Animesh Chowdhury, Founder and CTO, Goodtill

Pandemic payments have upgraded transactions and retail experiences forever

Animesh Chowdhury, Founder and CTO of Goodtill by SumUp considers how the pandemic has helped businesses evolve their payment transactions for the better.

Payments have changed immeasurably since the pandemic first took over last year. It was only as recently as 2019 that retailers, large and small, were still hesitating over whether the wider public was ready to go predominantly cashless. Fast forward to today and the majority of consumers are now buying online, and those shopping in-store are encouraged to use, if not completely limited to, contactless payments.

This will now be boosted by the new limit on contactless debit and credit card payments, rising from £45 to £100, as announced by the Treasury in the March 2021 budget. The increase is designed to provide a boost to the retail sector and to make it easier for consumers to pay for shopping. This is possible because of Brexit, with the UK no longer bound by the £45 cap on contactless payments which applies across the European Union.

We know that public attitudes around handling cash have already shifted substantially in recent times,[1] In the first quarter of 2020 alone, contactless payments grew by more than 40 percent globally, according to a survey by Mastercard. A study by data firm Dynata found the preference for cash dropped by 31 percent in the early months of the pandemic, and YouGov research found that ATM withdrawals in the UK had fallen by around 60 percent over lockdown.

More businesses than ever have now diversified altogether or as a minimum have incorporated e-commerce into their offering and cash just doesn’t work for online payments.

This rapid acceleration has all been in the name of keeping us safe, but what many retailers are now realising is that it is also extremely convenient for the customer. Not only that, retailers have recognised a host of new efficiencies and improved processes that cashless payments give them, from improved interactions with the customer to better business practices and insight that can make a quantifiable difference to the bottom line.

In short, COVID-19 has ensured that we are increasingly a cashless society and any lagard businesses which have resisted the move to card payments will need to innovate without hesitation and move to accept card and online payments in order to keep trading.

It is also true that as we ease out of lockdown and retail starts to adapt to new ways of working, the trading environment will continue to evolve and change in 2021. Businesses will need to be able to react quickly in line with new rules, but also to take advantage of new opportunities that these changes could present.

So, where can businesses add value to their operations and customer experience with cashless and online payment systems?

 Speed it up
In the average time to complete various types of payment, contactless transactions take around 2 seconds. Chip and pin is next at between 5-8 seconds and cash takes up a lengthy average of 15 seconds.

Over the course of a day’s business, these seemingly small differences can add up. Cash increases the time that people have to wait in the queue, something which is crucial for certain types of businesses – for instance quick-service restaurants or retailers who rely on the rushed lunchtime trade. With a card-only option, it’s a quick swipe or scan and the queue moves on, allowing your business to serve more people.

Speedy transactions mean that customers are in and out more quickly, which is important for reducing human contact whilst we remain at risk from COVID-19 and is also more convenient for consumers who now expect retailers to operate hyper efficiently.

Spend more
Drazen Prelec, a pioneer in the field of neuro-economics at MIT, discovered that people are more likely to spend without limit with card payments compared with cash.

Although responsible retailers do not want to be seen to encourage spending without limit, there’s no doubting the fact that card-only payments could be a simple way of raising the average transaction value within a business and boost revenue.

A smarter operation
The act of exchanging cash with customers is not only a slower process at the till but also presents a whole host of other tasks such as refilling the register with change, reconciling cash at the end of the day and making bank deposits. All of these take up valuable time and expose businesses to the vulnerabilities that come with human error.

Going cashless removes such tasks. Credit/debit card payments automatically reconcile with the bank and – because smart POS software can produce sales reports in real-time – this brings the added benefit of maintaining a more accurate and timely watch over the business financials. It also facilitates mobile payments in a much smarter and more convenient way, which has become fundamentally more important whilst we are unable to shop in physical outlets.

Effective modern payment systems have become much more than just the software for staff to manage your customer check out process. For most retailers, they are the core system for managing data and workflows relating to inventory, fulfilment and logistics, products, customers and sales. They help to make sure businesses source the right products, stock them in the right quantities, price them correctly, and as applicable, ship them on time in the fulfilment methods the customer desires. Synchronising inventory data with POS sales reports will ultimately lead to smarter, better-informed purchasing decisions. Not only will this help a business to decide what to keep or discard from the merchandise list, but it will also assist with decisions about minimum stock-levels and re-stocking schedules.

Getting these operational elements correct has a major impact on perceived convenience, reliability and choice, which can obviously impact whether or not shoppers decide to choose a specific retailer.

Added security
Another key benefit of going cashless has to be increased safety and security for your business, your staff and your customers. It means that time and resource is not wasted with trips to the bank and there is less cash on the premises, so a business is a less attractive option to thieves. By removing cash handling, there is also less risk of fraud and money laundering, although of course there are also inherent risks to financial transactions online, which businesses need to protect themselves against.

Getting to know your customers
One of the biggest benefits of moving to cashless payments is the ability to gain better access to invaluable data, such as customer buying patterns and preferences. It means that organisations can create tailored offers that better suit customers. With today’s shoppers having more choice than ever, retailers need to find intelligent ways to foster loyal and long-term profitable customer relationships rather than one-off low value transactions.

The most sustainable way to build long term loyalty is to optimise your customer experience and if possible, exceed expectations. Getting the operational elements right will demonstrate convenience, reliability, choice and a good payment system, where all data and processes are integrated for both physical and online, ensuring customers get accurate and up-to-date information.

The move to cashless payments increases the businesses’ opportunity to offer a personalised experience to the customer including communications, discounts, offers or unique rewards based on their profile or previous purchases. Retailers can use these improved offers or perhaps a points-based loyalty programme to promote more customer loyalty, which in turn increases repeat transactions and supports business growth.

Access to customer information can also allow businesses to run email marketing initiatives. These should be geared towards building long-term relationships and as with any interaction with customers, strike a good balance between push and pull, so as not to alienate when it is too one-sided.

The road ahead
In 2019, UK Finance published a report that predicted that just 9% of all payments will be cash by 2028. Two years on and given how the world has changed, would that prediction be even lower now? This month Amazon launched its first till-less store in the UK, taking the future of payments to another level again.

We seem to be at a revolutionary moment in terms of money transactions and there’s no denying that COVID-19 has accelerated adoption for the benefit of businesses. Going cashless may still seem a big step for some small businesses, but there are so many significant advantages that extend beyond payments to the entire business operations. We may have accelerated the adoption of many areas of technology in the last two years, but this one is definitely here to stay.

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