[It’s clear that this topic has wayyyy too much material for just a blog, so at some point I’ll back this up with a white paper or some such. Please accept this as an amuse-bouche];
Today, the savvy buyer does their homework on all major retail expenses, ensures they have they the funds for it (debit or credit), and finds the best deal BEFORE buying.
The non-savvy, or impulse buyer, tends to get hosed, which may result in several things; the buyer either changes their minds and returns the item (and/or gets into financial difficulty), the merchant has a second-hand system to get rid of AND has the hassle of a charge-back, and the financial institution behind the payment runs the risk of non-repayment of the resulting bad debt.
While you’re never going to get away from consumers making bad decisions, you CAN make level the playing field, and make the experience for all parties less risky, more efficient, and potentially cheaper all round.
Two of the challenges we face today are:
- The vast majority of new businesses in the payments space are innovators, and have a very narrow focus. i.e. see a need, fill a need from a niche perspective. So if you’re looking around for those types of services, you have hundreds of small organisations from which to choose, and you either gamble, or wait until the market settles down and risk missing out entirely on a potential competitive edge.
- Every player in the payments ecosystem is either a dependent, or in competition, leaving everyone worse off, especially the consumer. You just have to look at the number of e-wallets, coupons, or loyalty point systems to see that 99% of them are unsustainable. The corollary is that new innovations in the retail space are very slow to be adopted, if at all.
So how do you choose the right combination of payment services for YOUR business?
Choose the right one(s) and the benefits are clear and ongoing, choose the wrong one(s) and you’ve potentially damaged your brand reputation. How many times have you collected loyalty points (for example), and never had the opportunity to enjoy the benefits?
The biggest issue the payments ecosystem faces it that the true cost of an expense if rarely apparent up front, and your payment options are limited to the offers of either your existing financial institutions, or of the retailers themselves. Instead, what if the banks made available enough information at the time of purchase for you to choose the RIGHT payment option?
Bob Mackman wrote a short white paper How to Pay: The Future for Mobile in m-Commerce, in which he posits that for a mobile application to;
“…weigh up the advantages of each [payment method] by looking at things such as: available credit, due date, interest rates and any loyalty schemes and give them the pros and cons of each for this particular purchase at this moment in time. Perhaps putting them into an order of preference.“
…that the background financial institutions would first need to provide;
“…direct access to the information from the bank and card accounts being used. If the providers made API’s available for even just some basic transactions then this would be possible.”
You can imagine how often his happens currently.
But, if the banks could see the amazing potential this provides, then this would not be the “pipe dream of a romantic“, as Bob puts it, but a reality in which anyone NOT providing these services is left behind.
Like most things, it’s not that easy. For this to truly work you have to consider all of the following and many more:
- Authentication – ALWAYS the primary consideration in payments
- Ratings & Reviews integration – against financial services, retailers, products etc.
- Big data analytics and customer profiling resulting in targeted displays / coupons based on instant access to metadata of preferences (e.g. material / colour / designer)
- Existing payment technologies – PEDs, EMV, NFC, e-wallets and so on…
- New[er] payment technologies – Bluetooth beaconing, geolocation, bio-metrics and so on…
- Payment choices / instant credit through existing financial institutions (which has dependencies on single purchase interest rates and unaffected credit ratings etc.)
So who’s going to be able to put this all together? No-one currently, but in much the same way that the enormous growth of telecoms options resulting in a spin-off industry of consultants providing consolidation / savings services, the soon to be exponential growth of payment technologies will spurn a new breed of consultant; the payments Service Provider Integrator (SPI).
From banks, to payment gateways, to ratings & reviews, to loyalty, to anti-fraud, the SPI will be able to seamlessly integrate all the niche providers into a whole-istic solution designed to meet an organisations goals.
Here I must stop, but this will continue in more detail in the pending white paper.
If you have any ideas around this stuff, please share, I’ll make sure to build it in.