How can payment providers become truly omnichannel?

Becoming omnichannel is critical if payment providers are to stay competitive in a tight market.

Omnichannel is a term coined by the retail industry, where merchants strive to offer consistency in products and services, with matching pricing and conditions. To support these merchants, payment providers must deliver a consistent customer experience across different distribution channels.

Technology advances have enabled payment providers to deliver a true omnichannel portfolio of integrated, digitally enabled products and services where network and terminals, POS payments, online payments, merchant acquisitions and dynamic currency conversion (DCC) work seamlessly together. A true omnichannel approach enables providers to offer solutions that meet consumer needs, and additional value-added services that, if priced consistently, afford companies a competitive advantage.

But offering a true omnichannel experience to merchants is difficult for most payment providers, particularly since large retailers have specific payment methods, shop and backend integration, value-added services and reporting requirements.

Overcoming these challenges requires developing strategies to consistently meet merchants’ omnichannel offering requirements at every stage of their customer relationship. As the first merchant touchpoint, the payment provider’s omnichannel sales function needs to consistently quote prices, terms and conditions for all available products, verticals and features. For example, when buying a car — a sunroof may not be included, but it is always possible to add GPS navigation.

the omni channel operating model

When leads mature into contracts, merchants typically expect to have one contract for all selected features (i.e., POS terminal rent, online payment gateway, cards acceptance, acquisition, reporting and value-added solutions). Expectations include:

  • Minimal effort to manage contracts (e.g., monitor, track and manage contract periods, automatic renewal, reference accounts)
  • Single touchpoint for service requests and complaints
  • A high first-call resolution rate

To efficiently implement these requirements, the omnichannel payment provider must analyze merchant interaction points and company information to determine a single-point of truth for merchant and payment data. In other words, the service agent on the phone must see the exact same reference and transaction data as the merchant in the online portal.

Payment providers need to create a single monthly statement for the merchant, with all billable and line item costs, extra costs and hold-backs, and the total sum due. They must identify company-wide billing events and feed these into one consolidated billing system. Again, it’s critical that products and pricing are consistent and that CRM and sales information is harmonized with billing to make certain any rebates or sales-related pricing adjustments are made.

Reporting is very specific to the customer segment. Most large retailers do their own data analysis, so they are satisfied with a structured data set with information on transactions, status, payment information, chargebacks, etc. The challenge is to collect transaction data across all payment methods and channels and create a single data pool per merchant. In contrast, small to medium retailers typically have no dedicated reporting framework, so providers will need to offer analytical tools to enable merchants to “slice-and-dice” their data to gain useful insights.

These foundations help provide consistent check-out experiences for retail customers. For example, a customer who buys goods online and receives rebate vouchers may use those to walk into a bricks-and-mortar store. This may sound simple, but these vouchers are qualified by analyzing the underlying payment data (online or store). These need to be harmonized to make certain that, at checkout, the eligibility and voucher amount can be verified. And if this customer then decides to return this purchase, either online or in-store, this reverse-payment transaction must be handled seamlessly as well.

The omnichannel payment provider faces the challenge of setting up internal processes independently from payment channels and methods. This is difficult since various payment schemes have different processes, rules and regulations for chargeback or retrieval processes, e.g., the number of chargebacks allowed for specific types of merchants (MCC). Omnichannel payment providers may want to invest in a workflow management system to reduce the manual effort and help back-office staff operate the processes more efficiently.

Becoming truly omnichannel will require payment provides to radically reinvent their operating models, integrate products, services, data models and data sources, remodel internal processes and educate their staff. This is a huge investment and, with shrinking margins and increasing competition from startups, even big international players may find this difficult to achieve (especially considering shareholder pressure). But becoming omnichannel is critical if payment providers are to remain competitive in a tight market.

Author contribution from Alexander Christoph.

Summary

Developing a sustainable and commercially successful omnichannel operating model requires payment providers to think beyond a sales-centric approach. It’s imperative to combine products and services, customer management systems and high performing payment platforms for a compelling omnichannel offering that meets the demands of today’s merchants.

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