What does the changing payments landscape mean for your customers retail experience?

The recent threat of Armaguard going insolvent, has potentially significant consequences for cash payments in Australia. (1) A lifeline by parent company Linfox appears to have averted the collapse of Armguard. (2)

 This got me thinking about the broader trend in Australia and the declining use of cash as a consumer payment method. At the end of 2022, cash had declined to circa 13% of total payments. (3) The average rate of decline in cash payments is circa 10% every 3 years and this trend has been consistent since 2013. If this trend continues, by 2025, cash payments will account for circa 3% of total payments. There are a number of hidden costs associated with the processing of cash, such as manual reconciliation, leakage issues, staff safety, time / labour costs that are factors that make cash acceptance a tricky proposition. 

 While each industry will have a nuance to the percentages noted above, we were debating at X+O on what does this mean for the in store retail experience? What infrastructure is available to support this change and how does this impact customer experience, both in store and online?

The most obvious answer in respect to payment infrastructure is to do nothing. Retailers have existing payment solutions that support card payments. However, when you dig a little deeper, simply doing nothing is not addressing the opportunity to reimagine the customer experience, given the further advances in real time payment solutions.

 With the advent of PayTo, there is an opportunity for retailers to rethink not only the payment experience, but also how they can reposition a loyalty proposition and broader retail experience?

First, what is PayTo? PayTo is s a digital way for businesses to initiate real-time payments from customers' bank accounts. PayTo has been developed by New Payments Platform (NPP) Australia and the financial services industry. In simple terms, it is a real time direct debit from a bank account. (4)

There are a number of use cases for PayTo, however, the two that standout for retailers include an integrated in-app or e-commerce payment for one off or ad hoc payments and real time payments through the use of QR codes.

Let’s start with the in-app and e-commerce offering. PayTo can be used for purchases that previously needed a credit card. A consumer will have the ability to use their bank account as a payment method for online purchases, fund digital wallets and make buy now pay later payments. For a retailer, this means an additional real time, low cost payment method.

PayTo with QR codes can be used to set up new PayTo agreements, and initiate real-time payments, as well as for a one-step checkout experience that integrates with a retailer's loyalty app.  This efficiency benefits both the retailer and consumer through a range of potential loyalty options.

While the adoption of PayTo will likely be gradual, the opportunity exists to define new possibilities for customer experience strategy and retail design.

How is your brand positioning itself to cater for the changes to declining use of cash and the new real time payment methods? Does your loyalty offering have an integrated real time payment and personalisation solution? How are you positioning your store design strategy to cater for these changes?

If you're curious about the changing payment landscape and what this could mean for your customer experience and retail strategy reach out to me via LinkedIn or mate@xpluso.co