Consultants see retail payment systems adapting to the pandemic

Meeting new expectations

The pandemic has forced companies to embrace omnichannel commerce and refine their digital transformation strategies to meet customer expectations, said Vijaya Prakash Pallem, Dynamics 365 retail and commerce practice delivery leader and architect of solutions at Synoptek, an MSP and integrator based in Irvine, CA.

This shift in retail started with payment systems, he said.

“The pandemic has caused everyone, including customers, to turn to digital payments,” Pallem said.

Digital methods run the gamut from mobile payment apps on smartphones to e-wallets and QR code payments. Another trend among retailers is the “buy now, pay later” options built into digital payment methods.

“Businesses are expanding their payment options to meet customer preferences for digital payments — both in-store contactless payments and flexible online payments,” Pallem said.

Consumers are driving this confluence of physical and online sales.

“They want to shop in a way other than online or in-store,” said Inderpreet Batra, managing director and partner, head of payments for North America at Boston Consulting Group (BCG), a management consulting. “What’s going to happen is a closer coupling between the digital experience and the physical experience.”

Hybrid experiences include buy online, collect in store (BOPIS), Batra noted. He also cited the expansion of retailers’ mobile apps to enable in-store browsing and online ordering. Another hybrid variation gives customers the option to order products online when items are out of stock at a physical store.

These approaches invite merchants to think differently about payment systems.

“The bigger question is: how do they continue to introduce new, never-before-seen experiences – whether digital, physical or hybrid – and how can payment support all of these initiatives?” Batra explained.

The extent to which stores need to adjust retail payment systems to accommodate these experiences varies. Enabling BOPIS – which BCG’s Global Payments Report called a “must-have feature for merchants” – typically involves setting up a dedicated pickup station, rather than an all-new point-of-payment system. sale, Batra said.

Inderpreet Batra

Turning a retailer’s mobile commerce system into an in-store shopping assistant will require development work. The trick is to avoid becoming too intrusive. When a shopper uses a store’s mobile app to determine which aisle contains a particular product, the app may also provide information about two or three related products. But that’s probably enough help. “Don’t send 20 notifications,” Batra advised.

“If a customer hasn’t responded to any notifications, it might be a good idea to reduce the frequency and revisit the recommendation engine,” Batra said. Retailers, in general, need to be careful about marketing to customers through their apps, he said. . Buyers who enable notifications typically set the bar high for relevance. Marketing offers should therefore be carefully tailored and responsive to feedback. Otherwise, a client could ignore all notifications.

Ordering products online from a physical store offers a higher level of complexity. This capability requires integrating a retailer’s store operations with their e-commerce system, he added.

The pandemic has shifted everyone, including customers, to digital payments.

Payment trends for small and large retailers

Service providers working with smaller retailers will find that vertical software is the main trend in payment systems. The vertical software supports the entire operations of a small retailer, covering marketing, inventory management and ordering supplies, as well as payment and point of sale.

Clover and Square are examples of vertical software providers. These vendors offer their own point-of-sale hardware or partner with a hardware vendor, Batra said. Consolidation of software and hardware has led to a wave of POS technology replacement, with retailers abandoning legacy systems in favor of verticalized offerings.

Large retailers, however, are less likely to pursue such a radical replacement strategy. The cost of purchasing new hardware at many stores and the associated expense of retraining employees argue against such a move. Instead, big chains tend to modify their point-of-sale systems or integrate new software to add functionality, Batra said.

These retailers are also looking to improve the in-store experience for customers. Some companies are adding dual-use point-of-sale devices that they can deploy in a payment lane or move to another location when lines get long, said John Casebeer, product manager at Insight Enterprises, an IT services company based in Chandler, Arizona.

A dual-use device typically consists of a mobile point-of-sale unit with an attached sled that includes a scanner, card reader and receipt printer, he noted. These devices can operate in standalone mode or reside in a docking station that attaches a mobile POS device to accessories such as cash drawers and partner/customer monitors, he added.

John Casebeer

“A couple of our customers are considering something like this,” Casebeer said of the line-breaking technology.

POS terminals in self-service payment lanes will continue to be a retail trend. Batra said stores can fit four to six self-service checkout areas in the space of two traditional lanes.

“This means increasing the number of payment points for faster payment and a better customer experience,” he added.

Another retail concept is doing away with payment points and point-of-sale systems entirely. Amazon Go convenience stores, for example, combine computer vision, sensors, AI, and a mobile shopping app to offer on-the-go purchases. The technology tracks the items shoppers take from store shelves in a virtual shopping cart and charges credit cards tied to their Amazon accounts. British grocer Tesco offers a similar GetGo marketplace.

Partners, however, shouldn’t expect to see a huge push to adopt this model. Batra said more checkout-less store pilots could emerge in 2022, but not a wholesale transition to the take-out model.

Other payment technology trends for 2022 include investment in anti-fraud technology and digitization of B2B payments. The latter will undergo a digital transformation to meet the expectations of vendors and suppliers, Pallem said.