Financial IT Interviews Jon Horddal, Group Chief Product Officer at emerchantpay

  • Jon Horddal, Group Chief Product Officer at emerchantpay

  • 14.10.2022 02:54 pm

How is changing customer behaviour affecting merchant profitability and how can payments combat this?

As a result of the pandemic, in 2020, internet retail sales in the UK  as consumers ‘migrated’ online towards contactless shopping options. Still, eCommerce transactions have higher interchange and scheme fees than in-store card payments, affecting their margins. Furthermore, without consumers being able to see products before buying, the ratio of sales to returns and refunds has increased sharply. With more card not present transactions, there are also higher incidents of fraud and chargebacks, which can be costly to investigate and process, which in turn negatively affects merchants’ bottom line.

To mitigate against this, merchants should look to engage experienced payment service providers (PSPs), which can use payments data to help them identify where revenue is being lost due to unoptimised payment strategies. 

Merchants can improve their acceptance rates as well as transaction costs, by directing the payment through the best local acquiring service. This is a way that PSPs can safeguard merchants’ profitability and help them keep their processing costs in check.

What are the preferred payment methods of shopping and payment for UK consumers?

In the first quarter of 2022, emerchantpay published ‘The Global Payments Outlook’ uncovering payment preferences and trends across the globe, which highlighted the top three payment methods in the UK as: credit cards (29.1%), debit cards (23.9%) and bank transfers (13.1%).

However, looking forward, the data from emerchantpay’s ‘New World One Market’ report in 2021 revealed that 15% of Gen Z and 11% of Millennials expected to pay by digital wallet as their preferred method in 5 years’ time, with a small number of respondents (4%) expecting to use cryptocurrencies. What’s more, 38% of consumers said they felt encouraged to make a purchase when having Buy Now Pay Later (BNPL) as an option.

This tallies with the current way in which people buy. The report revealed that the three preferred shopping platforms used by UK online shoppers were: smartphones (46%), desktops or laptops (37%) and tablets (17%). If mobile digital wallets continue to grow in popularity alongside the use of mobile to shop, convenience is likely to win out suggesting digital wallets are definitely a trend to be aware of when merchants are planning the payment methods they can support.  (Source: emerchantpay Global Payments Outlook)

Which sectors are predicted to see most growth and why?

There has been growth across various sectors, with Travel and Entertainment on a steep hike. Hotels, restaurants, leisure, cinemas, and theatres are key examples within the industry that are witnessing an incredible sharp rise. The reason behind this strong rebound could be consumer eagerness to travel again after nearly two years of confinement due to the pandemic.

There has been a tremendous bounce back in the role the travel & tourism sectors have played in their contribution to the recovery of national economies. In Europe, we have seen the largest recovery in of this sector, in terms of GDP change in 2021, in Greece at 74.9%, followed by Turkey (60.6%), Italy (58.5% and  Spain (52.5%) Source: World Travel & Tourism Council.

We anticipate further growth along all these verticals. Though it’s natural for the rate to plateau at a certain point, we expect that the trend will continue its path on an upward trajectory over the next few years.

What can be done to improve and future-proof both e-commerce and in-store payments?

Ubiquitous, real-time payments are the key to future-proofing payments both online and in-store. Customers are looking for simplicity and convenience when shopping, so merchants should constantly strive to make their user journey as frictionless as possible and provide easy payments. Also, real-time visibility on the payments’ status so customers can be reassured their purchase has gone through and when to expect the amount to be debited from their account.

What should merchants look for when optimising omnichannel payment methods?

Merchants should firstly consider leveraging payment data so they can gain a holistic view of their consumers across all channels. Then they can focus on using the data for loyalty programmes, rewards, and any other tools to encourage repeat custom and, ultimately, more customer lifetime value.

Alongside this, merchants need to constantly ensure that their customer journey is simple, seamless, and efficient for the consumer to navigate and complete their transaction. 

Other Interviews