Successful businesses are great at merchandising their wares so that consumers are compelled to buy. We experience this in the inviting layout of the Apple Store, Amazon’s intuitive e-Commerce site and via well-designed menus at restaurants like Chick-fil-A. While merchandising goods and services is a longstanding practice, businesses are now increasingly looking at how consumers pay for those goods as a merchandising category of its own.
Merchandising payments is not new in and of itself; my local furniture chain is best known for its “don’t pay a cent event,” which says more about how you pay than what you buy. Starbucks has more money on its Starbucks loyalty cards than some banks have in deposits, and many of us define our loyalty to a petroleum brand by the payment dongle on our key chain.
What is new is the accelerating wave of innovation in the industry, which is driving powerful competition within payments as a merchandising category, and in turn unlocking the buying power of consumers. As businesses consider merchandising payments, there are two big trends to consider: speed and convenience, and spend motivation.
Advertisement
Speed And Convenience
This trend has caught the headlines more than any other because it captures the key selling point of digital wallets like Apple Pay, Android Pay and numerous proprietary attempts by banks. The biggest enemies of a good consumer payments experience are latency (waiting) and friction (multiple steps). Any quick-service restaurant (QSR) operator knows that consumers are twice as likely to abandon a line when there are seven people in front of them, and e-Commerce operators know that the more data the consumer has to enter to check out, the more likely that the purchase will not be completed. Just the same, adding value by cutting down time and steps can add perceived value for consumers.
Would-be payment merchandisers have a number of options available to increase speed. Contactless readers are easy to implement, and they not only speed up the checkout process but also create a trust equity with the consumer as they “tap-and-go,” trusting that their payment is safe and secure. Line-busting also boosts speed and convenience, and is the reason that Apple and Nordstrom’s stores typically do not have line-ups at traditional checkout counters. Rather, consumers engage with a store representative on the floor throughout their entire shopping experience, all the way from “why” to “buy.”
A few retailers are piloting “scan-and-go” technologies whereby consumers scan goods with their phone as they place them in their carts and then pay with their mobile wallet apps. The checkout process is avoided altogether, and retailers report that this convenience brings shoppers into the store more frequently because the typical friction — standing in line, taking the goods out of the cart, placing them on the conveyor, watching a cashier scan them, putting them back in your cart and then making payment from a leather wallet — is eliminated.
QSRs and petroleum retailers are merchandising payments to precede ordering. At Chick-fil-A and McDonalds, I can order and pay from a mobile app and then literally grab my goods from a special service counter. At certain petroleum retailers, drivers can turn on the pump and then sit back as loyalty information is communicated from apps on phones stowed inside their vehicles — a welcome innovation for consumers in northern climates.
Spend Motivation
There are two dominant means of motivating consumer spending in the merchandising payments era: buying power extension and personalization.
-
Buying Power Extension
Payment merchandisers add tremendous value to their enterprises by adjusting how consumers perceive their buying power and extending it by stretching payments out over time. While shoppers may walk in prepared to spend a certain amount, presenting a deferred payment or equal billing option at the POS means the consumer has more buying power while in the store, opening the door to a larger overall sale.
Loyalty programs also can extend perceived buying power through incentives like points multipliers. Offering double or triple points for buying certain goods, or buying at certain times or places, creates the perception of greater value for consumers and can increase the size of their shopping carts. Robust loyalty program technology is now available to small businesses, meaning even the single-store operator can start merchandising payments.
-
Personalization
Businesses can take full advantage of personalization by coupling it with account-based payments. As an Amazon user, I provide my billing address and payment credential information and in doing so, I’m essentially opening an account. From there, Amazon can build on that, get to know me better and promote goods that appeal to my interests. We are just now witnessing the beginning of what we expect to be the tremendous growth of account-based payments, or in the mobile world, in-app payments. Because we love the convenience of in-app payments, we tell merchandisers a lot about us and allow them to build out detailed profiles of our preferences. When I walk into Starbucks, they already know what I want and how I want to pay, and the more I frequent their stores, the more they know about how I will respond to offers. It is a virtuous cycle, and it benefits both consumers and merchandisers.
Many successful business operators share a talent for merchandising. Beyond driving sales, savvy operators will seize the opportunity at hand and apply that talent to payments to unlock customers’ buying power. The range of tools to merchandise payments is great and growing fast. While it can be daunting to jump in, payments are proving to be one of the most successful merchandising categories to drive growth, and the results will surely make the journey worthwhile.
Brian is President of First Data Canada with overall accountability for the company’s Canadian operations which include credit card issuing processing, merchant acquiring and Tasq Technologies Canada. During his tenure at First Data, Brian also held the position of General Manager, SunTrust Bank Merchant Services and was CEO, First Data Loan Company Canada – a federally regulated Financial Institution.
