19 May 2015
The omni-channel challenge in retail payments
From offline to online and from the home country to beyond borders; retail has made a huge leap into a digital world. Fewer consumers walk into a store and pay with coins, instead they prefer to use a debit card or credit card.
Approximately 15 per cent of retail payments nowadays are initiated online and with the introduction of mobile payments this percentage is expected to explode even further. And with more and more players (e.g. Apple, Samsung, Google, etc.) entering the world of payments, the complexity for merchants increases as well.
The big question arises: how can merchants combine and manage all these channels?
The answer to these challenges is embracing an omni-channel retail solution. But that is more easily said than done; a true omni-channel approach for merchants means being able to offer a wide variety of offline and online payment methods creating a seamless payment experience over different channels for its customers.
In order to do this, merchants need to draw up contracts with a multitude of parties. The number of contract parties has been rising significantly, especially for accepting online payments as there are separate contracts required per payment method. With the rising number of payment methods (i.e. to allow for cross-border trade and by the introduction of new methods as Apple Pay and Samsung Pay) the number of contract parties grows accordingly.
Introducing a one-stop shop
Merchant demand increasingly moves towards one omni-channel transaction overview, including transactions from its physical store(s) and online environment. In order to facilitate this demand banks, acquirers and PSPs need to take action. Their challenge is to master all channels, allowing the merchant a one-stop-shop of retail payments.
A very important part of the one-stop-shop package is the online proposition. In this domain, complexity for the merchant is still rather high. A good first step would be to offer them the Collecting Payment Service Provider (CPSP) model. This way, the merchant is offered one contract for multiple payment methods, one reconciled transaction overview and one merchant pay-out over all payment methods.
A CPSP provides the services in the back office like the technical infrastructure or support and the market players are responsible for marketing and sales. With this new solution, the clients are fully equipped instead of having to spend time, money or man power on the back office. It makes no difference which channel (offline, online or mobile) is used for the payments; the CPSP assists the banks, acquirers and PSPs offering payment methods towards retailers.
The CPSP model has grown to become the standard offering in mature e-Commerce countries (e.g. UK, the Nordics and the Netherlands) and is rapidly becoming the standard for other countries as well.
The next step in omni-channel will be combining the physical and virtual channels for a merchant providing clear insights, payment settlement and reconciliation information. It’s a challenge we’re willing to take, so that we can help the merchants reap the entire benefits of the truly omni-channel approach.
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