June 24th, 2020 - Payments
By Ash Forsyth, Director, Global Product Manager, Managed Payment Solutions
The Coronavirus pandemic is something that very few, if any of us in the western world, have experienced before. Its impact to our society and communities will be prolific and is fundamentally changing behaviors, perhaps even cultures. However, it also presents an opportunity to reset and look at what’s next in order to thrive in the “new normal”.
The common theme we have seen emerge is around the dramatic acceleration of existing, underlying trends. These accelerations are everywhere, from exposing vulnerabilities in our fragile healthcare and welfare systems, through to the digitalization of almost every aspect of our lives. Microsoft recently reported they have seen two years of digital adoption in two months and many restaurants have shifted from just 5% of sales1 being online/delivery to 100% of their orders.
As countries begin to come out of lockdowns and businesses start to re-open under the new conditions and adapt their go-to market practices we think it’s time for merchants to take a breath and consider what’s next.
For a merchant’s payment systems, this shouldn’t be big, long-term changes. Instead, it should focus on changes that will incrementally improve customer experience, engagement and conversion. Below are five short-term changes to enhance your payment acceptance:
1. Contactless Payments – If not already accepting contactless (tapping a card or phone) payments, now is the time to accelerate that deployment. I recently saw a mother walk out of a large US supermarket, abandoning her cart of 15 plus items, when she found they did not accept Apple Pay which uses contactless technology.
Many countries have also increased contactless limits, so even if you’re already accepting tap payments, it’s critical to ensure terminals are updated with the latest configurations.
2. Digital Wallets – As businesses have pushed customers online for ordering, the need to simplify the checkout experience has never been stronger. Complicated checkout forms and multi-step processes will decimate conversion. Streamlined mobile solutions like Apple Pay or Google Pay are almost “no brainers”; and merchants already accepting and seeing adoption of PayPal, Shop Pay and others should ensure they are available across all digital channels.
Merchants should be selective to not over burden customers with options, but at the same time make sure digital wallets are relevant, prominent and presented early in the checkout process.
3. Fraud Prevention – with the rush for businesses to go online and the spike in new customers checking out online, it’s expected that Card Not Present (CNP) fraud will see a sizeable uptick in the coming months. CNP fraud is complex and for merchants new to the space, it can be overwhelming, but even simple changes can be effective.
Consider channeling users towards digital wallet transactions that provide liability shift. Not only does this offer a 2-for-1 benefit by streamlining the experience, it also reduces the risk for merchants. Check with your acquirer as liability shift can be complex and vary under different scenarios.
Many gateways and service providers also offer built-in fraud tools that often aren’t enabled by default. While Card Verification Value (CVV) and Address Verification Service (AVS) may provide acceptance cost reductions in the US, in isolation, they are not effective in combating fraud. While many fraud solutions have additional costs, these small increases are often easily justified and offset by the impact of chargeback losses.
Implementing EMVCo’s 3D Secure (3DS 2.0) for online transactions may also trigger liability shift and reduce a merchant’s risk exposure. While 3DS has a bad reputation (for many valid reasons), the newest 2.0 implementation and its risk-based approach provides a far more seamless and transparent customer experience. For merchants selling in Europe (cross-border or domestically), this will also help to address expected decline rate increases when PSD2’s Strong Customer Authentication (SCA) requirements come into effect in late 2020.
4. Buy Now Pay Later(BNPL) – while lockdown restrictions are being loosened in many countries, we are seeing consumers take a cautious approach to both venturing out and with their spending habits. For businesses selling less-essential items, BNPL may present a solution to entice customers wary of big expenses by spreading payments over multiple months, yet still providing the full payment to the business.
5. Signature Capture/Collection– In the US, all major card networks removed the requirement for a merchant to collect the cardholder’s signature in 2018, and yet signing is still commonplace with many merchants. For retailers it is straightforward to stop prompting for a signature, and restaurants collecting a tip via paper receipt, should seriously consider their digital alternatives.
With the world going through significant change on an almost daily basis, focusing efforts on streamlining processes and improving the customer experience is a better path to follow.
As the world begins to re-open and a sense of normality starts to return, merchants can make incremental improvements to enhancing their customer interaction. Only once a vaccine is widely available, and broader confidence returns to the public, should merchants re-evaluate their payments infrastructure and consider making major changes.
Ash Forsyth is Director of Global Product Management and oversees strategy and product management for managed payment solutions, including hosted switching/processing, payment security products and message conversion services.
If you would like further information about any of the above, please contact Ash by email at firstname.lastname@example.org
 Q1 2020 sales versus June 2019 sales data