Forget Cash Is King, Customer Experience Is King

Posted: 1st September 2021

Everybody knows what a S.W.O.T. analysis is, the classic 4-box way of grading a business strategy by listing the Strengths, Weaknesses, Opportunities, and Threats. Certainly a helpful tool that’s become fairly commonplace….but what if you don’t know what the threats are? That’s exactly where many merchants find themselves in the race to accept new forms of payment from their customers.

In today’s hyper-competitive consumer businesses, it’s no secret that the “customer experience” or CX, is king.  Customers that have a bad experience during a shopping visit, whether online or in person, may not return to give the merchant another chance. Merchants are finding that that they are responsible for the entire CX, even if they don’t own it.  Beyond the actual merchandise and the merchant’s environment, the ease of payment has a lot of influence on the customer’s perception of CX, and allowing the customer to pay however they want is a big factor. Merchants are rushing to offer new payment forms including, But Now Pay Later (BNPL), crypto currency acceptance, digital gifts cards, etc.

Accepting a new form of payment can be complex, and usually affects many internal processes beyond just the shopping cart and web integration. Items further down on the list like accounting integration, fraud prevention, and dispute resolution often go unaddressed as merchants rush to light up a new payment type and get the logo on their home page. While speed to market is important, lack of fraud prevention tools and guidelines for disputes can quickly turn a lift in sales from a new payment form into a net loss for the merchant. According to a recent survey by Sift, a leader in Digital Trust & Safety, only 26% of leaders who responded said they were ‘very effective’ at preventing fraud from sources other than credit cards, and just 60% said they were ‘mostly effective’ in preventing alternative payment fraud.  These results can’t help but make you wonder if “effective” is the same as “hasn’t happened to me yet”. View the quote article from the paypers here.

The takeaway for merchants of all sizes is that before you expand your payments acceptance beyond branded cards, be sure that you know what your risks are.  Understand your fraud risks, and if there are things that you can do to mitigate those risks be sure that those procedures are in place. Understand your rights and responsibilities in the event of a dispute, so that fraudsters can’t turn the dispute process against you. Finally, ensure that you are reviewing new payment processes very frequently in the beginning so that you can make a fast assessment on potential sales lift, and identify any operational concerns that may be risk drivers.  Constantly revise your original SWOT analysis with new data and compare against the original to be sure that any new payment type is truly a value-add for your business.

Overview provided by Don Apgar, Director, Merchant Services Advisory Practice at Mercator Advisory Group

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