Payments Innovation

How Merchants Are Navigating Digital’s ‘Second Shift’

The first phase of retailers’ response to the pandemic was an extremely rapid switch to digital channels by merchants of all kinds.

Nandan Sheth, senior vice president and head of global digital commerce at Fiserv, told Karen Webster in a recent Masterclass conversation that initial questions involved how to expand online ordering or curbside pickup. That’s starting to change, he said, as it becomes apparent that many new consumer habits engendered by the pandemic won’t be temporary.

Some of the new questions that are emerging: “Where do we go from here? How do we take the digital enhancements that started as an immediate response to COVID-19 and weave them together to form a new omnicommerce experience for customers?”

For example, Sheth said that in the grocery industry, the conversation has shifted to areas like scan-and-go services, where deployments with top grocers are on the horizon by year’s end.

There are also numerous conversations around touchless payments — particularly with merchants who don’t want to rely on third-party digital wallets, instead opting for their own branded touchless payment and mobile wallet programs, with their own loyalty offerings integrated into the experience.

More broadly, said Sheth, the new challenge for every merchant — whether brick-and-mortar or digitally native — is creating a positive omnichannel experience. Merchants want to ensure that every customer has a consistent experience online, on mobile, in person or in some combination of all three.

“There are a variety of use cases, and the work is in trying to connect the dots between the online and physical channel,” he explained. “And when you sprinkle in mobile, it gets even more complicated in trying to enhance the consumer journey across those three channels.”

EBT and the Power of a Moving Market

For a wide swath of Americans, the appeal of ordering groceries online and picking them up curbside has presented itself as a superior option, both in terms of avoiding infection risk and adding convenience. That’s why there’s been such a massive effort on the part of grocery retailers to double-down on digital and expand the number of channels through which their customers can easily shop.

But for about 40 million Americans, Sheth noted, tapping into the digital grocery transition simply hasn’t been possible because they are enrolled in the Supplemental Nutrition Assistance Program (SNAP) — formerly known as food stamps. Until recently, those consumers could only use their program-provided debit cards — known as electronic benefit transfer, or EBT, cards —

for in-store purchases because a PIN was required to authenticate the user at the physical point of sale (POS).

In 2019, government officials began allowing the use of EBT cards for online purchases as part of a limited trial. Sheth told Webster that as of January, only a handful of states allowed such transactions. By year’s end, online usage will grow to include more than 40 states and close to 100 million transactions.

“In a time of concern around safety — and demand for increased convenience — all consumers should have the same ability to make grocery purchases online and pick them up curbside,” Sheth said.

And while he said he’s very pleased at the speed in which digital EBT has scaled up in response to COVID-19, he said there’s still more work to do. Next up: taking online other public assistance efforts, like the Special Supplemental Nutrition Program for Women, Infants and Children (WIC).

Touchless Payments

Sheth said the expansion of touchless payments in response to the pandemic is also playing out in a variety of ways.

“I think there's a lot going on in touchless, and we're right in the middle,” he said. “We will see a lot more innovation emerge that offers an elegant experience for consumers who don’t want to physically interact with a [POS] device.”

Those opportunities will come in many forms. Contactless payments, he noted, suddenly takes on a very broad definition, allowing customers to access wallets and card-on-file credentials to make purchases in-store; order their goods online and have them delivered to their trunk; scan QR codes; or purchase via voice command through their preferred assistant or chatbot. Sometimes, Sheth said, consumers will achieve touchless payments via a no-contact commerce approach, such as when their connected devices make purchases on their behalf.

The payment needs to easily connect to the consumer's purchase, he noted — but that doesn’t necessarily mean they have to happen in the same channel where the consumer is procuring the goods. And the preferred payment methods may vary in context depending on the purchaser’s specific needs. That means payments face the same challenge as the rest of commerce as the world moves from the first phase of the digital shift — which was about making it happen — to the second, which is about optimizing the offer.

In order for customers’ behaviors to make the transition into permanently new habits, said Sheth, they will need more than just a new form factor with which to pay, and more than simply the benefit of contactless.

“The experience has to get better, and there has to be more value for them to participate,” he said.



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.

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