People, payments and the future report % % % of online smartphone users comment about their experience on social media of people say contactless payments are quick and efficient of shoppers use a loyalty scheme at least once a month
Keeping up with your customers? New technologies are transforming the way we go about our daily lives including the way we pay. Everybody likes being able to pay the way they want to, but with so many new options, businesses can struggle to get all their bases covered. If you don t offer enough choice, you risk stretching your customers loyalty. But there s no point investing in something that only a handful of customers want. So how do you know which payment options are worth providing? It all hinges on your customers payment behaviour. After extensive research and interviews, we ve pinpointed ten key types of payment behaviour and the opportunities they open up for your business. Recognise these, and it s much easier to make the right decision about the payment options you should invest in for the future. 1
1. Reflex payments Customers of habit We all know people who use the same payment method every time. Many of these customers have made a decision based on a balance of speed and security and they re happy to stick with it. They are creatures of habit, and they ll only change their routine if they can see clear and convincing benefits. Your opportunity Just because a customer is used to paying in a certain way, doesn t mean there isn t an alternative that would suit them or you better. It s up to you to get one step ahead by offering convenient new payment options that support your business, like contactless or online payments. Then you can start encouraging habit-driven customers to discover the advantages of paying faster, or from the comfort of their home. 9 times out of 10 I use my debit card Female, 45 54, northern England 3/4 shoppers agree they tend to pay for things in the same way 2
2. Speed-aware spending Customers in a rush Even though payment technology has sped up transaction times significantly over the years, this group of customers still have ever-higher expectations for speed. Your opportunity Upgrading dial-up terminals to broadband will speed up payments, without compromising on reassurance. Moving to a broadband connection is simpler than many businesses think. As well as making transactions faster, it does away with the need for a dedicated phone line, so it can save your business money too. And if you have goods on sale for less than 20, introducing contactless payments can cut queuing times and help keep your customers happy. I notice the different amount of time it takes to process [Chip & PIN] Male, 35 44, southern England 57% of consumers think there are too many steps to make online payments by card 3
3. Cash amnesia Customers who don t often use cash In the UK, we re relying more and more on cards instead of cash. You ve probably noticed that many customers are now comfortable using a card to pay for low-value items. Although 37% of people say cash helps them budget better, most find replenishing their wallet a hassle. In fact, 38% say they often find they re short of cash when it s the only way to pay. I don t often have much cash Male, 25 34, Wales Your opportunity Taking cards means losing fewer sales. By making it easier for customers to pay, you ll improve your service and keep them coming back too. 42 % of customers are using credit and debit cards more than last year for amounts of 10 or less 4
4. Exact transacting Customers who want payment confirmation and be able to track their spend Customer behaviour: These customers feel that some payment systems are too fast and provide no confirmation or no receipt citing the need to keep track of Oyster card balances and the lack of receipt and unclear confirmation with contactless technology. They re more comfortable with habits they re familiar with, and can be closed to new ways of operating but problems are experienced with established payment confirmation technology too. you want to be sure it s gone through before you leave Business opportunity: New payment systems need to provide more reassuring confirmation, as failure here raises questions about its security. Customers should be asked if they want a receipt and shouldn t have to request one. For instance, with Worldpay Total Mobile customers can choose between an email or text receipt. 78% of people keep a receipt for everything they buy 5
5. Loyalty at a price Customers who want to get more back It s clear that loyalty schemes matter to UK consumers, with 92% of us transacting with a loyalty scheme at least once a month. But some of us find they take a lot of effort. One in three say they forget to bring their loyalty cards when they go shopping, and 42% say supermarkets give them too many paper vouchers with their receipts. All that hard work is holding loyalty schemes back from achieving their full potential. Your opportunity For some consumers, the ideal loyalty scheme would unify the retailers they shop with regularly, giving them a single, easy-to-manage pot of points. And linking loyalty schemes to payment cards so that points are added automatically when the customer pays would make the customer experience better and improve take-up. The opportunity for the retail industry is to work collaboratively towards the ultimate goal of unified loyalty schemes. And in the meantime, the message is to keep your scheme as simple and easy to access as you can. why the hell do I have to carry so many loyalty cards? Female, 45 54, northern England I don t use coupons because I can t stand the stream of emails Male, 35 44, southern England 6
6. Security-philia Cautious customers Cautious customers may think that a fast transaction is a less secure transaction. New payment methods need to offer them the reassurance of high security as well as convenience. Speed and security needn t be mutually exclusive, but if a transaction is too quick, customers are more likely to worry. Your opportunity Faster payments can cut your queues and improve your service. But securityconscious customers need reassurance that speedy payment systems are still safe. It s a case of reinforcing the message. In our survey, 91% of customers said they now believe online payments are secure, as a result of the industry addressing consumers initial misgivings. The same shift in attitude can be expected for contactless payments. There are now more than 32 million contactless cards in circulation, and people will eventually come round to paying this way. ANY ONE could pick up my [contactless] card Male, 45 54, northern England Most secure payment technologies Chip and PIN payment Cash machine transactions Web payments from a secure network Payments using a self-service kiosk Phone payments to UK call centres Web payments from public Wi-Fi Phone payments to call centres abroad Payments using an App Most Secure 2nd Most Secure 51% 27% 30% 30% 27% 27% 10% 22% 7% 18% 7% 13% 6% 4% 5% 22% 7
7. Return rewards Customers who want to give back Have you heard of the Peak End Rule? It says that when we re judging an experience, we pay a disproportionate amount of attention to how it ends. So customer loyalty depends not only on smooth transactions but also on seamless returns and refunds. Shoppers are often frustrated by the different ways that retailers handle this side of their service and by the amount of effort that can be involved for them. The opportunity A few shoppers may take advantage, but the majority will reward faster refunds and easier returns. In fact, 63% of customers will buy more from retailers with no quibbles returns. It s clear from our research that going the extra mile to make the returns experience smooth and easy for your customers won t result in missed sales but ultimately in extra sales. 63 % buy more from retailers with no quibbles returns 47% say it takes too long for refunds to my bank or credit card after I return something 8
8. Independence pay Do it yourself payments These customers are using self-service with increasing regularity and confidence. They don t need hand-holding once they re comfortable with a new process but they do want staff to help them quickly if needed. The backfire effect describes how an inadequate experience reinforces our negative beliefs. So, customers who are sceptical of new payment methods will reject them more firmly if they don t get the help they need to make the process seamless. The opportunity When retailers introduce any new selfservice payment method, front-line staff are crucial. They need to be visible and available to help and inform customers otherwise, the backfire effect will delay consumer take-up. With staff on-hand to help and sell the benefits of the new payment method to customers, you can maximise adoption. 33 % would like to use self-service scanners in supermarkets regularly 72% say sales assistants often tell me to remove my card [from Chip and PIN terminals] when I know to do it 9
9. One-touch transactions Slow uptake but improved benefits We found that 60% of customers are aware of the contactless symbol, but only 10% have used it. Most (62%) just don t possess a contactless card, but interestingly, only 22% feel it s risky. And contactless payment pioneers are very positive 93% say it s quick and efficient. Your opportunity With over 32 million contactless cards in circulation in the UK, more and more customers have the option to pay with contactless. The challenge is awareness, as some customers may not realise that they have a contactless card. Advertising at point of sale is key to driving awareness and engagement then once customers start using contactless, its benefits are clear to them. 93 % say it is quick and efficient 10 % of shoppers use contactless payments 10
10. Smart new world Connected customers Smartphone owners are easy to spot. But although one in five online banking customers now uses a mobile banking app, there is still a lot of resistance towards paying with a smartphone when shopping. Only 8% say they would use their smartphone for contactless payments. Your opportunity Smartphone payments offer the ability to integrate loyalty schemes and dispense with physical wallets and purses. However, barriers such as battery life and slow adoption of mobile sites need to be overcome. It may be that digital wallet systems will grow in popularity as consumers realise how much easier they make the experience of shopping through mobile sites. Currently, a high proportion of shopping baskets are abandoned on mobile sites before the customer has completed the transaction. Customers are already using their smartphones to research before shopping so developing a strong online presence for your brand could help them make the leap to paying with their mobile. 60% are happy using existing cards. 57% worry their phone could be stolen. 45% expressed concern over security and an inability to pay due to a flat battery. 44% worry over Wi-Fi or network coverage. Smartphones on the High Street 2013 Used smartphone in store to check prices Showrooming Comment about experience on social media Download vouchers and coupons in store Shared your location with companies for offers Used an App to manage tickets and loyalty cards Used a QR code to get information 17% 27% 14% 31% 12% 19% 7% 19% 7% 16% 5% 14% 5% 14% Often Sometimes 11
How will you be paying? In the UK, consumer enthusiasm for new payment options is restrained, but growing. This is Worldpay s view on how businesses can expect to see their customers payment habits developing in the near future. A controlled payment future The future looks set to be one of multi payment options, with a mix of contactless, Chip and PIN, and online payments continuing to take over from cash and cheques. Newer technologies such as digital wallets and biometrics where individual characteristics like fingerprints are used to verify identity will also have a part to play as new payment methods come to market and adoption becomes more widespread. At the same time, retailers will collect and analyse more data about their customers; and the use of online vouchers, coupons and loyalty schemes will become standard. For a new payment method to succeed and become widespread, it needs to be reliable, secure and trusted by customers and businesses. This is most likely to happen where the payments industry, government and businesses collaborate. This may limit the range of options that will succeed, but customers will have more confidence in the methods that are promoted. 12
How should businesses respond? Customers already expect to be given a choice of ways to pay, and although adoption of some methods is slow, demand looks set to increase. For businesses, offering more choices does require investment, but it can help grow sales. To identify the right strategy for their payment services, businesses need to know about the options and be alert to their customers needs. Looking further ahead, businesses will need to engage with customers across multiple channels to promote a positive experience with their brand. So, although you may not be able to sell online, you will still need a strong presence. For businesses who can, enabling customers to pay the way they want via multiple channels will help keep customers loyal. Segment variation: early adopters of new payments are most positive I would like to use Nice to have Link payment card to loyalty scheme 34% 41% Retailers kept record of expenditure using payment card to offer you vouchers 20% 43% Fingerprint, iris scanner 18% 31% Using your smartphone to make payments but still with a PIN 9% 21% Using your smartphone to make contactless payments to 20 8% 21% Supermarket poster in railway station to scan for later deliveries/pick up 6% 21% SMS payments (e.g.) Pingit 6% 17% An online wallet where you can store cards or a smartphone (e.g. Google Wallet) 5% 20% Chirpify or direct social media payments 2% 10% 13
Futureproof with Worldpay Worldpay enables your business to accept all major credit and debit cards quickly, face to face, via telephone, or online. So no matter how your customers wish to pay, now or in the future, we can help your business. Whatever the future holds, find out how we ve got you futureproofed here. Worldpay worldpay.com Worldpay UK Limited and Affiliates 2000-2013. Worldpay and other indicated brands are trademarks. All rights reserved. 14
*Max call charge from a BT landline is up to 5p per minute. Calls from other networks may vary. Worldpay 2014. All rights reserved. Worldpay (UK) Limited (Company No: 07316500/FCA No: 530923), Worldpay Limited (Company No: 03424752/FCA No: 504504). Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AF and authorised by the Financial Conduct Authority under the Payment Service Regulations 2009 for the provision of payment services. Worldpay (UK) Limited is authorised and regulated by the Financial Conduct Authority for consumer credit activities. Worldpay, the logo and any associated brand names are all trademarks of the Worldpay group of companies. WP530 April 2014 90436225