Digitising payments: An opportunity to meet consumer needs and build business resilience

8-minute read

Changing consumer habits (like switching from cash to contactless payments) usually encounters resistance. The coronavirus pandemic, however, created a realisation that change is imperative to commercial survival and revenue growth in the digital era. Is this an opportunity for businesses to adapt operational and consumer payments processes, and build business resilience in the process? Read on, or request a call back to discuss opportunities.

Business resilience

The reduction in cash usage. The rise in the contactless limit and adoption of alternative payment methods. The increased importance of supply chain resilience. The pandemic has accelerated a shift in the payment journey like never before, driven by societal and business appetite for change.

This, in turn, presents an important opportunity for corporate adaptability and digitising payments (operational and consumer) to meet needs and build business resilience. From an operational perspective, this is looking at digitisation of employee expenses, supply chain management and a switch to virtual cards. On the consumer side, it’s about ensuring businesses offer digital payments methods that customers want to use. While these adaptations can require significant investment, they can also present long-term opportunity.

What specific challenges have businesses faced and what opportunities have they presented?

Jump to:

  • Adapting to face-to-face restrictions by optimising digital commerce
  • Building your own resilience by working with your supply chain to understand theirs
  • Using data to achieve personalisation at scale
  • Balance fraud protection and a good checkout experience for your consumers
  • In conclusion: What opportunities will the digitisation of payments offer your business?

Challenge: Adapting to restrictions limiting face-to-face interactions with consumers, and then opening back up again

Opportunity: Optimise digital commerce and unified commerce initiatives, including ways to pay

A need for reduced human interaction and to meet consumer concerns around cash hygiene, accelerated the decision to increase the contactless spending limit from £30 to £45, in the UK (1st April 2020). This will be further increased to £100 from 15th October 2021. For businesses, this met a need to keep employees and consumers as safe as possible, by reducing time at checkouts, minimising the need to handle and exchange cash, and decreasing the need for consumers to touch the PIN pad. As a result, contactless transactions continue to increase week on week, as the technology continues to be the preferred way to pay.

The growth in ecommerce encourages uptake of alternative ways to pay

Contactless was the big payments news in face-to-face retail, but ecommerce was really the story of the pandemic. Consumers changed their shopping preferences and habits, partly due to necessity (non-essential shops being shut and restrictions in place) and partly for ease (no need to queue) and safety.

This rapid shift to online shopping drove demand for alternative ways to pay. Businesses had the opportunity to meet increased consumer demand for things like Click & Collect, Buy Now Pay Later, subscription payments and gift cards. The digitisation of high street businesses, almost overnight in some cases, meant payment services providers worked collaboratively with retailers to help digitise payments fast, and to make sure the payment journey was as seamless as possible for consumers. Some retailers also accelerated investment in technology to help consumers buy online, with innovation like virtual changing rooms.

As well as asking ‘how do we get online quickly?’, businesses were asking how they could deliver on their brand promises and give customers great experiences online. Alternative ways to pay became a popular talking point, and fell in line with our research into the top 10 lockdown legacies in the UK, which included:

Click & Collect boom – According to our research1 , 30% of consumers say they have used Click & Collect more frequently since the start of the pandemic. 90% of those said they’ll keep this habit, and on average, shoppers use this service three times a month, compared to twice a month in 2019

Growth in home deliveries – The average person received seven parcels a month since March 2020, compared to five before March 2020. 47% of consumers said they expect to receive the same number of parcels as they did during lockdown and 10% said they expect to receive more

‘Come to me’ retail – one in 10 consumers have used ‘come to me’ retail since the start of the pandemic. This is where concierge-style services deliver clothing to customers and wait while they try it on at home. 34% of shoppers said they’d be more likely to buy from a brand offering this service

Dine-at-home experiences – 24% of people who have ordered at-home restaurant kits will continue to do so despite restaurants reopening. For many, it’s a chance to eat food from restaurants that are not local to them

All of these trends influence payment methods – from consumers using their own devices (app-based payments and digital wallets) to shop online and in store, to subscription models and Bank Pay. So much so, that three in 10 consumers and 55% of 25-34 year-olds say they regularly leave their wallet behind when they leave home, because all they need is their mobile phone2.

One challenge with the need to adapt quickly, and specifically with the sudden switch to ecommerce and online payments, is the danger of businesses facing issues with performance. For example:

slower response times because of increased transaction volumes, potentially resulting in timeouts and cart abandonment

a challenge in balancing authorisation and decline rates

an increase in chargebacks and refunds

a lack of clarity around payment processing costs and an impact on the bottom line as a result
For businesses, finding the right gateway technology and fraud prevention tools helped redress the balance between sales and declines; specifically helping to identify and rectify customer friction points, and highlight opportunities for unified commerce.

Challenge: The need to be resilient but also to be assured of supply chain and partner resilience

Opportunity: Work more closely and collaboratively with payment providers to understand the initiatives they’ve developed to help businesses adapt

Cash no longer a viable back up?

Cash has traditionally been the back up in the event of payment technology or Wi-Fi downtime. But as our Managing Director of International Corporate, Steve Lappin, points out, “even cash relies on technology. If payment terminals go down in a store, customers still need to be able to draw cash from an ATM, and ATMs rely on technology to operate.”

So, the focus from payment service providers (PSPs) is to ensure technical resilience, by having primary and alternate set-ups for businesses. This resilience is critical to any business’ brand promise. Having spent significant marketing budget on getting a customer to the point of sale, the worst outcome is failing to convert a consumer at that point. It can damage customer experience and loyalty, and impact bottom line.

Using data to support supply chain health and resilience

Technical resilience aside, businesses are looking for assurances from suppliers and partners about their long-term resilience. For example, if a PSP’s revenues are impacted as a result of a decrease in transaction volumes, does this impact their own resilience and that of their business customers? That depends on many factors, but Barclays’ role as a universal bank in helping the UK recovery is something that can give businesses confidence in the brand’s resilience.

Partnerships is key to resilience and growth too. By partnering with organisations like Judopay (digital payment solutions built for mobile), FreedomPay (intelligent commerce platforms), and VALINA from Worldline (unattended terminals), we can help businesses with much more than just processing payments or integrating new payments technology.

Our consumer spend data, combined with a business’ own data, and data available from working with these partners, gives brands a wealth of information to understand their own health, and that of their supply chain.

The rise of B2B digital commerce

From a B2B commerce perspective, resilience is just as critical as in B2C commerce. Our Head of Core Product, Linda Weston, believes we’re in a period of acceleration when it comes to the digitisation of B2B payments.

“Businesses have been so busy building and digitising in the last 12 months. This is the year of B2B digital commerce.

Linda Weston, Head of Core Product

With the pandemic came the need for a rapid shift in the way businesses worked with and relied on their supply chain. The role of data to determine supply chain health became a hot topic. Businesses wanted to tap into data analytics platforms to get a comprehensive picture of their supply chain. To get answers to questions like:

Who are my suppliers?

Where are they based?

How critical are they to my business?

Are any of my suppliers at risk?

How can we help them build resilience and financial security?

Ian O’Donohue, the founder of Barclaycard Business customer Tudor Drinks, a supplier of soft drinks to supermarkets, explained how supermarkets had shortened payment terms during the first lockdown:

“The large high street retailers were fantastic during the first lockdown. They dropped their payment terms from 60 days to 7 days. They were getting their cash in the door as soon as the product was sold and they did the right thing, which was supporting smaller businesses to get their money faster too.”

Challenge: Offering consumers a personalised shopping experience, at scale

Opportunity: Use data to achieve personalisation at scale

Before the days of ecommerce, many brands enjoyed a one-to-one, personalised relationship with their customers. They knew their wants and budgets; they knew their names, their families, their hobbies. The bigger a brand gets, and the more channels they’re on, the harder this becomes and true personal service, at scale, becomes impossible.

Digital channels, however, do give businesses the chance to offer personalisation at scale. For many consumers, there’s less of a demand for one-on-one bespoke customer service, but instead demand for a journey that feels personal to them. Adapting to consumer needs is critical here. Allowing a shopper to pay the way they want to pay, online or in store, having had a joined up, omnichannel experience, can be as powerful as the bespoke customer service of the past. The shift to ecommerce has highlighted this further and given businesses the push to factor it into their customer journey.

Challenge: Offer a secure payment journey without adding time and steps for a consumer

Opportunity: Work collaboratively with your payments provider to implement affective fraud solutions

The logic goes, that if you can offer consumers an interaction with you that they enjoy, and if they can check out securely and quickly, they’re more likely to return than if you can’t. The second Payment Services Directive (PSD2) and Strong Customer Authentication (SCA) are designed to bring increased security when it comes to online transactions. However, they also bring the potential of increased friction if businesses don’t get the balance right. This security versus friction debate is really critical to business success online, for businesses of all sizes.

Sheldon Chuan

Our Head of Digital Product, Sheldon Chuan, believes this balance is key on the B2B and B2C sides of any corporate business.

“It’s critical for large merchants to embrace fraud prevention as an opportunity to build customer loyalty, reduce cart abandonment and look for new ways to improve and speed up the payment journey for customers.

“For corporate businesses with company card programmes, the impact of fraud regulation shouldn’t be underestimated. Personal Assistants will no longer be able to use their managers’ credit cards to book travel on their behalf, for example. If company card administrators don’t have adequate cardholder data coverage (like mobile phone numbers), their cardholders will potentially find that they can’t complete transactions if they’re asked to authenticate using a second device (like a mobile phone).

“My advice to companies and card administrators is to ensure cardholder data – especially email addresses and mobile numbers – are up to date.”

What opportunities could the digitisation of payments offer your business?

With every challenge comes an opportunity to adapt, transform and grow. The digitisation of payments is a huge area of opportunity for corporate businesses to meet consumer demand, achieve personalisation at scale, leverage data to optimise supply chain health, achieve the balance of fraud security and customer payment journey, and much more. All of these areas are critical to businesses when it comes to delivering on the brand promise to consumers.


1 All stats in this list are from here: https://home.barclaycard/press-releases/2021/03/Lockdown-legacies/ (20th January-9th February 2021)
2 https://home.barclaycard/press-releases/2021/03/Lockdown-legacies/ (20th January-9th February 2021)

Business resilience

Turn challenges into opportunities

If you’re an existing customer, get in touch directly with your relationship manager to leverage opportunities through the digitisation of payments.

To start a conversation with us, request a callback, or read more about our corporate solutions.