With the growth of online and mobile commerce channels in our market, coupled with emerging technologies and trend changing expectations of the in-store experience, traditional retailers are being forced to think outside the box and re-evaluate their position, approach, and offers. Engaging with customers is the priority in this day and age. Among the necessary processes that need to be managed, payments have become an area of focus.
When expanding payment options, retailers and merchants can consider deploying a branded digital wallet. There are many benefits to this as we will find out in this article below.
Reasons to Introduce Digital Wallet
Value-Added Services and Personalized Shopping Experience
If retailers provide a digital wallet, they have direct access to detailed shopping data which can be used to improve existing services and also develop new ones. Shopping data can be deployed in such a way that the stores can deliver a hyper-personalized buying experience. It can help retailers to leverage past customer behavior across numerous channels. They can then use the information to identify cross and up-sell opportunities to increase transaction amounts, enhancing sales in the process.
When it comes to value-added services, retailers can introduce coupons, gift cards, and loyalty programs as part of their in-store shopping experiences. A digital wallet can simplify this process allowing both consumers and retailers to derive the maximum value from these value-added services. For instance, retailers can digitize cards that will function like gift cards or loyalty points inside a single, comprehensive platform. This allows consumers to pay with credit, points, and coupons in a single transaction. They will have full control over their own payment mix.
Transaction Fees are Decreased
Payment networks levy certain transaction fees on retailers to process debit and credit card transactions. It makes commercial sense, especially for larger retailers to implement strategies that aim to decrease these costs as transaction fees can amount to something significant. One way stores can do this is by introducing a store-branded, close loop payment card. These cards are not subject to the interchange fees levied by payment networks as they can be used only by consumers at the particular retailer. This is what is known as an “on us” transaction where the cost per transaction is much lower.
For this system to work, however, consumers have to use their store cards. This is where the store will need a digital wallet. It serves as a viable means of directly incentivizing the user of a store card. For instance, as a retailer, you can push an in-app discount to encourage adoption. This can also result in increasing recognition for your brand, increased customer loyalty, and driving brand engagement.
Advanced Checkout Process
As a retailer, you should always look to offer a mobile wallet that has Virtual Point of Sale capabilities. This will enable your customers to checkout through in-aisle payment, removing the hassle of queuing up and reduces dropouts. To reduce waiting times at the counter, you can also integrate the “order ahead” functionality.
One of the great ways of streamlining the checkout process is via self-checkout technology such as in-aisle payments. These help in decreasing overhead costs and reduce the number of POS terminals required. This also frees up your staff to be deployed across other store functions to improve overall customer experience.
Digitization of Payments
Physical retailers are almost compelled in the production and distribution of vast amounts of collateral. This can be expenditure related to gift cards, plastic store, cardboard coupons, print advertisement,s and paper receipt. This activity results in a huge environmental as well as monetary expenditure.
Digital wallets can be a solution to this problem. The gift cards, loyalty cards, and other items can be provisioned virtually with minimal costs. As a retailer, you can tailor push notifications and in-app offers which are inexpensive compared to the more cumbersome tasks of handing out flyers or putting leaflets in mailboxes. All of this makes a mobile wallet the perfect vehicle for retailers for a more cost-effective, efficient, and sustainable payment process.
Improved Security Measures
It’s no secret that the retail sector, especially large merchants, has been the victim of a number of high profile data breaches. On average a retailer suffers an average cost of $4 million for an incident of the breach. Additionally, they suffer long-term reputational damage to their brand which has a negative effect on sales in the long-term. Thus security is a business-critical aspect that retailers need to seriously consider. In many cases, the traditional model of outsourcing to a merchant acquirer is being changed to bring payments in-house.
So to address security, retailers have to consider the main security fears, like customer identity theft or theft of payment credentials. By introducing digital wallets, a retailer can incorporate several technologies and techniques to mitigate risk, making the organization less susceptible to data breaches.
Some of the technologies incorporated by digital wallets include tokenization, device protection, biometric authentication, and fraud management. However, retailers should also understand that consumers also demand simplicity and convenience, despite their focus on the degree of security in place. Thus retailers should find a careful balance between usability and security.
Thus, to enable retailers to select a risk profile that integrates with their wider commercial strategy, a modular, layered approach to security is required. They should tailor and deploy the appropriate level of protection that meets their specific requirements.
All the signs point towards the advantages that a well-executed digital retail wallet can provide. This includes improved payment security, increased revenues, and reduced operational costs. The only challenge for retailers in this context is to accelerate time to market and provide a seamless experience from the get-go. We know that market demand and consumer expectations are an ever-changing affair. However, functionality can be regularly upgraded to meet these new and emerging customer requirements. The industry is slowly starting to recognize these benefits and taking the necessary steps to launch branded digital wallets in recent years.