As thoughts on Covid security continue to take the front seat in the minds of many, the way in which services are delivered remains paramount to many businesses and their operations.
As Paul Marcantonio discusses in this guest-authored piece for The Fintech Times, utilising Open Banking technology could provide a remedy to this field.
Paul is the Executive Director for the UK and Western Europe at ECOMMPAY, establishing the payment service provider as a trusted partner to e-Commerce merchants throughout the region. He has over 20 years of experience working for representatives of the payments industry, including popular e-Wallets, and tier-1 interactive gaming brands, such as Ubisoft and THQ. Paul is committed to driving success across the diverse landscape of digital payments, facilitating a frictionless user experience for merchants and their customers.
In 2020, total retail sales volumes fell by 1.9%, the largest annual decline on record. Added to this, PureGym reported losses of £200m, due to Covid-related closures. With non-essential retail and leisure businesses shutting their doors again under Tier 4 restrictions in late 2020, the sector is still struggling to get back on its feet. Although Freedom Day was the welcome final step of lockdown easing in the UK, retail and leisure businesses are continuously and disproportionately encumbered by the virus.
Shops and leisure facilities are facing the new challenge of staff isolation and outbreaks, forcing them to close their doors once again in a quasi-lockdown. It is estimated that 20% of shop workers were self-isolating in mid-July 2021. The sector needs to be adaptable to change more than ever before, as it attempts to balance public health, customer satisfaction, and its own financial resilience.
The retail and leisure industry needs all the support it can get right now, whether that is in the form of extended in-store shopping hours or greater support from the UK government. One area that is a natural fit for retail businesses looking to provide the best possible customer experience, while keeping their business afloat in challenging times, is enhancing payment solutions.
Open Banking Offers Retail and Leisure Businesses a Lifeline
Merchant payment providers can provide flexible, bespoke solutions able to help these businesses stay nimble and responsive to the ever-changing context of the pandemic.
By leveraging Open Banking capabilities, leisure facilities, in particular, will not have to compromise between Covid-security, customer retention, and financial stability. These digital payment solutions offer quick, secure, and simple refunds for customers who have prepaid or put down a deposit for a leisure treatment, training session, or appointment, which has subsequently been cancelled, either due to isolating staff or clients.
Many Open Banking solutions are also free of chargebacks for refunds, a small but valuable gesture to help businesses reduce their cost base. Products such as payment links use 3DS technology, specifically designed to reduce chargebacks. The technology verifies the user identity several times, minimising potential fraudulent claims. Opting for digital payment options also removes the chargeback risks of insufficient funds with the help of Application Programming Interface (APIs). This is particularly useful to bricks-and-mortar retail businesses who have had to quickly transition to e-commerce models to ensure their resilience over the pandemic.
Merchant payment providers can also help retail and leisure businesses protect customer experience with the speed and ease of payment transfers. Open Banking products tend to use pre-filled payer forms. This eliminates the need for users to enter their details manually. Customers need only log in to their online banking portal, ensure the existing details are correct, and confirm the payment using Strong Customer Authentication, such as Face ID or Touch ID. Automating the data entry also reduces the risk of human error, speeding up the payment process.
Simplicity is at the heart of Open Banking. With direct bank transfers from customer to business, or business to customer in the context of refunds, there are no unfamiliar digital payment provider names in bank statements or final receipt. This clarity is invaluable in the current Covid landscape, where back and forth transfers are unfortunately likely to remain frequent for the time being.
The Payments Innovation Roadmap for the Retail and Leisure Industry
Although the pandemic has created hugely challenging and unforeseen obstacles for retail and leisure, many of the payment solutions that will help them mitigate the impact of Covid were growing in popularity prior to the pandemic. For instance, reducing a business’s cost-base, made easier by Open Banking, has always been favourable.
Consumers are also increasingly opting for e-wallets. ECOMMPAY’s research revealed that 20% of people used a digital wallet for the first time or started using one regularly in 2020. As customer confidence in the new technology available to them grows, retail and leisure businesses can lean on merchant payment providers as the pandemic continues.
Another major trend we’re witnessing is the increased usage of Software Point of Sale (SoftPOS) terminals as an alternative to traditional, hardware-based Point of Sale (POS) terminals. SoftPOS solutions allow vendors to use software-based applications which enable them to accept contactless payments on their personal smartphones, without the installation of any additional hardware. While their growth in use can in part now be attributed to the ubiquity of NFC technology in smartphones, they are also seeing heavy adoption among micro businesses, as well as those in areas where traditional payment infrastructure is unsuitable or expensive.
Reducing the risk of fraud has also become a priority during the pandemic too. ECOMMPAY’s data uncovered that the UK has the highest attempted fraud levels in Europe, having experienced a three-fold rise in fraud attempts during the pandemic. Fraud prevention strategies must become a priority for merchant payment providers and retail and leisure businesses alike. Technology including payment links and APIs will be continuously refined until these threats are eliminated.
Online payment providers offering Open Banking solutions are equally well positioned to navigate another confronting challenge for the sector: Brexit. Our research found that over one in three UK businesses (37%) have lost revenue from cross-border card payments post-Brexit, with an average revenue loss of £66,812. APIs allow for faster and easier cross-border payments. This will allow UK retail and leisure businesses, bolstered by EU tourism, to remain attractive to the European market and ensure it is connected and collaborative.
The retail and leisure sector has many challenges ahead as it balances the continued impacts of the pandemic with long-term business success. With cash flow pivotal when making business decisions, fully utilising payment ecosystems, data-driven technologies, and Open Banking solutions will offer a multitude of benefits. From reduced operational costs to finding the balance between conversion and security, offering an enhanced customer experience will help retail and leisure companies to navigate pandemic pressures and successfully grow their businesses.