The retail merchant marketplace is an ever-changing landscape — and new technologies and evolving consumer preferences are forcing the space to change faster than ever before.
With shoppers increasingly wanting the ability to shop whenever, wherever and with whichever payment method they see fit, it’s no surprise that omnichannel strategies have taken off among the merchant community.
Being available to customers across multiple channels does come with its benefits – better insight on behaviors, closer customer relationships, new business models and a stronger opportunity for boosting revenue – but the strategy does not come without its challenges.
Begging the question, do merchants really need omnichannel payments?
In its latest white paper, titled “Omni-Channel Payments for Merchants: Myth or Reality?,” ACI Worldwide sought to address if the disruptive nature of emerging commerce models – particularly those of the multi-channel variety – really does offer a tremendous opportunity for merchants.
While the path to omnichannel varies drastically from merchant to merchant, it seems as though the end results are positive. However, it’s easy to underestimate the challenges merchants face along the journey itself.
From payments security and PCI compliance to frictionless commerce and cross-border considerations, the move to facilitate omnichannel payments is much easier said than done.
“At the end of the day, the goal remains the same for most merchants: offer the broadest set of goods and services, when and where consumers desire to purchase, through the easiest (and safest) purchase experience, while supporting a broad range of payment options,” the white paper explained, but quickly notes that ensuring the omnichannel transformation is both seamless and effective is “no small feat for the merchant community.”
To gain a better understanding of how pervasive omnichannel payment offerings are among merchants, ACI Worldwide collaborated with Payments Cards and Mobile (PCM Research) to conduct a survey of the retail industry.
With the goal of not only assessing the significance of omnicommerce, but also to gauge the functionality from vendors, perspectives on security, fraud, payment ecosystem responsibilities, service delivery models and funding, more than 500 large and medium-sized merchants from various segments were approached and roughly 100 responses were gathered.
“With the proliferation of technology and channels, and convergence in some areas, we are seeing retailers and other merchants forced into making investment choices, to capitalize on new ways to better align physical and online channels and so drive efficiency and value,” the white paper stated.
It seems that merchants may no longer be able to rely on traditional methods of product availability and fulfillment, embarking on omnichannel business means being able to offer the services today’s omnishoppers have come to expect.
These include, but are certainly not limited to, buy online/pick-up in store, in-store self-service kiosks, mobile point of sale and tablets, QR codes scanning options to make an “on the spot” purchase regardless of time or location and payment acceptance from mobile wallets in smartphones, watches and other wearable technology.
While these frictionless commerce and payments services help to fuel the convenient and seamless shopping experience consumers increasingly demand in today’s retail marketplace, the study found that 46 percent of survey respondents have no plans for omnichannel within the next twelve months.
“Regulation is a thorny issue for the industry – for some, a necessary intervention while, for others, often outdated, hard to implement in a timely manner and causing unnecessary friction in the payments value chain.”
The concerning figure may be linked to the many challenges faced by merchants when it comes to implementing omnichannel payments programs.
Respondents listed the top barriers to omnichannel as follows: solution availability (77 percent), regulatory and compliance (71 percent) and finding the business case and business sponsorship to secure the necessary funding (50 percent).
“Regulation is a thorny issue for the industry – for some, a necessary intervention while, for others, often outdated, hard to implement in a timely manner and causing unnecessary friction in the payments value chain,” the white paper stated.
Supporting the availability of all payment options in any channel requires incorporating effective fraud management and prevention capabilities, in addition to payment options. But many survey respondents noted frustration with trying to keep up regular requests to comply with later versions of standards not long after achieving compliance to the initial version – which can easily be exasperated across multiple channels.
Even if retailers are somewhat apprehensive about the full shift to omnichannel payments, it was clear that respondents are very interested in ensuring they meet consumer demands for alternative and mobile payment options.
According to the data, nearly two-thirds (63 percent) of merchants said they are interested in options and tools surrounding alternative payments, including supporting new payment schemes and the range of payment methods supported by new technologies.
“Digital wallets including Apple Pay, Samsung Pay and Android Pay have high awareness levels, but retailers are now starting to question the volume of consumer usage that can be expected through these payment options,” the paper explained.
Above all, one topic remains paramount among retailers: payment security.
The ever-present challenge of safeguarding transactions and payment data is one that impacts all merchants – omnichannel or not – but the study made it clear that while a large number of respondents have common sets of security and fraud prevention measures, more must be done to improve these offerings across channels.
Lynn Holland, ACI Worldwide VP Product Line Manager, Merchant Solutions, highlights the importance of this perspective in the paper stating, “Protocols like tokenization and transaction monitoring are critical components to a merchant’s security and fraud prevention strategy. It’s about making your customers feel safe while shopping and have trust and confidence in your brand.”
When it comes to having a set of fraud prevention capabilities across channels today, about 53 percent of respondents said they did not and 8 percent were unsure. But for those asked if they have a common set of payment security capabilities across channels today, a little less than half (49 percent) answered yes, while 9 percent were unsure.
Though the white paper’s research highlights a considerable divergence in merchants’ views on the need for, and readiness of, deploying payments capabilities across channels, it does seem that there is a collective realization that consumers are changing the ways in which they approach their shopping journeys.
As the white paper explained:
“With all the emerging commerce opportunities in the retailer marketplace, merchants are still grasping for what they should do to attain the holy grail of any omnichannel payments strategy – a single view of their customer regardless of the channel through which they decide to shop. Today most payment (and fulfillment) systems are siloed by channel and, as a result, merchants are missing the benefits associated with knowing the complete shopping and buying patterns of their consumers.”
Whether every merchant will decide to follow their shoppers down the omnichannel rabbit hole is yet to be seen.