Evolution of payments in the ‘now economy’

The payments landscape has transformed significantly in recent years, driven by developments in technology and fast-changing consumer expectations.

The role payments play has advanced rapidly in the last two decades. From the pioneering introduction of chip and PIN in the early-2000s to the current rise of fingerprint and facial scanning alternatives, the growing sophistication of authentication capabilities is making it more secure, not to mention seamless, to purchase goods online and in-store.

Shoppers’ habits are evolving, particularly driven by Generation Z’s desire for instant gratification, fuelling what is being termed as the “now economy”. Consumers want to be able to buy whatever they want through any channel they choose, whenever they want, and they want it delivered today. As a result, payments companies have had to work hard to help interweave various functionalities that enable a smooth customer experience, which of course helps to maximise sales.

Particularly for online ecommerce businesses, friction in the checkout process is a common barrier to delivering a great customer experience. The consequences of failing to enable frictionless payments can be very damaging, resulting in cart abandonment.

Niche integrations enable a much better user experience. We put payments at the heart of that conversation

In a study of UK retailers by Klarna and Ovum, more than half said friction at the checkout is the main reason for consumers abandoning a sale, while four in ten said it’s because certain payment methods are missing. Separate research from Splitit found 87 per cent of consumers will abandon their shopping if a checkout process is “complicated”.

“Abandonment is one of the key problems for any online retailer because if you don’t have a smooth payment experience, with popular payment methods included, you lose the customer and the sale,” says Seamus Smith, chief executive of Sage Pay. “We have to bring consumers on the journey and educate merchants on what information is needed to ensure transactions can go through. This is the help businesses are looking for.”

The other problem that merchants have to deal with is the expectation from consumers to be able to buy and return in different channels. For example, they buy something online, collect it at their local convenience store, but return it in-store. Businesses need to be able to handle payments and refunds seamlessly between these channels.

The payments industry is having to respond to these challenges and expectations by building solutions to address the multitude of ways people wish to spend money. For example, with subscription-based services, which have exploded in popularity in recent years, new capabilities have been developed and used, such as tokenisation.

This particular technology has meant companies can store an embedded token to represent a user’s account, rather than a card number, minimising the risk of fraud as well as automatically updating customers’ details when a card is replaced, lost or stolen, saving consumers time and preventing businesses from losing out.

Companies typically start out with quite simple payment needs, often just wanting a means to accept money from their customers. But business growth can create payment complexities that small business owners just don’t have time to deal with. Unless they have a payments partner that handles the emerging complexities as they scale, they will soon run into challenges and face issues with delivering the experience customers expect.

Fortunately, the advent of cloud computing and other technologies has lowered the barrier to entry for software solutions that previously only large organisations could afford. At the same time, numerous software providers are focusing on developing niche solutions to help merchants in particular sectors run their businesses more efficiently. Sage Pay implements the payments capabilities into the back-end of these solutions.

“There are niche software capabilities being developed that service a much broader range of customers or merchants, and the price point of those services is coming right down,” says Mr Smith. “It’s becoming a lot easier to set up and run a business because there will be a piece of software you can buy that helps you get everything up and running, providing all the integrations into the services you need, allowing people to get started with minimal hassle or time.”

One such company that Sage Pay works with is ROLLER Software, which develops all-in-one software for attractions, entertainment and leisure venues. A ROLLER Software client, Jump In Trampoline Parks, now enjoys fast, frictionless payments across its nine UK parks thanks to the payment integrations with Sage Pay.

Jump In’s system is set up to accept payments through online bookings, customer service representatives, and onsite terminals and kiosks, and has resulted in 40 to 50 per cent time savings for the business. Meanwhile, it is able to keep up with the latest trends, such as accepting payments through wearable wristbands, as well as access the expertise to enable its growth plans.

“We play a vital role by providing a very supportive service to small and medium-sized enterprises to help them get up and running with payments,” says Mr Smith. “The larger businesses often only give a one-size-fits-all solution, but when it comes to the bespoke, niche integrations that enable much better user experiences in particular scenarios, we are on hand to help businesses on that journey. We put payments at the heart of that conversation.”

As the internet of things and technologies such as 5G and artificial intelligence become a reality, the payments market has to keep up with these trends and be present in every scenario. Sage Pay works consistently to ensure it can accept as many different types of payment methods as possible, as well as developing the latest integration capabilities, so its clients can always keep up as consumer behaviour continues to evolve.

For more information please visit sagepay.co.uk or call +44 (0) 191 294 1134