Why a new merchant payments acceptance architecture is needed

The way consumers shop and wish to pay for goods and services have changed radically over the last decade but the industry has not kept pace and adapted to these changes. At STS we believe that a new payments architecture is necessary. Here are reasons why we feel this is needed and the benefits it would bring to merchants and all payment industry stakeholders.

Consumers no longer shop by siloed channel but rather move smoothly across online, mobile and stores as they browse, research, purchase, collect or even return products. Consistency of payment methods and options is required at each point in order to deliver a great customer experience, remove friction and allow cross channel processes like ‘click and collect’ to work efficiently. Merchants also need to be able to track all customer activity however and whenever it takes place in order to offer personalisation and rewards.

Card payments used to be the only electronic payment methods that a merchant needed to support but now customers pick and choose between an extensive range of payment options which include: cards, digital wallets, mobile payments, bank transfers as well as other alternative payment methods (APM). PayPal acceptance is required in-store as well as on-line. Continental European customers want their national payment methods like IDEAL, MobilePay and Sofort (Klarna) to be supported at online storefronts and in-store. Chinese tourists, students and business travellers expect to be able to pay by AliPay and WeChat Pay. Our survey earlier this year showed that 79% of businesses felt APMs to be important or very importance to their business.

Currently it is very expensive and slow for a merchant to add support for a new payment method or technology due to the complex integration and accreditation efforts involved. Each new payment option to be added requires a separate IT project and often months of effort. In today’s fast paced world merchants are looking for greater agility and the ability to test new payment options at a low cost. They would like to be able to trial new payment options to help firm up the business case. It would be much easier and cheaper if the payments logic were run in the cloud.

Thanks to smartphone adoption, PSD2 changes and greater access options to realtime payment networks, bank transfer payments are predicted to be increasingly attractive to retail merchants. Those with high average transaction values will likely be the early adopters thanks to the high interchange fees. Merchants will be keen to be able to accept both card and bank payments. Systems will need to be able to offer maximum choice and switch the transaction to the appropriate processor.

Big supermarket chains understand the power of customer data to their business. Currently most of payments transactional data is not being used. One of the reasons why this is the case is that data is spread across multiple systems without any consolidation. Full line item details are required to maximise value and to avoid privacy concerns the data can be anonymised if required.

Customer receipt processes also need to change. Few customers like paper receipts now. Electronic receipts would save money, help the environment and be safely stored in case of need to later support an insurance or warranty claim. This should be offered as part of a new payments acceptance approach.

Another high priority for merchants is to strengthen data security protection levels. Data breaches happen far too frequently, impacting customer relations and causing reputational damage. If processing logic could be moved to the cloud and away from the store then security can be strengthened and compliance achieved more quickly and at lower cost.

The cloud is likely to be a central element of a new merchant payments architecture. It offers many benefits to all parties. Currently the payments industry has lagged behind the mainstream IT sector in making this shift.

The STS viewpoint

We believe a new architecture is required for merchant payments acceptance. The existing systems were designed for a card payments world and discreet sales channels. This hot topic piece explains why we feel the current architectures are not appropriate for the future and proposes that a move to the cloud is required. Customers are demanding change and businesses need to respond.

We would be pleased to discuss possible architectural options with you. We have developed a demo to guide these discussions. Please do get in contact to arrange a time to chat and help make this happen.

Tuesday, October 30, 2018