Thu Mar 02 2017
Barclaycard teamed up with Retail Week to explore the developments around the future of payments.
Ever-changing consumer behaviour is certainly keeping the fashion industry on its toes. Shoppers have come to expect the fastest and easiest of experiences from the moment they step through the doors, to the second they are handed the receipt, to the ongoing relationship they build.
These growing expectations have meant the sector has had to step up to the mark and embrace more convenient payment processes offering speed and ease. With this pressing need to adapt comes a renewed focus on payment strategies as digital innovation in store and online continue to drive the retailing evolution.
Research from Barclaycard suggests that consumers are placing a premium on convenience and that brand loyalty is becoming less important when it comes to shopping. Insight from Barclaycard’s Are You Keeping up with Your Customers report (January 2017) showed that almost a third of shoppers have abandoned fashion purchases because of long queues over the past 12 months, while nearly half of consumers say that a quick online checkout would encourage them to choose one retailer over another.
According to Customer Solutions Director at Barclaycard Sharon Manikon: “Customer experience is critical, and payments have a huge role to play in creating that experience. We truly believe if you can make the payments aspect of your customer experience simple you could retain that business and grow your market share quickly.”
Therefore, it is important for fashion retailers to consider the experience they want to offer their customers across all channels. Yet, as the industry becomes increasingly driven by digital developments, many retailers are at risk of falling behind as the level of innovation in payment processes rises.
Shopping payment journeys are moving away from requiring the physical exchange of money to using payment technology that fades the payment process so much into the background that it becomes almost invisible.
This year sees the 10th anniversary of contactless payments and in recent years this type of payment method has become the norm. Retail Week research found that more than half of UK consumers (56%) expect contactless payment to be available in clothing, footwear and accessories stores. This expectation is heightened for consumers aged 18 to 24, with 62% of these consumers using contactless payments for fashion purchases in 2016. The millennial market is more able to adapt to new technologies and so it is integral that fashion retailers predominantly target this age range to embrace contactless payments quickly.
Mobile has been another game changer, with the development of invisible payments enabling a new wave of contactless payments to surface. Contactless payment through mobile devices gained real momentum in July 2015, after a refresh of bPay products, and subsequently grew from that time on.
In September, Barclaycard partnered with British menswear brand Lyle & Scott to launch the world’s first contactless payment jacket, and – targeting the millennial market, Barclaycard teamed up with Topshop to create a wearable technology collection, ‘Topshop X bPay’.
Last year saw other innovations come to market, including the launch of Barclaycard’s Contactless Mobile for Android devices, and a partnership with British leather accessories brand Tovi Sorga to bring a contactless payment chip to the retailer’s wallet cuffs and bracelets.
Tami Hargreaves, Commercial Director, Digital Consumer Payments at Barclaycard says: “These collaborations show how the worlds of fashion and technology can combine to create a stylish and easy new way for people to pay using contactless, for everyday things – be it a morning coffee, or a bus trip across town.”
However, due to the £30 threshold on single purchases, there are limitations in the use of contactless payments at fashion retailers. While some retailers allow consumers to make higher-value contactless payments through authenticating themselves with their fingerprint or PIN code on their mobile devices, this is not widely available on the high street, limiting its use when many items of clothing can cost in excess of £30.
Nevertheless, moving away from monetary exchanges can also increase throughput in store as the payment process is faster for both the consumer and staff. Therefore, when the queue time is reduced, more consumers can be served during a given period, while reducing the risk of abandoned sales as a result of long queue times. Additionally, increased throughput will most likely translate to increased revenue for retailers.
Invisible payment technology through mobile also brings increased speed, ease and convenience in online purchases through the development of biometric payments. This futuristic point-of-sale technology authenticates payment through human characteristics, whether that be fingerprints, voice or even face.
While fingerprint touch for payment on mobile shopping apps is widely available in the UK, one card scheme is trialling facial recognition for online mobile payments through its identity check initiative across 16 countries outside of the UK. Payment is authorised through consumers taking a selfie, with the card scheme claiming that 92% of trialled consumers found its selfie ID check more convenient than other payment methods.
However, this is not surprising given the social media culture now ingrained in almost every aspect of daily life, particularly for the younger demographic. Therefore, fashion players targeting younger consumers would be extremely well-suited to embrace something similar to a selfie checkout system.
More widely, biometric payments not only make the checkout process feel more effortless but also reduce the gap between browsing products and owning, while minimising any barrier for basket abandonment. Biometric and contactless payments therefore enable frictionless purchases, where consumers purchase products without even thinking about the payment.
But the extent of technology developments for payment processes, most notably through mobile, goes further than just the cyber world. Insight from Barclaycard’s Are You Keeping up with Your Customers report found that, by 2020, a quarter of consumers expect to be able to use an app to scan and buy clothing in store with their mobile device and have their payment taken automatically. While this has been trialled by a leading online retailer for the grocery market in the US, it is yet to be implemented for the fashion market.
However, consumer behaviour and purchase drive is no longer just determined by retailers having the right product; they are demanding an experience and the fashion sector must also encompass this in store. Consumers are open to trying new experiences that will help improve and speed up service, such as digital fitting rooms, where consumers can try on merchandise through virtual reality and make payment then and there, rather than going to the checkout.
When it comes to payment processes in an omnichannel environment, the fashion sector needs to integrate its digital experiences online and offline, and mobile is a great way to blur these lines. Many retailers are therefore adopting a mobile-first strategy. In Barclaycard’s Payments 2016: The Big Story is Mobile insight report, the group’s head of strategic initiatives and innovation, James McDonald, agrees that while he doesn’t expect any one technology to come in and replace traditional payment systems over the next five to 10 years, for many people, mobile will become the default payment choice.
However, when navigating the evolving future of digital payments, it is important for retailers to consider their target consumer and whether a new payment technology will aid their shopping experience. What may work for certain retailers who appeal to younger consumers may in fact deter more traditional shoppers.