The Digital Transformation of Payments: A Powerful Case for Omnichannel Commerce

The Digital Transformation of Payments: A Powerful Case for Omnichannel Commerce
Raja Vel Principal Business Architect Fiserv
Apr 14, 2021

In a year that brought tremendous disruption to all walks of life, 2020 will also be seen as a turning point for merchants, particularly those who had already started down the path toward emerging payments technologies. These businesses gained a significant competitive head start, allowing them to quickly implement changes in support of dramatic consumer behavioral shifts. As online, curbside, and third-party delivery purchases dominated the shopping experience, those who were able to meet this consumer demand were best positioned to take advantage of the opportunities.

One of the lessons learned from this past year has been the importance of connecting online experiences with real-world actions. Shopping online is nothing new, but the most successful responses to the pandemic resulted from combining the often-siloed digital and retail payment processes, thus delivering a seamless end-user experience for the new normal times. A good example of this can be found with the grocery giant, Albertsons, who announced back in October the introduction of a zero-touch checkout experience available through its updated “Just for U” loyalty app. This new payment method serves as a complement to existing tap-to-pay options at the check stand.

Of course, the challenge for merchants begins with setting up complex payment processing configurations that must combine different payment instruments with loyalty apps to deliver a seamless, simple, yet rich user experience for customers - whether online or in-store. Adding to the challenge, studies have shown that there are limits to how many apps consumers will download. This further complicates the goal of delivering a superior customer experience and opens merchants up to purchase abandonment or consumer dissatisfaction.

Omnichannel Commerce Transforming the Payment Experience

Third-party providers are leading today’s technology evolution which is focused on meeting consumers where they shop – delivering a true omnichannel commerce experience. And this trend is not simply geared toward the younger, digitally native market segment. A recent McKinsey study has shown that not only is Generation Z a strong user segment of Fintech solutions, but older generations are increasingly relying on these interconnected solutions as well 1. McKinsey reports that 36% of survey respondents found Fintech payment solutions were easier to use than bank solutions, as compared to 27% who found bank solutions more convenient. The same report revealed that the level of trust in Fintechs and banks is nearly equal 2. All of this points to the importance of choosing a solution provider that has proven experience in omnichannel commerce to ensure consumer trust is well placed.

The efficacy of any omnichannel commerce solution is dependent on having a highly available, globally distributed, and dynamically scalable platform. In order to optimize the consumer payment experience, merchants will want a platform that is secure, reliable and responsive. They will also want to be able to leverage interoperable Application Programming Interface (API) technology that does not disrupt existing physical processing configurations and setups. Merchants require a solution that meets operational demands, while delivering a holistic and consistent experience.

The reason omnichannel platforms are growing in importance is that they create a connected commerce ecosystem that is completely agnostic of apps, making the payment experience far simpler for consumers. For instance, Alexa-enabled vehicles can now easily pay for fuel through Amazon Pay at more than 11,500 Exxon and Mobil gas stations across the U.S. with a simple voice command. Omnichannel commerce platforms allow consumers to interact and transact with a multitude of brands without having to download an app for each one. This simplifies the purchase experience for consumers and broadens the appeal of brands by making them more easily available, which is a win-win for merchants and consumers alike.

As demand rises for wider support of payment types that are accepted at a physical store, merchants are seeing the advantage of omnichannel commerce solutions. Take for example online EBT Supplemental Nutrition Assistance Program (SNAP) payments, also known as Food Stamps, which spiked in use as a result of the pandemic. In October of 2020, Instacart announced they would begin to accept EBT payments online within their app in select locations to meet unprecedented demand for grocery deliveries. This further demonstrates the value of taking an omnichannel approach.

Amongst the options available today, Carat from Fiserv stands out for its highly effective omnichannel commerce platform, specially designed to cater to soaring adoption growth, 130% this past year, of omnichannel commerce in the market. By providing consumers with a unified shopping experience, greater control and payment choice, and access to multiple brands from one place, Carat enables large national and multinational merchants to reach untapped markets and expand globally without being limited by borders, currencies or old ways of thinking 3.

Accelerating Digital Transformation

To meet demands today and evolve to meet future needs of merchants and consumer, players in the payment technology space should look to accelerate digital transformation. This involves enhancing solutions, expanding consumer personalization through micro-targeting and making hyperlocal connections.

For merchants, it is imperative to work with an omnichannel commerce solution provider that has a flexible platform that will allow them to connect with an ecosystem of partners. It is also crucial that such a provider have the experience and reputation for delivering a best-in-class consumer experience. It may be tempting for merchants and providers alike to take a wait and see approach to transformation, but if there is one thing this past year has taught us, it’s that if you don’t take the lead, then you will be left behind.

1 Strategic Intel Status Report – Jan. 8, 2021

2 Strategic Intel Status Report – Jan. 8, 2021

3 Fiserv data

The Merchant Advisory Group

Driving positive change and innovation in the payments industry that serves the merchants interest through collaboration, education, and advocacy.