Omni-channel payment / a business enabler...4. VivaKiAdvance: Connected Commerce 2014 5. statistica.com Did you know? In 2015, more than 25% of the global population used a smartphone

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Omni-channelpayment / a business enablerSeven benefits of an omni-channel payment solution

ING_BROCH_Omni channel 2016 V2_2 14/06/16 10:06 Page1

Payments have been pretty straightforward for a long time. The advent of e-commerce did not make things more complicated, until the retail industry observed a shift in the balanceof power within the ecosystem. In addition to that, the industry acknowledges the value of having more than just traditional payment options for consumers at points of sale. Withconsumers becoming increasingly connected, the line between on and offline commerce is veryblurry. The need for a single platform that bridges the gap between their online activity and brick-and-mortar points of sale is obvious for most merchants.

Payment is only one part of the omni-channel mosaic. Merchants need to take into accountinventories, orders, CRM & consumer data, loyalty, supply chain as well as payments torestructure the whole interaction between online and offline.

Driven by the development of social media and mobile devices, the emergence of permanentlyconnected consumers has impacted their interactions with brands but also their expectations of how brands interact with them. The increasing number of touch points between consumersand merchants has led to the need to redefine the position of every sales channel: from a siloed organisation to a global brand experience.

This omni-channel approach aims to enable customers to search, buy and pay seamlessly acrossmultiple contact points. Card Present (CP, for in-store transactions) and Card Not Present (CNP,for online & mobile transactions), usually identified as two separate payment channels withdifferent security and authentication solutions, will need to merge.

Providing a consistent shopper experience across channels initially involves a consistentdevelopment of acceptance points. As most merchants manage multiple formats of transactionsthrough diverse points of sale, it is now time to think about implementing a unique paymentstrategy in order to streamline and improve the global customer experience. The ability to providesecurity-driven and flexible acceptance of both CP and CNP payments constitutes a major asset for businesses in terms of cost management, sales development and customer satisfaction.


Consumer behaviour evolution

Today’s shopper wants to be able to purchaseanywhere, at any time, from any device.55 per cent of the world population lives inurban areas, according to the UN, and thisnumber will reach 66 per cent in 20501

making a real difference for major retailers.The average consumer lives in a largecity and is very mobile and active. Thesedemographic factors have a major influenceon purchasing behaviour and decisions.Urbanisation combined with the necessity totake advantage of every minute of the dayincreases shopping frequency and reducesloyalty to specific stores or brands.

Saving time is a recurring rationale forshopping online but it is a reality in-store aswell. In order to shorten the checkout queue,43 per cent of consumers would appreciatebeing able to pay using a tablet or anothermobile device in-store2. Time is valuable andshoppers do not want to waste any.

Consequently, they expect absolute efficiencyfrom retailers at every stage of thepurchasing act.

However, a high level of convenience doesnot satisfy all consumers’ requirements.Retailers are also expected to provideresponsive services, knowledgeable assistanceand customisation options, whether theyshop in-store or online. Customers will nolonger accept perceived overpricing andpoor standards of customer service and arelikely to change service providers.

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Did youknow?

43% of consumers would appreciate beingable to pay using a tabletor another mobile deviceto save time for in-storepurchases.

A changingmarketplace

1. United Nations: World Urbanisation Prospects2. Les comportements d’achat des Français : An Opinea study for Ingenico Group, January 2016.


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Connected consumer

In 2015 more than 25 per cent of the globalpopulation used a smartphone and thisshould rise to 35 per cent in 20503. Thedemocratisation of digital technology isgiving consumers access to unlimitedinformation, allowing them to make moreinformed decisions, which results in thedevelopment of ROPO and showrooming.

• ROPO (Research Online Purchase Offline):Worldwide, 88 per cent of consumers areseeking information online before buyingin store4.

• Showrooming: in France, 67 per cent ofclients think that having the ability tocompare and get more information aboutproducts via their smartphone in-store mightinfluence their purchasing decision4.

3. statistica.com4. VivaKiAdvance: Connected Commerce 20145. statistica.com

Did youknow?

In 2015, more than

25% of the global population used a smartphone and this should rise to

35% in 20503.

The Showrooming effect remains steady

Consumers are not only looking forinformation about a product or service butthey also check the brand reputation, refer toothers’ opinions and share experience. It isestimated that there will be around 2.44bnsocial network users around the globe in 2018,up from 1.96bn in 20155. The rise of socialmedia strengthens the relationship betweenbusinesses and consumers. Social media andcustomer forums have huge potential bothto build and to destroy brands. Customersare led by the opinion of their friends andfollowers through likes and testimonials.The reputation of a company is undermindedor strengthened accordingly. Connectedconsumers also require a specific care in-store as they are often more aware of theproduct specifications than the salesperson.

67% of the French think that being able to gain more information and compare products in-store via their smartphone influences their decision to purchase4

67%

88% of consumers do some research on the internet before making a purchase

54% of smartphone owners use their mobile to look up information on the go

88% RETAIL MARKET

54%

The Research Online Purchase Offline (ROPO) trend


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Nowadays, the increasing number of mobileconnected consumers, the growing penetrationof new technologies and a purchasing pathreinvented through social collaborationmean merchants are confronted with a morechallenging and complex environment. Thisevolution has impacted and affected thetraditional retail business model which needsto be reconsidered by retailers in order to bemore consistent and efficient.

The journey to omni-channel

Many retailers have been focusing on bigstore networks for decades and haveunderestimated the potential of new saleschannels, treating them as separatebusinesses. Sorting that out is frightening asit involves profound restructuring of thewhole organisation which might lead to therise of online revenues and to the closure ofa few physical stores. But moving towardsomni-channel is now necessary and is goingthrough fundamental changes not only toavoid disappointing customers but also toharness new opportunities from newtechnologies. A powerful customer experienceis not just about maintaining consistency,relevance and convenience at any cost. It isabout creating seamless customer dialoguethrough every stage of the customer journey,from pre-purchase research to post-salestouches.

Structural reorganisation

According to a survey from The EconomistIntelligence Unit6, 27 per cent of retailexecutives consider silos within theirorganisation as the main obstacle standingin the way of improving their company’s

customer experience. To get to the omni-channel model, merchants need to adopta corporate culture that considers online,offline business and sales strategies as asingle entity. Companies need to reorganisein order to remove the distinction betweenindividual business units. Staff incentives andtargets must be reconsidered so that theytake account of wider sales rather thansimply measuring the performance of anindividual store or sales channel.

Department store chain Macy’s announced asweeping reorganisation plan7 that includesshuttering 14 underperforming stores andthe restructuring of its marketing andmerchandising operations. Macy’s and itsupscale sister chain Bloomingdales willoperate with unified marketing andmerchandising divisions focused on “a hybrid

A powerful customer experience is about creating seamless customerdialogue through every stage of thecustomer journey, from pre-purchaseresearch to post-sales touches.

6. The Economist Intelligence Unit: Creating a seamless retail customer experience7. http://www.zdnet.com/article/macys-makes-a-play-omnichannel-with-sweeping-reorganization/

Did youknow?

27% of retail executives considersilos within theirorganisation as the mainobstacle standing in the way of improvingtheir company’scustomer experience6.


of store and online buying” designed tomerge the buying and marketing processeswithin each chain. The function of physicalstores is changing as Green Street Advisorasserts that about 15 per cent of US mallswill either close or be converted into non-retail space over the next decade8. Traditionalretailers are sitting on a network of big storesand it represents a huge logistic advantage.Wal-Mart for example has more than4,000 stores within five miles of two thirdsof the population. They plan to use some oftheir big stores as “next-generation fulfilmentcentres” dispatching the goods to a nearbystore that employees pick out and transportto the final consumer. It is quick, inexpensiveand has helped the company launch same-day delivery.

Physical stores are not obsolete, their use hasto be redesigned by retailers to make themcore pillars in the omni-channel strategy.

Enhanced technological infrastructure

The line between digital and physical worldsis being blurred by the wide range of newtechnologies at point of sale but also withinbusiness processes. It provides many excitingopportunities for merchants to enrich theirinteractions with consumers. At the heart ofthe omni-channel process, investments inInformation Technology (IT) will allow retailersto unify their multiple platforms from a user’spoint of view but also to make both online andphysical shopping easier.

Technology provides new tools that onlineplayers and physical retailers can use to filltheir service gaps within an omni-channelperspective. Mobile apps such as Virtusize,

a virtual fitting solution, are making onlineshopping easier. Online retailers areattempting to tackle people’s reluctance tobuy fashion without trying things on first.

Traditional merchants are using technologyin-store to tailor their offering moreeffectively. M&S has developed in-storehubs or kiosks allowing users to browse thecatalogue or scan barcodes on items andexplore product information. Customers canchoose to order on the device and collect ata later date or have the product delivered.Retailers are looking at new ways to reducethe delivery time and price with innovativemethods. Physical and online retailing arestarting to converge with click and collect,which allows consumers to have flexibility:they can reserve items or make day-to-daypurchases.

Online companies, which lack physicalnetworks, are looking to team up withgeneral retailers to bridge the gap throughclick & collect. eBay tried this in the UKthrough a partnership with Argos, a retailerrepresenting around 650 stores nationwide9.This service is now offered by manybusinesses and should expand in the nearfuture. It is expected that the number of click& collect locations in Europe will reach halfa million in 201610.

6

Did youknow?

The number of click & collect locations in Europe will reach

half a millionin 201610.

8. www.fortune.com/2015/01/28/2015-mall-outlook/9. www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10943206/eBay-and-Argos-click-and-collectdeal-goes-nationwide.html10. Metapack.com


Innovative point of sale technologies suchas self-scanning and self-checkout enableshoppers to scan, bag, and pay for theirpurchases without human assistance.According to a 2014 report11, 90 per cent ofconsumers identify themselves as users ofself-checkout. It highlights that self-checkouttechnology has become more established andaccepted in the mainstream, providing valueto both consumers and retailers alike.

The development of these services highlightsthe fact that retailers are finding solutionsor new processes, improving their customersatisfaction as they acknowledge thenecessity of building their business strategieson a deep understanding of customerbehaviour and need.

Getting closer to the final consumer

The ability to engage, interact and influencethe shopper at any stage of the path topurchase is now essential and possible withsmartphones and other connected devicessuch as tablets. These devices can be definedas complementary channels to brick andmortar, the connection between the digitaland in-store experience. Retailers haveseized this opportunity to increase their salesthrough the implementation of mobile appsand websites. These tools offer a new rangeof services that facilitates the purchasing act.A study reported that 85 per cent of time onsmartphones is spent using apps; and of thattime, only 5 per cent is spent on retailerapps12. This very limited amount of time hasto be optimised by retailers, who cannotafford to have a complex checkout process.

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Mobile use

To engage omni-channel shoppers, retailersneed to know who they are. The increaseduse of smartphones has enabled the constantlyconnected consumer to be hyper targeted atany stage of the purchasing journey withmessages relevant to their shopping occasionand mission. As the shopping processsimplifies, it gets more personalized andcontextualised. These behavioural marketingstrategies are based on the integration ofsolutions that track the shopper at everytouch point, either online or in-store. Thesesolutions are gathering data from beacons,Wi-Fi, cameras or our online habits in orderto provide the right product, to the rightconsumer at the right time and the right place.

Retailers are investing massively in thesenew channels and they are getting greatresults. Retail mutation benefits consumersbut also businesses, getting positive returnon investment and leading them to go furtherinto this omni-channel process.

11. NCR 2014: Self-Checkout: A global consumer perspective12. techcrunch.com/2015/06/22/consumers-spend-85-of-time-on-smartphones-in-apps-but-only-5-apps-seeheavy-use/

85%

5%

85% of time on smartphones is spent using apps and of that time, only 5% is spent on retailer apps


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Omni-channelpayment,

a businessenabler

Payments are essential to theapplication of a powerful and efficient

omni-channel strategy. Having a globalapproach across all points of sale is now

becoming a major asset for merchantsand will help them significantly

improve the customer experience,increase sales and optimise costs.

Develop comprehensive targetedoffers in-store and online thanksto omni-channel tokens

Offer a streamlined click andcollect experience for customers

Improve after-sales service with a unique refund policy

Implement endless aislecapability with omni-channelsales assistants

Increase in-store conversion rateand average basket withpayment facilities

Increase and facilitatesubscriptions with tokens

Reduce attempted fraud and improve overall security

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1. Develop comprehensive targetedoffers in-store and online thanks to omni-channel tokens

Retailers can improve their global customerknowledge by taking ownership of the tokenand harnessing omni-channel KPIs.

To help businesses grow and stay ahead ofthe curve, having a better understanding ofconsumer behaviour across channels becomesa core challenge for merchants who are nowable to get a token for every transactionprocessed in-store and online. It identifiesthe card used throughout channels. Retailers

can thus improve their customer knowledgeby taking ownership of the token provided.This token represents a payment cardwithout the associated risk and can feed intoa CRM tool to further analyse customers’purchasing behaviour across all points of asale. This data is not sensitive and can befreely processed by the merchant, either asan anonymous identifier to make customersegmentation, or as personal data whichwill be aggregated to other customer datacollected elsewhere (web, loyalty cards, etc.).

A recent13 study reveals that targeted offersnot being provided in-store is a relevantissue in many countries, such as NorthAmerica, where 46 per cent of consumerssaid they receive offers online based on whatthey buy, but the same could not be said forwhen they shop in-store. Nearly 31 per centof European consumers felt the same wayabout in-store targeted offers. With the token,the merchant gets the key to providecomprehensive targeted offers.

Payments are essential to theapplication of a powerful and efficientomni-channel strategy.

13. Europe and North America: A Study in omnichannel Contrasts” report from CitiXsys and iVend Retail


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Poor customer experience

In addition to this, retailers can now expect,from a unique payment solution provider, arelevant analytic tool such as a web portal,which gathers omni-channel key performanceindicators, reporting and card-countryanalysis. It brings the merchant clear andorganised information on unique andreturning customer ratios, channel efficiencyand their global activity across e-commerceand store locations.

Picard – a leader in frozen food – has chosento be a forward thinker, by placing thecustomer at the heart of its developmentstrategy. Now the brand is able tounderstand its client profile and to assessits marketing campaign efficiency.Emmanuelle Bazin, Picard’s MarketingClient and e-Commerce Director, stated:

Picard is a brand dedicated to innovation and this solution fits perfectly with our customerinsight strategy. Tokenization will enable us to improve our customer portfolio andprovide personalized optionsbased on our customers’ buyingbehaviours and needs.

Success Story

14. Les comportements d’achat des Français : An Opinea study for Ingenico Group, January 2016.

2. Offer a streamlined click and collectexperience for customers

An in-store welcome of a customer whocollects an online order is a good way tomake additional revenue. Merchants will seehalf of their customers purchase anotheritem when they come to collect goods,bringing 3 to 10 per cent of additionalrevenue according to market data.

Yet the click & collect experience is notalways simple for customers who oftenforget the barcode, their loyalty card or theircustomer number required for the collection.A terminal connected to an omni-channelplatform can significantly enhance thecustomer experience as it allows them to beidentified by their payment card, as it wasused for an internet reservation. 77 per centof consumers would be glad to be offeredthis solution14. Upon collection, the merchantinvites customers to insert their card intothe payment terminal, which triggers thereconciliation and provides the merchantwith the internet order number. From the

46% of US consumers are disappointed to receive offers based on what they buy online but not what they buy in-store

46%

RETAIL MARKET 31%31% of European consumers are disappointed to receive offers based on what they buy in-store but not what they buy online


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merchant’s side, the consumer identificationis faster and cheaper as it is based onpayment equipment legacy. It makes it moresecure as well, as the merchant may requirethe customer to type in the card’s PIN.

Improving the click & collectexperience

Consumers interested in being able to collect theirorder in-store or at a pick-up point, using onlytheir credit card as identification

3. Improve after-sales service with a unique refund policy

Many retailers’ organisations are split, makingbusiness processes separate when it comesto managing in-store and online claims. Fromthe customers’ perspective, it makes theirafter-sales experience cumbersome whenthey wish to file for a refund: 51 per centof French consumers are not satisfied withthe way their refunds are processed15.

Consumers are becoming more and moredemanding and it is harder to satisfy them.For retailers simplifying the path to purchaseremains essential as ensures an efficient andrelevant after-sales experience. They nowhave the opportunity to enhance theircustomer satisfaction by enabling web refundsof card-present transactions. A client whopaid in-store on a terminal and wishes toreturn goods no longer needs to go back tothe store. The goods can be shipped back tothe merchant and the refund processedremotely, via the web or an API. This processminimises the retailer’s costs for refunds(traditionally made via wire transfers,cheques or vouchers). This also ensures thatthe refund goes back to the same customer(as it is processed on the same payment card)and avoids fraud.

Unsatisfactory refund policies

Consumers disappointed with the refund policieson an in-store purchase, when using the onlinecustomer service


Yes, very interested

Yes, quite interested

Not really interested

Not interested at all

33% 44% 17%

6%

29% 26% 5%

I received a credit note instead of a refund

The refund process took too long

I received a cheque instead of a direct refund to my account


4. Implement endless aisle capabilitywith omni-channel sales assistants

An American study16 which surveyed 71,000consumers worldwide reveals that onaverage a typical retailer loses 4 per cent ofsales due to having items out of stock (theaverage out-of-stock rate being 8.3 per cent).With 40 per cent of customers who abandonthe purchase or find the missing item inanother store, retailers need to find ways tocapture the purchase on the spot and avoidsecond thoughts. Sales assistants equippedwith a tablet giving access to the entirecatalogue will not only improve the customerrelationship but also allow the sale of out-of-stock items and items from the web store,thus multiplying the number of itemsavailable for sale in-store, some of whichmay come from the e-commerce marketplace.

96 per cent of customers would be interestedin having the possibility to order in-store andbe delivered at home when a product is notavailable17. But a customer purchasing itemsnot immediately available will not expectto be charged upfront. Merchants shouldlet their customer make a split purchase,processing an in-store transaction for theitems available and triggering the nexttransaction (for the items to be shipped to

the customer) afterwards. This flexibilityimproves customer satisfaction and themerchant’s organisation. For items thatcannot be delivered, the customer will not becharged and will not need to request a refund.

In-store out of stock items

Customers would be interested in being able toorder in-store and receive home delivery of anout-of-stock item

5. Increase in-store conversion rate and average basket with paymentfacilities

According to European and American figuresan average of 9 per cent of householdexpenditures are enabled by consumercredit. Payment facilities constitute a realmarketing and commercial driver formerchants: they increase consumers’purchasing power and encourage impulsebuying. This has a positive impact onmerchants’ business, increasing in-storeconversion rate and average basket usingthe client’s card data captured in-store forinternet payment.

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16. Retail Out-of-Stocks: A Worldwide Examination of Extent, Causes, and Consumer Responses, by T. Gruen, D.Corsten & S. Bharadwaj, 2002.17. Les comportements d’achat des Français : An Opinea study for Ingenico Group, January 2016.

Did youknow?

A typical retailer loses

4% of sales due to having items out of stock16.

53% 43%

1%

3%

Yes very interested





Retailers can now rely on a unique paymentsolution provider (PSP) across all sales pointsto increase their conversion rate, allowingconsumers to pay in several instalments viatheir payment card and without needinga line of credit. This solution eases expensivepurchases and matches customers ’expectations as 77 per cent of them wouldlike to be able to use their payment card topay in instalments without additional fees18.Thus, in-store, the client will pay a depositand the instalments will be triggered by themerchant.

Payment facilities

Consumers interested in being able to pay in-storein three interest-free payments using their creditcard

6. Increase and facilitatesubscriptions with tokens

Consumption patterns are evolving quicklytowards a model based on use more thanthe ownership of goods and services.Juniper research announces that the globalsubscription market reached $1.73 billion in2014, increasing by 40 per cent over thatyear19. Western Europe accounts for nearlyhalf of that revenue and most of theremainder is evenly split between NorthAmerica and South-East Asia.

Global subscription market breakdown

Many businesses involve subscription andmerchants miss some sales opportunitieswhen consumers lack documents for a directdebit subscription in-store. With the help ofa payment token, merchants can now maketheir customers pay the first contribution in-store and then every month the merchantwill request to charge the cardholder’ssubscription fee.

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Payment facilities constitute a real marketing and commercial driver for merchants: they increaseconsumers’ purchasing power and encourage impulse buying.

18. Les comportements d’achat des Français : An Opinea study for Ingenico Group, January 2016. Opinéa19. www.billboard.com/biz/articles/news/digital-and-mobile/1566310/business-matters-subscription-marketto-grow-40-this

41% 36% 12% 11%

Yes very interested




25%25%

50%


7. Reduce attempted fraud and improve overall security

Security matters to consumers as 95 per centof them check that the payment is securewhen they make a purchase20. Retailers areat the heart of card payment processing. Itis important that they use appropriateprocedures and technologies to prevent theftof sensitive data. An omni-channel solutionshould cover all security features from thepayment perspective, whether face to face orremote payment, thereby fully protecting theparticipating retailers and exempting themfrom any liability in case of the data beingcompromised. A P2PE-validated acceptancesolution enables card data to be secured fromthe terminal, so they are indecipherablewhen processed by the checkout softwareand merchant network. Such a solution iscompulsory in most countries, especiallywhen it comes to mobile acceptance.

The P2PE standard protects the merchant’sbrand image and simplifies their PCI-DSScertification by reducing the scope ofresponsibility.

Security matters to consumers

Consumers systematically checking that theirpayment is secure

With an omni-channel payment solution,every transaction processed in-store andonline contributes to the global frauddetection service. This significantly improvesthe efficiency when compared to a mono-channel tool restricted to a small part ofthe payment data processed for a merchant(usually focused on e-payments). Additionally,the retailer may secure an e-commerceorder delivery with in-store goods retrieval,requesting the customer to authenticate (cardinsertion into a terminal and PIN entry)before giving out the goods. This process willprovide the merchant with undisputableproof in the event of a payment dispute.

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With an omni-channel paymentsolution, every transaction processedin-store and online contributesto the global fraud detection service.


67% 28%

Always

Sometimes

Never

I don't know what it is

1%

4%


Retailers need to embrace the omni-channeltrend to cater for new customerconsumption patterns and expectations.

Multiple recent technological innovations have changed the way people consider shopping.Retailers need to embrace the omni-channel trend to cater for new customer consumptionpatterns and expectations. The transition is difficult as pure players lack store expertise andbrick and mortar merchants are working hard to integrate and unify their online and physicalentities. In practical terms, implementing this strategy requires a major effort from retailers.The first step consists in significantly developing IT infrastructure to simplify systems and create a single customer database. As a second step, merchants will need to think of how to reorganise team structures and even financial and sales reporting in order to move awayfrom the single-channel approach.

At the heart of the retailer’s processes, omni-channel payment appears to be a business enabler.We have, in this white paper, highlighted strong use cases with actual implementationsgenerating incremental sales, providing better customer knowledge and improving customerexperience for merchants. Omni-channel is here to stay and will grow rapidly. Retailers need to have a strong global payment strategy to succeed.

Supporting merchants in their customer relationship performance while maintaining highpayment data security is the challenge that a unique payment solution provider for both CP and CNP payments needs to address. This allows merchants to enhance the omni-channelpayment experience that will ensure their long-term success.


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ingenico.com

@ingenico

Ingenico Payment Services provides merchants with a wide range of payment services. Our expertise –centralized transaction management, transaction processing and loyalty services – allow our clients to easilyand efficiently manage their financial transactions.


Documents

Omni-channel payment / a business enabler...4. VivaKiAdvance: Connected Commerce 2014 5. statistica.com Did you know? In 2015, more than 25% of the global population used a smartphone