because it does not provide any added value in terms of additional convenience over contactless, for instance.

Alipay, meanwhile, is huge in China with a 70% share of the mobile payment market. Alipay is therefore also relevant in those areas attracting Chinese tourists, Toussaint advised.

New regulations are influencing the payments market too. In Europe, PSD2 - the second payments services directive has created an open banking environment enabling third party apps and APIs to have access to account information for triggering payments without the need of the bank, for example.

“Regulators in Europe are pushing innovation,” Toussaint said.

Finally, technological initiatives such as digital wallets and biometrics are introducing new customer experiences. The same is true with Amazon 1-Click ordering, which lets users associate a credit or debit card with addresses so that they can place orders with a single click of a button.

Toussaint went on to highlight the retail opportunities that payments provided.

“Payments are strategic to optimise financial costs and IT systems,” he said. “There’s an increasing awareness that payment has become strategic for retailers.”

Payments can be used to optimise a retailer’s fraud prevention policy, for example. Similarly, by reducing payment costs, businesses can generate additional revenues.

According to Toussaint, there will continue to be disruption in payments in future and retailers must focus on the consumer, consider what payment options they want to use and the merchant devices that will be needed to receive payments plus emerging types of commerce and technologies.

Toussaint highlighted the potential of new technologies such as FitBits, smart fridges, the Amazon Dash button, connected cars, interactive kiosks and screens to impact the payments arena. Starbucks’ app already makes it easy to order and pay for a coffee, while Uber is leveraging the functionality of a mobile phone and Amazon Go takes queuing and the checkout out of the equation, he explained.

“Payment is key to creating multi-channel purchases - it’s blurring the lines between proximity and remote sales,” he said.

Bourron highlighted the payment trends across Total’s network of 15,551 stations in Africa, Asia, Europe and America. Total accepts all universal means of payment but while cash was at a low level in Europe, it had a high level of acceptance in Africa. Fuel cards are also dominant in Europe, where they account for more than 40% of transactions, Bourron revealed. B2B activity, where cards can be used for fuel, shop plus tolls and parking, is growing for Total too. “It’s a value added service and a very important part of our business that we want to develop,” he said.

In terms of payment strategy, Bourron said the focus was to promote the use of electronic payment and decrease cash in the network but with an eye on alternative payments as well.

Bourron highlighted the introduction of a new payments acceptance system at Total in 2015, which introduced one platform for all its markets. That enabled new services such as contactless, Apple Pay and Samsung Pay; along with the Total Club fuel card. Bourron revealed Total processes more than 1 million contactless transactions per month.

“Before the launch of the platform, we were able to launch an RFP at European level, which provided location-based dynamic routing for transactions, depending on card type.”

Bourron reported Total was working to alleviate service station pain points such as the lack of fluidity of a customer journey on the forecourt and constraints linked to payments.

It has launched a Total eWallet in Germany and Belgium, which enables customers to choose the petrol pump and fuel type and then refuel and pay without going into the shop. Total has also partnered with DriveNow, the joint car-sharing venture from the BMW Group and Sixt SE, to embed an eWallet into the car operating system. After filling up at a Total service station, the bill is paid directly by the DriveNow vehicle itself. Through direct communication between the car and the cash register system, payments for fuel at the register with the classic fuel card are being discontinued.

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Fiona BriggsFiona Briggs Freelance retail business journalist

Fiona is an experienced journalist and editor, writing exclusive content for GCSF. She is founder of retailtimes.co.uk. She contributes regularly to NACS Magazine and writes articles on omnichannel shopper trends for Radial. Fiona is available for commissions at fionalbriggs@gmail.com

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