Staying on Top of New Payment Technologies
With big brand names like Sears, Toys ‘R’ Us, and Payless Shoe Source turning the lights off for good, now is the time for retail businesses to wake up and take note: times are changing.
Companies like Macy’s, J.C. Penney, and Victoria’s Secret are all in deep trouble. The brick and mortar stores of America are clearly down trending, and the number one reason for the decline is the convenience of shopping from home. Whether we have become a lazy society or smarter shoppers is debatable. One thing that is not debatable is that we have become a cashless society, but we aren’t necessarily a plastic society either. From ACH payments to electronic wallets to old-fashioned cash, merchants must accept all forms of payment if they want the shopping experience to be convenient for their customers.
According to Small Business Trends, an online consortium for small retailers, 73% of consumers cite the check-out experience as their biggest source of discontentment at traditional brick and mortar stores. Since consumers have ditched using cash, merchants must be prepared to accept other forms of payments and do it quickly and efficiently.
Here are a few payment methods you should consider accepting:
A “virtual wallet” is quickly becoming a favored payment method since a cell phone can take the place of a wallet. In fact, by the end of 2017, almost 40% of all Americans were using some form of a virtual wallet. By 2020 that number is estimated to jump up to 56% and involve $503 billion in sales. Basically, a consumer can have one credit card account tied to an account such as Apple Pay, Google Pay, PayPal, Venmo, or Zelle and use those wallet apps to make payments. Alternately, a consumer can have several cards in an electronic wallet (a cell phone) that can also include reloadable accounts like Starbucks.
How they work: A virtual card number is issued for each new transaction as a single-use string of digits that the customer enters online, shares over the phone, or types in manually to your POS system. The charges are applied to the same account as the main physical card without ever disclosing the real credit card number, making it a safer transaction.
Another way consumers are changing the way they do business is shown by the proliferation of subscription-based services. From Apple Music to Blue Apron, Stitch Fix, and even household products from Amazon, we are seeing more people subscribe for repeat purchases. To give you an idea how fast this is growing, subscription-based transactions have jumped more than 3000% since 2016. Amazon captured more than $1.4 billion in subscription sales during the final quarter of 2017. Recurring memberships lock a customer in. The subscription model is also finding its way in to brick-and-mortar businesses and helping businesses generate more revenue.
Prepayment is another great way to generate income, and you don’t need to accept subscriptions to accommodate prepay options for your customers. The prepayment plan works great for businesses like gyms, spas, and hair/nail salons. You can sell six haircuts in one single transaction by offering a lower price. Collect the money today, deliver the services later. There are other ways to use prepayment strategically by offering discounts when customers load an account with funds in advance. You can set up alerts to remind customers of a low balance or when they have just enough left in their account to pay for something specific.
“Mindless pay” refers to placing a payment method on file once in a “set it and forget it” moment. The most common form of this type of payment is Uber or Lyft. Airlines such as Southwest, American and United also allow you to keep a card on file. Every time you place an order, that same card is charged for the service. Hotels also take this same approach, and Amazon has taken it to a new level where you don’t even have to pull your phone out of your pocket. Consumers’ phones communicate their presence in an Amazon store and record the items as they walk out of the store with them, conveniently charging their credit card on file.
Buy online, pick up in-store
The buy online, pick-up in store (BOPIS) trend, also known as “click-and-collect” is also on the rise. It is a checkout option that two-thirds of consumers are using regularly. Service providers such as ground transportation providers, plumbing services, and massage therapists can also incorporate this payment model so the payment information is provided upfront to charge for no-shows or charged after services have been provided.
The in-person buying experience is still a part of life today, so remaining on top of changing technology and trends is important. You must adapt to the way your customers want to pay for their goods and services.