Digital Payments

Improving Conversions While Navigating The Great Digital Shift

Payments Orchestration Amid The Digital Shift

When the pandemic is over, there will be thousands of books written about the ways the coronavirus changed daily life, globally.

Among those will be – or should be – a tome on how the great shift to digital commerce drove merchants to connect to multiple services.

In an interview with Karen Webster, Justin Benson, CEO of Spreedly, said the shift is a critical one, requiring merchants to rethink how they approach payments and, as a result, optimize revenues.

As PYMNTS found in a study published earlier this month, 42 percent of consumers are engaging in even the most routine activities online, and as much as $158 billion in brick-and-mortar sales are moving to digital channels. That means companies of all sizes and across all verticals must examine how successful they are when it comes to payment conversion rates.

And to boost conversion rates, merchants can embrace payment orchestration, which involves using a combination of different payment methods and platforms to satisfy a range of consumer preferences.

At a high level, said Benson, conversion can be pictured along three “vectors,” including the actual form factor or technology the consumer has in hand (literally), the payment methods the consumer prefers and the “run time” of the transaction – literally, how long it takes to complete.

He said merchants that support multiple options for payments – including mobile wallets such as Apple Pay and Google Pay – are likely to see significantly increased conversion rates.

“When you get into payment methods,” said Benson, “everyone thinks about credit cards plus Apple Pay and Google Pay” – but merchants can also benefit from an awareness of what “evergreen” payment methods consumers want to have kept on file.

Efforts to boost success rates can be improved by plugging into account updaters and new technologies, including network tokenization.

For those firms whose customer bases stretch beyond U.S. borders, said Benson, alternative – and local – payment methods are increasingly important to consider and to offer.

As Benson noted, there was already an effort to get rid of cash across various economies and regions (such as Latin America) before the coronavirus hit, and those efforts will remain in place.

“There's no one-size-fits-all answer,” he told Webster, “and we're seeing different behavior by verticals and geographies."

Drilling down a bit, in embracing payments orchestration, Benson said merchants must examine whether payment providers are consistently available, how different types of payments (such as stimulus funds) might be more efficiently allocated to other providers, and whether seamless “failover” processes are in place – where interruptions at one provider will automatically trigger payment flows to be re-routed to other providers.

As Benson told Webster: “When we think about the payments orchestration layer, it’s much more than just ‘A to B.’ It’s thinking about your entire stack, and whether you’re optimizing processes at each point.”

That flexibility and focus on optimal payment flows is critical in today’s digital-led environment. Access to real-time data and analytics can help merchants shift to meet changing consumer preferences in a proactive manner. Data can help merchants adjust their payment flows to optimize the customer experience and, in the process, grow revenues.

Getting Ready – And Getting Onto Platforms

But to steal a line from Shakespeare, “the readiness is all” – and a significant number of merchants have yet to meet the challenges of commerce done mostly online.

“Many of them are just facing the question of how ready their point of sale providers are to support digital," he told Webster. Some POS providers have robust digital offerings in place, and are able to develop networks around their solutions.

But to take some guesswork out of the equation, many merchants are finding value in online platforms that can link with payment service providers, as well as a variety of back-office functions, including reconciliation and checkout optimization.

That model can minimize integration costs and the technical heavy lifting that comes with merchants trying to build new payments functionality into their websites.

After all, payments – in the age of Uber, order-ahead and curbside pickup – is about much more than simply making the sale. As Benson noted, consumer expectations surrounding even the simple ordering of a meal for delivery or pickup have changed.

The days of picking up a phone, reading off appetizers and entrees from a paper menu and verbally giving card details to the restaurant are largely over. Now consumers click on links, add what they want to digital carts and check out. For the restaurant that does not have that (literal) soup-to-nuts experience on offer … well, the consumer simply moves on to another restaurant.

“It's no longer just a matter of, ‘can I take a credit card online?’” said Benson. “You’re thinking about capturing and storing payment methods, presenting delivery options and communicating how you’re tackling COVID-19 expectations for the restaurant. So that whole flow has changed.”

Looking At Loyalty

One area of the commerce equation that can cement the consumer/merchant relationship is loyalty programs.

But integrating such offerings into payments has proven to be a challenge for smaller merchants that have operated largely in the physical realm. We’re still stuck with the face-to-face transactions that require consumers to tap loyalty cards at the terminal or punch in their codes at the point of sale – even for the largest merchants.

As Benson noted, an overwhelming majority of consumers expect some sort of loyalty and rewards program to accompany their credit cards.

“There's a ton of upside and opportunity there,” he said.

Rethinking ROI

Yet, Benson said, some merchants may shy away from embracing platform models. He noted that these firms may be focused on the simple math that drills down on the fact that that they have an average of 250 orders a week, and the platform will take 10 percent or 20 percent of their sales.

“But in thinking about it holistically” and sidestepping the zero-sum game mentality, he told Webster, “maybe digital platforms allow them to get more orders, more than they would through their own homegrown efforts. Their primary skillsets are to cook and deliver great food.”

Platforms can help with sales and marketing, and with delivering [digital] coupons at the right time to the right customers, said Benson.

Digitizing transactions can also help restaurants and other verticals when they do come back online, offering staggered, social-distanced seating. As Benson noted, automating and integrating payments so that they are part of the meal, requiring only minimal interaction with servers, can help reduce transaction friction and allay people’s concerns about public health. It’s all a matter of recreating the experience – without the plastic.

“One of the things we consistently see about COVID-19 is that it's not so much the new behavior it's creating, but how it has accelerated that behavior," noted Benson. “We’re going to see a dramatic acceleration of those trends to make the payment more seamless. The business drivers have changed: It’s not just about convenience anymore – it’s about health, too."



Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.