The opening line of a Ford Motor Company commercial recently caught my attention. “You don’t become a 117 year old auto maker in this country by refusing to change.” The commercial goes on to say that Ford does not resist, deny, or ignore change as it relates to renewable energy and electric vehicles. I applaud Ford’s message because responding to change is not all that easy. This is demonstrated in the mountain of changes software companies with integrated payments are facing right now.
Consumer behavior has greatly changed over the past 12 months. These changes have spawned numerous trends that are spilling over into 2021 and beyond. The trends that have been picking up the most steam are the ones centered on the customer. Specifically, they make transacting easier, safer, and more secure. This growing focus on the customer not only benefits consumers but delivers benefits to merchants and software providers alike.
Below are three payment trends that will affect integrated payments in 2021:
Merchants are looking to allow customers to pay any way they want. As a result, they want and need flexibility in the payment vehicles that their consumers wish to use. The most important goal is to get the revenue – regardless of how it comes in. This includes credit cards, debit cards, prepaid/gift cards and automated clearinghouse (ACH).
Your customers will appreciate the benefits of ACH payment acceptance:
While ACH is less expensive to process, it does not bring many of the benefits that card payments deliver to your customers. These include:
As with many things, there are pluses and minuses of ACH payment acceptance. Your customers will have to weigh those out for themselves. The important thing is for your software to enable that option.
Buy now, pay later (BNPL) is a twist on the old layaway model that’s been around retail for eons. Using layaway, consumers can set aside merchandise, make installment payments, and then pick it up once the items have been paid in full. BNPL does it in reverse by allowing the consumer to take possession of the merchandise first, then pay for it in installments over time. Often these weekly, bi-weekly, or monthly installments are made at zero or low interest rates which makes it very appealing. As a result, consumers may be more inclined to make larger purchases than they would have otherwise made had full payment been required up front.
Last summer, Wind River posted about new technologies, and we included buy now, pay later. At the time, it was considered to be in its infancy in the U.S. Well, it seems that BNPL has been gaining momentum lately, and it’s something software providers should keep an eye on moving forward.
A colleague was telling me that while picking-up a prescription recently, she was asked to enter her date of birth in a keypad at the drive-up window. Her immediate response was one of hesitation as the driver of the car in front of her had just used that same device. It also made her nervous that there were no wipes in the drawer and no mention of the keypad being sanitized. Although reluctant to do so, she did enter her information but only because she had a small bottle of Purel sitting in her car.
Millions of others feel the same way about touching common surfaces. As a result, the use of touch-free payment methods using Near Field Communication (NFC) cards, mobile wallets, and payment-enabled watches has exploded. Software providers with integrated payments must adapt and enable all methods of touch-free payments at their point of sale environments. This includes new terminals equipped with the latest technology designed to enhance consumer safety and the payment experience.
Let’s face – fraud is a pain. Whether it is fraudulent transactions or fraudulent card testing on an ecommerce website, fraud is costly and often difficult to detect. Moreover, with the droves of online shopping, the risks of fraud and data theft have increased exponentially over the past year.
To address the growing risks, software companies with integrated payments should consider enabling point-to-point encryption (P2PE). Essentially, P2PE protects cardholder’s data and can be implemented in a way that never enters your customer’s system.
The moment the card information is introduced into the transaction, it is encrypted and stored on the payment processor’s network. The encrypted data is then turned into a token that is stored on your customer’s network. The token interacts with the encrypted data on the processor’s network to approve the transaction. This secure process renders the data useless should it get intercepted by any outside party along the way.
Point-to-point encryption delivers three key benefits to your customers:
Lastly, if you haven’t done so, you’ll want to bolster the anti-fraud tools incorporated in your integrated payments solution. Since most anti-fraud tools are payment-environment specific, it’s best to work directly with your integrated payments provider(s) to determine the optimal anti-fraud tools for your environment.
Changes in consumer behavior trends can be considered either an obstacle or opportunity for software companies with integrated payments in 2021. Treat them as obstacles, and you risk lagging behind. Treat them as the opportunities they are, and you just may help grow your customers’ business and yours.