5 Things You Need To Know About Alternative Payments
By Erin Harris, associate editor
Retail today is defined not by how retailers want to sell, but by how consumers want to buy — and that applies to payments, too. Payment options, and how they are handled, are an important part of the retailer’s brand identity. I recently talked to Jim Johnson, senior VP, retail payments at FIS, about the top five things retailers need to know before considering alternative payment options. The following is an excerpt from our conversation. The full-length version is available in podcast form on RetailSolutionsOnline.com.
Why do alternative payments exist, and why should retailers care?
Johnson: Consumers are looking for different forms of transacting. While traditional tender types exist (cash, check, debit, credit), people want different forms because they want larger reach. When you consider the check and card transactions made today, people need a bank account. Some people don’t have that option (those who are unbanked). The second factor is convenience, which is especially prevalent among younger consumers who use different channels to shop (the mobile phone and/or online). The third factor is speed. Simply put, people want to transact more quickly. For example, P-to-P (person to person payments) offers the ability to pay electronically in real time. The fourth factor is related directly to the retailer — to help the retailer drive loyalty.
Retailers should care [about alternative payments] because it comes down to opportunity cost. The more alternative payment type capabilities that exist, the greater the opportunity to grow traffic within their site, and the greater the opportunity to drive loyalty. Also, let’s be honest, the ability to be able to change the existing interchange model is a big driver. Whether it is a PayPal-type payment, [payment options such as this] has a drastically different interchange model. Lastly, if you offer your consumers the ability to access their money easier, it helps the retailer to do more business.
What are the top 5 things retailers need to know about alternative payment options?
Johnson: First, alternative payments are here to stay and consumers will consider to look for this functionality within the retail space. It’s a topic that can’t be ignored and one that retailers should consider.
Second, retailers should offer an array of alternative payment options to reach as many segments of buyers as possible. Third, retailers need to consider a common access point. Look for a solution that offers a seamless integrated approach both online and offline for payment options for their consumers. In essence, it’s valuable to have one user interface (UI) to access all payment options. Fourth, consider how and where the alternative payment data is stored and accessed. Pay attention to how you procure data and how that data is handled. Finally, integrate alternative payments with your existing online fraud monitoring solutions and loyalty programs. Do not silo alternative payments. Take the opportunity to apply loyalty to your products and monitor fraud on alternative payment transactions just like any other.
Johnson also delivers actionable data on the type of solution integration/data security measures retailers need to consider before accepting alternative payments. Hear for yourself what he has to say by listening to the entire podcast.