How Retailers Benefit From Controlling Their Payment Ecosystems

The retail payment ecosystem has evolved over the years to include a vast array of payment options for consumers. Mobile payments are on the rise, as an estimated 20.2 percent of U.S. consumers made use of them in 2018. As this trend grows into the new way of doing business, Mobile Merchant even predicts that mobile transaction value will reach $14 trillion by 2022.

As a retailer, it’s your responsibility to offer a secure and fast payment ecosystem for your business and its customers, and increasingly that includes mobile payment options. The only way to do this is to have complete control, from gateway to approved transaction.

Keep Your Payment Ecosystem Fees in Check

As a retailer, you must pay fees in order to accept credit and debit cards. Some of these fees will include the following:

• Interchange fees: This is the fee paid from the acquiring bank or your merchant account to the issuing bank or customer account. The average interchange fee in the U.S. hovers around 1.73 percent, depending on many factors, such as card present status, size of the retailer (as it relates to negotiating power), and more.
• Dues and assessments: Payment processors must collect dues and assessments for the card networks in order to have the ability to process the transaction. These fees vary based on a retailer’s pricing bundle, but assessment fees are often between 0.13 percent and 0.15 percent, depending on the card type.
• Additional fees: International processing fees, location fees, processing integrity fees, credit voucher fees ... there are many more fees that retailers need to keep track of.

Keep in mind that if you offer in-app mobile payment, your fees could vary even more.

Being in control of your payment ecosystem allows you to choose the parties involved in your transactions. You can choose which credit and debit cards or other payment methods you accept based on their fees and if they fit your bottom line.

Control Equals Adaptability

It’s true that not all payment methods are created equal. Consumers are searching for and expect the fastest way to complete the checkout process. The payment methods and parties you choose for your payment ecosystem have a direct impact on that process. Being in control allows you to choose the best payment options that fulfill your customer’s need for speed, enhancing the customer experience.

As technology continues to advance, improved payment options are being uncovered (e.g., mobile payments and voice commerce). Without control over your payment ecosystem, you lose the ability to adapt to this changing environment. And without adapting, you risk succumbing to your competition.

The current state of the point of sale is full of friction: shoppers just want to pay and get on with their lives, instead of being stuck in lines. Take a moment to review your payment experience and note any friction points your customers may experience. Are you asking your customers to scan a barcode? Punch in their number, and then read a short code back to you? If so, these can be experience killers. Therefore, be sure you’re working to make all options within your payment ecosystem as seamless as possible.

eMarketer reports that “In 2019, a little more than one-quarter of smartphone users in the U.S. will make a purchase using a mobile payment service at the point of sale. And by 2022, less than one-third of smartphone users will have made a proximity mobile payment.” Legacy payment processing structures simply won’t make the cut anymore. The future of payments is already here, and forward-thinking retailers are ensuring that their payment ecosystems fit in seamlessly with the way shoppers will want to transact.

Take Back Control of Your Retail Payments

You have the power to choose the payment methods you use to complete transactions. In fact, control is the only way to lower the cost of payments, while maintaining the security and speed your customers expect. Even beyond payments, our increasingly connected world demands mobile experiences that are relevant, engaging and personal. This means looking beyond the transaction itself and adding new revenue-boosting engagement opportunities.

As I’ve mentioned, the future of payments centers around proximity. How can retailers accept payments from their customers without having to pull out cash or cards? How can retailers make use of the powerful payment and engagement technology the majority of their shoppers already have in their pockets?

Retailers need transaction control in order to enhance the payment experience and produce measurable increases in average transaction value and customer loyalty. As mobile wallets become commonplace at the point of sale, they will have to become more versatile to enable payments beyond the point of sale. This requires real-time, short-range connectivity, made possible with hardware-agnostic ultrasonic technology.

Chris Ostoich is co-founder and head of innovation at LISNR, the world’s leading ultrasonic data platform.