We may well be in an economic environment which is challenging every facet of business life but we have also learnt from previous downturns that those who innovate will succeed.
E-retailing is rapidly maturing in audience reach, delivery of products and services and is showing greater resilience than other parts of the retail landscape. As online commerce continues to defy the pessimism enveloping the high street, organisations would do well to diversify or consider transferring part of their business online in order to drive down costs and shore up revenues. For those businesses that have already established a strong online presence, it is important to ensure that the business strategy maximises customer acquisition.
An often overlooked area is payments and those who view payments as a commodity are missing a trick. Online business prosperity depends on the ability to process an array of payments methods at all times, with a near perfect record for uptime being a key differentiator when selecting a payment service provider. It doesn’t matter how exciting or original your USP might be, if your payment process is clunky or restrictive in any way, you run the risk of losing sales. Put simply, payments should never be a barrier to securing the sale.
This makes sense when you consider that, loosely speaking; consumers tend to fall within the following categories:
• The fickle: unless you can instantly gratify their requests, their interest will soon waver. This also applies to those who are motivated by ‘want’ rather than ‘need’.
• The demanding: certain criteria must be met before they are willing to part with their money; dealing with them on their terms is an imperative.
• The loyal followers: appreciate a merchant who displays equal loyalty and consideration, demonstrated by the user- friendly options and services they offer their customers.
Two important factors to success are versatility and creativity - it’s important to think outside the box. For instance, who said that online sites can only accept electronic payments? We recently launched PayCash, which enables merchants to offer their customers the option of paying for things online with cash. When a consumer selects this payment method, a reference number and printable barcode is generated, which can be presented at any PayPoint terminal (in 22,000 convenience stores up and down the country). Once the payment has been taken, the merchant is informed and the goods are dispatched or the online account is credited.
Being able to accept online cash payments can be hugely beneficial. Not only does this facility open up e-commerce access to the millions of unbanked, who make-up over one tenth of the UK population (source: National Audit Office), but it also helps consumers manage their outgoings, as they are only able to spend what they have physical access to. In addition, there is the youth market, which has high levels of access to the internet but no access to credit cards, and finally, there are consumers who are reluctant to trade online, of which (in a survey conducted by PayPoint.net) 52% said they would be willing to engage in e-commerce if there was a cash product. We estimate this represents a £15bn annual commerce opportunity.
We certainly have reason to believe that cash is in vogue once more. Results from a recent TGI survey found that nearly 50 per cent of respondents would like to pay cash for everything they buy and PayPoint.net’s own research has revealed that, compared to last year, 20 per cent of consumers have shifted towards paying more in cash, of which two-thirds attribute this flight to cash as a means to better manage spending. Making it easy for all consumers to pay using their method of choice is the secret to exemplary customer care, a prerequisite for enduring business success.
Another compelling reason to offer the option to pay for cash is the absence of fraud as PayPoint guarantees all payment received. For customers, paying in cash removes the risk of fraud as it does not require the exchange of personal bank details. Chargeback’s caused by fraud can be crippling for any online business and have historically been a major barrier for businesses looking to move into the online world. Fear of fraud and identity theft is also a major cause of concern for consumers. In the most recent figures available, UK Payments Administration warned that online banking fraud losses were £21.4m in the six months to June 2008, a 185 per cent rise on the same period of 2007. They reported that more than 20,000 fraudulent phishing websites were set up in the first half of 2008, an increase of 180 per cent from the same period in 2007. A risk outlook report by the Financial Services Authority lamented that consumer awareness of fraudulent techniques is mediocre at best, and PayPoint.net’s own research shows that almost four-fifths of people would trust a site that was easy to use – regardless of its security features.
Offering the ability to pay for cash encapsulates a number of golden principles in e-commerce, namely: digital inclusion, fraud mitigation and debt management. But the most important of all, in a recession that sorts the wheat from the chaff, is the ability to offer the best customer experience, which is boosted by delivering customer choice in the area of payments as well as product. It is common sense to find a way to reach out to millions of potential consumers who want to spend online but are excluded from doing so.
Author: Michael Norton, Managing Director, PayPoint.net