Customers’ preferences are quickly evolving. “Customer experience” has become a buzzword, but it accurately describes the top priorities of today’s customers. They demand more choices – and they want them provided instantly and with as little disruption to their daily lives as possible. Digitalisation has been a key driver of this, helping reduce user friction while giving them more options. This has been accelerated by the pandemic, which has sped up digitalisation by 6 years or more.
The same trend also applies to payments. Invisible, instant, and free will soon be the standard – and no longer enough for customers. This means that beyond the “basics” of providing fast contactless payments, merchants must find ways to further leverage the simple act of payment to benefit both them and their customers.
It all starts with a shift in perspective.
More Than Just a Payment Processor
The old question merchants used to ask was, how can I make my payments as cheap, fast, and smooth as possible? Today, merchants must ask a new question – how can I use payments to improve my vision for an ideal customer experience?
For instance, consider how Amazon cleverly integrates its payments with its entire ecosystem to transform the customer shopping journey. There’s Amazon Pay, which allows Amazon customers to make payments on third-party sites. Amazon Prime Reload gives Amazon Prime customers cashback to their prepaid accounts. And Amazon Cash gives underbanked customers a prepaid account they can use to shop at various merchants, including 7-Eleven, Walgreens, and CVS.
For merchants, the humble Point-of-Sale (POS) terminal is often seen as the mere enabler of the last step in the purchase process. But that point of view underestimates its full potential. The POS can be much more than just a payment processor – it can also be a strategic tool for enhancing customer experience and thus their own value proposition.
The key realisation here is that the potential value of each sale extends far beyond the immediate transaction. One way that merchants can unlock this value is through value-added services.
The Value-Added Services Solution
Value-added services (VAS) are what merchants can offer their customers above and beyond a smooth payment experience. Modern POS terminals – such as the next-generation YUMI payment terminal supplied by Worldline – provide merchants with a variety of VAS such as:
This can span real-time fraud detection and management on the frontend to reporting and resolution on the backend. Limiting fraud protects not just merchants, but customers as well. In the digital age, identity theft-related fraud is a major threat for consumers, with 6% of EU respondents reporting they had been a victim of identity theft. An estimated EUR1.8 billion was lost to fraudulent card transactions in the SEPA in 2018.
As we move toward a paperless world, it is making less and less sense for receipts to still be printed on paper. Consumers should be able to receive and store their receipts digitally – which is also superior from a record-keeping standpoint. To that end, we have partnered with ReceiptHero to enable digital receipt capabilities on our POS terminals.
Merchants get the benefit of saved man-hours from printing and handing out physical receipts (and the customers checking them on the spot). While this might seem trivial at first, it adds up over time. A report by the Finnish state treasury, for instance, found that the potential savings of digital receipt adoption would be about EUR800 million for Finnish companies alone.
Flexible payment options
Customers want choice. They may not have the funds now – but would still like the product anyway. The rise of Buy Now Pay Later (BNPL) is a prime example. By 2025, European BNPL volumes are estimated to hit USD357 billion (EUR294 billion), almost half of global volumes. In short, consumers want payment flexibility with maximum transactional convenience. With the right setup, things like in-store credit can be seamlessly provided even in physical transactions.
Filling out forms at the counter to sign up for a loyalty programme will soon go the way of the dinosaurs. A good POS system can catalogue and automate most if not all the programmes functions, from onboarding to reporting. Merchants get valuable data and a higher per-customer spend, while customers get to enjoy their loyalty rewards in a seamless manner.
Detailed business and marketing analytics
If data is the new oil, then merchants would be remiss if they did not harness the power of their transaction data. A data analytics platform built on top of the POS terminal will be able to analyse transaction data at the source – no data migration required. Merchants not only save time but can also give their customers more of what they want.
How Value-Added Services Augment the Purchase Cycle
Another way of looking at these VAS is through the lens of the purchase cycle. This can be divided into three broad phases – pre, during, and post.
In the pre-purchase phase, VAS such as analytics and loyalty programmes can allow merchants to better match specific offerings to potential customers. For instance, the customer who signed up for a loyalty programme can receive a notification informing them that their favourite item is on sale. The more granular data a merchant can obtain – such as transaction-level data from digital receipts – the better they will be able to “prime” their customers before the sale.
During the purchase itself, VAS like in-store credit can provide customers with the option to purchase items they might not have otherwise. Real-time fraud management helps protect the merchant, and valuable transaction data is collected and stored.
After the purchase, detailed business and marketing analytics can help “close the loop” and provide better pre-purchase offerings. Digital receipts can save both merchants and customers the need for wasteful physical archiving and make any returns, refunds, or exchanges far more efficient.
The Missing Ingredient – Granular Purchase Data
Thus far, many VAS have been missing one thing – easy access to granular purchase data. Or in other words, data that can match specific product-level transactions to specific customers. Getting this level of detail with mass market payment methods such as cards and wallets was a challenge.
That is why we are so excited about our partnership with ReceiptHero. Beyond the environmental benefits and time-saving benefits, some merchants can also better analyse existing customer data their customer by matching payment card data with receipt data from their electronic cash registers. In the future, merchant tools that can directly support data analysis may also be added.
Loyalty programmes – already a proven method of increasing customer spend – can be even more targeted. Merchants will be able to better identify and leverage upon cross-selling opportunities. And the onboarding process to these programmes themselves can be made seamless thanks to card linking.
Payment Data and Value-Added Services – The Power of Synergy
Digitalisation will continue to drive customers’ purchase expectations. No longer can purchasing and payment be classified as a single distinct activity at a specific point in time. Rather it must be seen as an ongoing process that extends far beyond the payment itself. Think of the purchase cycle as a business conversation between the merchants and their customers.
The combination of payment data and VAS can serve as a way to give this conversation new depth – a vital advantage in a world where every business relationship is becoming increasingly contextual. Merchants can capitalise on this trend, starting with something as simple as the humble POS terminal.
In Worldline’s Merchant Services business line Marco is in charge of physical payment terminals and digital products and services for the POS, including value added services, automated onboarding and merchant portals.