J.P. Morgan: How Payments Drive Customer Loyalty Amid A Digitization Push

How Digital Payments Drive Customer Loyalty

Amid a sudden and dramatic shift in consumer shopping behavior, merchants across all industries have been forced to react quickly. The pandemic required digitization for many businesses to keep revenue flowing, but simply setting up shop online is no longer enough to keep customers happy.

Indeed, according to Laura Miller, president of J.P. Morgan Merchant Services, customer loyalty is now more important than ever. In a recent conversation with PYMNTS’ Karen Webster, Miller discussed the impact of shifting buyer habits on merchants’ digital sales strategies, with optimized back-end payment processes essential to delivering a powerful customer experience on the front end.


“The month of March alone was truly proof that having scalable, flexible and robust digital capabilities is critical for businesses today, particularly in the payments space,” said Miller.

Brand Loyalty’s Surging Importance

The sudden rush to digitize has led to an impressive transformation for many firms. Restaurants quickly figured out their delivery and curbside pickup strategies. Small mom-and-pop merchants hustled to improve their websites and online stores. As a whole, Miller said she’s seen business owners increasingly strengthen their tech muscles, taking the initiative to develop programming and web design skills.

While a user-friendly website and online ordering functionality are important, Miller also highlighted that the digital-only paradigm in which many businesses find themselves is forcing changes in how they develop customer relationships and drive brand loyalty.

“This omnichannel experience actually creates some new challenges and opportunities,” she said. “Businesses need to think differently about client communication and their engagement strategies – what does the end-to-end experience look like for customers?”

The journey of fostering the customer experience goes beyond the shopping process. Everything from delivery to accepting customer feedback on products remains vital, with stay-at-home orders leaving consumers yearning for connections. In response, Miller said brands are now developing a community around their user bases, both by connecting brands to their shoppers and connecting those shoppers to one another. There are opportunities for sellers to collaborate to develop not only better products, but also a better experience for the end consumer.

“This is a defining moment for some of these businesses to solidify their brand loyalty with customers,” she noted.

Optimizing The Payments Experience

Businesses’ payments strategies are adjusting to the new reality of online sales and contactless transactions, as the payment journey is often as important to the customer as the product research journey or customer service interactions.

“It’s not just about the payment itself,” explained Miller. “It’s about [merchants] maximizing the experience with their customers.”

For some merchants, that may mean adopting point-of-sale (POS) solutions and accepting contactless payments that don’t require shoppers to physically touch any devices. The preference for shoppers to reduce in-person trips to stores puts a premium on card-not-present and other online payment acceptance capabilities. For the customers themselves, Miller said the current climate is a powerful incentive to adopt mobile and contactless payment solutions that will continue to push sellers’ payment acceptance strategies well after the pandemic.

The digital migration has also introduced new payments challenges surrounding returns, fraud prevention and chargeback management.

Again, customer engagement here is essential, as Miller emphasized the importance of clearly communicating return and exchange policies. This is particularly vital for industries that have experienced the most volatility as a result of the coronavirus: the travel and entertainment sectors, already under extreme stress, have recently faced backlash for unclear or unfavorable return policies that can dampen the customer experience and threaten brand loyalty.

“It develops the relationship; it solidifies the loyalty and customer experience,” Miller said, adding that many online merchants will face additional friction as chargeback and friendly fraud volume increases.

Easing Transformation Through Collaboration

Just as the relationship between merchant and consumer has become more important, the relationship between merchant and financial service provider is vital to easing the digital transformation journey. Miller noted that for J.P. Morgan, that means collaborating with clients on best practices to develop their payments and overall omnichannel strategies.

Working with providers gives merchants the data they need to understand consumer patterns and to identify niche opportunities to further grow revenue. J.P. Morgan, for example, offers API integrations to help clients quickly access data with minimal development effort for easy analysis. Providers can also offer guidance on how to develop and effectively communicate a return policy, as well as provide tips on how to encourage contactless payment habits at the POS.

Merchants, many of them small businesses, have been thrust into a world with higher customer expectations. Firms are expected to support both physical and online experiences, operate user-friendly platforms that are on 24/7, and adjust to a new normal in which “peak capacity” is no longer a challenge reserved for toy stores and electronic sales during the holiday season.

“Digital isn’t going to become the only way people pay overnight. I do think there’s going to be an evolution,” said Miller. “With COVID-19, people were forced to go into that model. That will build confidence, and over time, it will be core to what they do.”