Frictionless payment, the combination of payments and loyalty and mobile wallets help strengthen customer relationships.
How consumers experience the purchase of products and services is changing. They shop both offline and online and they expect more and more convenience in every step of the customer journey. They also become more aware of the value of the data they provide to the retailer. In the meantime, the technical possibilities on the supply side are increasing.
In order to allow retailers to take full advantage of the opportunities offered by the changing payment dynamics, the expert group focused on the most important payment developments in the next five years. In doing so, the group focuses on three themes that in its view will influence the dynamics most strongly: frictionless payments, loyalty programs and mobile wallets. All three are explained and defined in the experts’ bluepaper, underlying trends are also identified and examples are given.
“In payment dynamics, a flywheel effect is visible between the value of the relationship with a customer and being able to serve a customer well,” the experts write. The better the relationship with the customer, the better the customer can be served. As a result of better service to the customer, the relationship with the customer improves, et cetera. Underlying this is that the customer is in control; his preferences are leading to improve the relationship and to serve him better.
Retailers can use frictionless payment, loyalty and wallet capabilities to improve customer relationship and serve customers better
This will keep the flywheel going towards 2025. Recognizing and serving the customer according to personal preferences is then even more important than is already the case.
Payment dynamics in 2025
Looking ahead to 2025, the experts first describe that payment thresholds will disappear further, partly due to the use of biometric data and the arrival of new frictionless payment solutions thanks to PSD2 (European payment rules).
In addition, retailer-specific and retailer-transcending loyalty programs will become increasingly personal due to the greater digital data richness that will become available to retailers. The expert group sees the general trend here that customers are willing to share more data if there is a clear benefit in return and if they have control over the use of this data.
The combination of both – frictionless payments and personal loyalty – will become a commodity, according to the experts: services that only large retailers now offer will become accessible to medium-sized and even small retailers, as technologies develop faster and become available at lower costs. The large retailers will continue to lead in innovations and will be able to gain richer data insights through their scale.
Mobile wallets combine frictionless payments and loyalty
But these virtual wallets have even more to offer: by integrating different functionalities and associated providers, they can improve customer journeys, facilitate data exchange and promote trust.
Frictionless payments and a personal loyalty program require, according to the experts, a continuous balance between payment security and payment convenience, respectively, and between privacy and customer benefit. The expert group expects that more customers will make use of the possibilities offered by the easier payment dynamics. Retailers will increasingly opt for solutions with a unified customer experience that they can deploy omnichannel, rather than separate solutions for online and in-store.
The optimal interpretation of the options in the field of frictionless payment, loyalty and wallets differs per provider. That is why the expert group advises retailers to follow relevant (product) developments, for example by talking to their payment supplier and experimenting with them. “The payment dynamics in 2025 offer prospects for retailers of all sizes, as it will be possible for any type of retailer to build a good customer relationship and serve customers well,” the experts conclude on their bluepaper. “There is no one-size-fits-all solution for investing in payment convenience and loyalty to build good customer relationships.”
The bluepaper of the Future of Payments expert group can be downloaded free of charge from the ShoppingTomorrow website.