2020 and beyond: Why digital wallets will pay dividends

vicky reevesJust over a decade ago, consumer payments were revolutionised by the launch of contactless cards, followed hot on the heels of the advent of chip and pin technology. But the inception of new payment systems now seems to accelerate every year.

It’s becoming a universally popular way to pay. According to consultancy Iquii, over e46bn was spent on digital payments via mobile and contactless platforms by the end of 2018 – more than a fifth of total card payments worldwide.

And with the digital payments market expected to grow at an average of 18% a year until 2023, according to Linker, it’s a phenomenon brands, charities and any organisation with a need for transaction technology can’t afford to ignore.

The expanding payment ‘menu’ is increasing consumer choice, too, and newer technology is displacing long-standing options such as Direct Debit. That has a knock-on effect on customer acquisition and retention: people’s checkout preferences must be satisfied if organisations want to keep up with the competition.

For example, businesses that offer a subscription service, and therefore rely on regular payments from their customers, must now be equipped to cater for an array of payment options, including credit cards and digital wallets.

The face of current innovations
There is a plethora of emerging technologies to consider. As we know, many consumers already use digital voice assistants such as Amazon Alexa, Google Home and Siri in their everyday lives. They do so for a variety of reasons: playing music or connecting to cookery ideas, for example. But payment technology can also be linked to these devices to allow people to order products or make donations.

Very soon, any commercial enterprise will need to ensure their website is voice optimised. That means understanding how to incorporate voice-enabled purchases or donations into the customer journey, regardless of the device someone is using or their preferred payment platform.

At WPNC we have been developing voice-based donations for UK charity supporters and have linked our goDonate Voice platform to Amazon Pay and launched the UK’s first such service for NSPCC. The results are already encouraging.

Elsewhere, banks have used facial recognition for several years, while this method and fingerprint authentication are already incorporated into most smartphones’ settings. Today’s consumers are rightly aware of, and concerned about, online security. These innovative platforms promise to reduce fraud and present more frictionless payment options for the shopper who is reluctant to carry cash.

Forthcoming regulatory changes – in the form of the updated EU Payment Systems Directive (PSD2) – will require consumers to confirm their identity for digital purchases over £30. The use of fingerprints, facial and voice recognition will provide a relatively simple way to do this.

The key to customer experience
At first glance, it might seem that marketers can only benefit from the rapid uptake of PayPal, Apple Pay and their rivals as a slick way of closing a sale. And better conversion is certainly a key benefit- as an agency, we have already helped ecommerce and charity clients collect millions of pounds annually by harnessing the technology on offer.

Take a closer look, however, and it’s as much about the overall customer journey as it is about the transaction. In other words, payment technology isn’t just about increasing conversions at the checkout; it’s also changing the way consumers experience brands throughout the sales funnel. That requires an understanding of how to incorporate these emerging payment methods into your wider marketing strategies.

Despite the high street doom and gloom, consumers are at least becoming used to a smoother shopping experience. In the US, bricks and mortar Amazon outlets house functionality that allows baskets to calculate the price of a customer’s shopping as each item is added, simply through someone’s in-store location. Frictionless payment is also coming to UK retailers. For instance, some supermarkets are now using mobile technology that lets shoppers scan, pay and go.

But real growth will come as ecommerce providers begin to replicate a similar level of customer experience online. Marketers are looking to agencies to help them manage this disruptive technology and understand how consumers are using, and would like to use, these platforms.

We always advocate designing the customer experience with the consumer in mind. Whether the vehicle is a DRTV campaign, SMS call to action or online advertising, that experience should be as frictionless and rewarding as possible. The journey should lead the customer neatly to the checkout. And, of course, the checkout process must be slick, quick and offer all available payment options.

Although some businesses still believe payment technology should fall within the IT department’s remit, marketers should boldly stake their claim. They are the ones who can understand what the customer wants in terms of an experience. Brand reputation is at stake if they deem that experience poor and the product or service isn’t ultimately easy to buy.

Meanwhile, keeping up with the digital native Millennials and Generation Z consumers will be vital. These are the people with the future spending power to make and break brands. They’ll also be au fait with instant digital payment and impatient if it’s missing.

The more agile organisations can be about implementing new technologies and creating customer experiences around them, the more successful they will be with these audiences.

Now is the time to consider the future
It might surprise you to learn that just a quarter of UK shoppers and still fewer US consumers (17%) consider themselves digital wallet users, according to Merchant Machine. This means there is still huge room for growth in penetration of next-generation technologies.

Despite this, smart marketers will start to focus now on what their organisation could be doing to stay ahead of the curve. Otherwise, their existing customer journey could quickly become obsolete.

Whether it’s the need for a new ecommerce site that offers users a better all-round journey from browsing to buying, or harnessing the latest biometric or voice innovations, it’s never too early to start your own journey to digital payments. Get it right and your conversion and customer satisfaction rates will soar.

Vicky Reeves is managing director digital and deputy group CEO at WPNC

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