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How To Choose The Right Payment Technology

By Alon Feit, Splitit

Over the last several years, the introduction of new payment solutions has risen dramatically, yet consumers are ultimately reliant on retailers actually implementing these new solutions at the point of sale to enjoy the benefits these technologies provide.

That is not to say that we have not already started seeing a transformation: there already are an unprecedented array of payment options for consumers, including PayPal and mobile wallets such as Apple Pay, Samsung Pay etc. And after years of expectations, 2015 was the first time that retailers reported record sales from online and mobile shopping.

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According to the National Retail Federation, online Black Friday sales beat out in-store sales, contributing to a 3.7% overall boost in sales. In fact, Amazon alone was responsible for 36% of all online sales from Cyber Monday.

In addition to online sales, mobile shopping hit record sales as well, with nearly half of online retail visits originating from a smartphone or a tablet, generating some $6.3 billion in online sales throughout November.

In fact, merchants are heavily dependent on PayPal as a payment gateway, so much so that its recent outage is estimated to have cost millions of dollars to retailers. Currently, PayPal boasts of one million merchants using its service.

Beyond the legacy platforms, retailers have been slow to adopt new payment solutions, primarily due to two factors: security and the complexity of the payment value chain.   

Security Concerns

According to an Ovum Payments survey, 52% of retailers are wary of investing in new payment technologies due to security concerns. The frequency of retail data breaches over the last few years may explain why retailers do not trust the security readiness of payment gateways. While the Target data breach is the most well-known — and has cost the company $162 million to date — there are dozens of payment gateway breaches every year.

Even Apple Pay users fell victim to fraudulent transactions from stolen credit card information in the Target breach. Indeed, hackers see new payment technologies as uncharted territory to sensitive customer information.

The Complexity Of The Payments Chain

Another roadblock for retailers is the complexity and costliness involved in implementing new payment tools. Adopting new payment solutions means using siloed systems to support all the various POS platforms, such as in-store, online or mobile. This adds several layers and higher costs to maintain, often times leading retailers to delay implementation. According to the Ovum survey, nearly half of retailers reported an increase in their payment costs after employing new payment solutions.

Choosing A Payment Solution For Your Business

Despite these challenges, the intentions are definitely in the right place, with nearly 80% of retailers wanting to offer consumers a broader choice of payment tools.

Given the overwhelming number of payment solutions on the market, here is what you should consider when evaluating which one is best for your business:

  • Security: Being PCI-compliant may seem like a lot of work, but having the highest level of PCI compliance is of utmost importance for your business. PCI is a security certification from Visa and MasterCard that ensures storage of credit card details via an encryption process. Being PCI compliant will only help boost your reputation amongst partners as well as reassure wary customers.
  • Customer Experience: Traditionally, we think of brand loyalty as online shopping experience or loyalty programs, but equally as important in building brand loyalty is the customer’s payment experience. You will want to offer payment solutions that are in line with customer expectations, but one that is also seamless, without breaking the bank. Beware of payment solutions that bring along those hefty APR rates in the fine print.
  • Revenue: Of course, every retailer wants to increase sales this holiday season. In addition to considering the above two elements, be sure to review the payment model of the solution and make sure it matches your goals in terms of sales and revenues. Choosing a simplified payment system that reduces fee-collecting intermediaries are very attractive to retailers.

While being able to check off each of these boxes does not guarantee a perfect implementation, it will certainly afford you with the peace of mind that you are headed in the right direction.


Alon Feit is the CEO of Splitit, an interest-free payment installment solution

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