Electrum’s MD, Dave Glass, shares his top retail payments insights.
Tech savvy consumers are demanding quicker, more convenient and more engaging ways to pay. It’s clear that to stay ahead, South African retailers need to support payment methods other than cash and card. Emerging payment types include QR codes such as Snapscan, Masterpass, Zapper; NFC cards/phones such as Contactless; digital wallets like Paypal and Apple Pay.
"Tech savvy consumers are demanding quicker, more convenient and more engaging ways to pay."
In the current economic environment, retailer’s earnings are increasingly under pressure. They’re looking for more reasons for customers to come into their stores whilst also developing new revenue streams. Electrum sees all the major retailers building their financial services offerings. Financial services that are becoming available at the most progressive retailers include:
- personalised credit offerings,
- FICA registrations,
- domestic and international money transfer services,
- international airtime top ups and
- a wide variety of bill payments (traffic fines, municipal bills, insurance policies, DStv etc).
The benefits to the retailers are clear in terms of increased footfall, customer loyalty and commission revenue.
Retailers are stepping up their risk and compliance programmes
Retailers must protect customers’ bank card information, and the Payment Card Industry Data Security Standard (PCI-DSS) must be followed. However, as the ubiquity and complexity of payments technology becomes ever greater, PCI-DSS compliance is becoming a much bigger headache for retailers. Achieving annual PCI-DSS compliance milestones is a major time and resource cost to retailers when they would rather be focusing on their core business, especially in the high risk payments environment.
Smart retailers are moving their technology to the cloud
Cloud based technology has many well known benefits including improved reliability, lower infrastructure costs, faster on-demand technology delivery and high scalability. However for retailers, the benefits of cloud-based, software-as-a-service payments technology are even greater - it allows them to reduce the scope of the risk and compliance landscape that they need to manage. Cloud-based transaction switching technology also improves their ability to deliver omni-channel experiences to their customers, across all of their channels (store, online, mobile, kiosks, etc).
Online products are coming to the physical store
Retailers have been selling “virtual products” (also known as Value Added Services) such as airtime and electricity vouchers for quite a while. As they look to find new sources of revenue, they are increasingly offering other products such as e-tickets for travel and events, software licenses, subscriptions to gaming services, and other types of vouchers that were traditionally only sold online. Interestingly, although everyone believes the future of retail is online, there is clearly consumer demand in bricks and mortar stores for products that are normally sold online.
Omni-channel strategies for traditional retailers as they compete with online
Online shopping is still a lot less prevalent in South Africa than in developed economies. However, competition from online retailers such as Takealot is now having a material impact on the sales of traditional brick and mortar retailers. To counteract this, traditional retailers need to ensure that customers can have a consistent shopping experience across channels that include store, online, mobile, and kiosks – this is known as omni-channel. The hurdle to this is that many retailers rely on legacy technology that is built for in-store only and cannot support an omni-channel strategy. Amazon has been experimenting with physical stores since 2015, and it’s easy to imagine that we might see the same here in South Africa.
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