3 Ways Retailers Can Prepare for the Future of Payments in 2022
Last year was full of innovations and transformations in the payments industry. In fact, more than four out of five Americans used some form of digital payment in 2021.
This shift in digital adoption was accelerated by COVID-19, but with the impact of the pandemic continuing to shape how consumers shop and pay, retailers must also continue to adopt modern payments methods in 2022. The new year presents new opportunities for retailers to prioritize strategic and innovative approaches to their payments processes to stand out from the competition and better serve their customers.
1. Explore alternative, digital payment options.
When it comes to checkout, consumers have grown to expect a fast and convenient experience. As a result, QR codes, contactless and digital currency payments have seen a continued increase in adoption.
In the U.S., a significant contributor to this adoption were recent waves of card re-issuance by major banks, seeding the market with new contactless capabilities. Now, there are more than 190 million contactless Visa credit cards in circulation in the U.S. There’s also been an explosion of demand for more acceptance of digital currencies. In fact, 57 percent of consumers would choose where to shop based in part on whether the merchant has the right mix of digital payment options.
When alternative payment options are integrated into current payments ecosystems, retailers also reap other benefits such as the ability to easily tie together loyalty programs, and creating a streamlined and frictionless customer experience. Laying this groundwork will be critical to futureproofing payments processes to meet consumer expectations.
2. Offer fast and seamless omnichannel payments capabilities.
As customer expectations continue to change, retailers need visibility into buying habits across the digital and physical landscape. For example, buy online, pick up in-store (BOPIS) and curbside services have increased over the past few years, with nearly three-quarters of consumers having tried these services. What’s more, these shoppers also intend to continue using BOPIS and curbside after the pandemic ends. To support the successful execution of these services, retailers must have a variety of omnichannel capabilities, ensuring the checkout experience is fast and seamless across all channels.
In addition, offering easy purchases and returns is essential. When a customer is prompted at checkout to save their card information by creating an account, they now have access to a portal with their card on file for any transactions — including online or within a mobile app.
Now, the next time they check out, the process is even faster. On the back end, retailers can easily recall payments information at the time of pickup as well as when executing returns. All the customer needs to do is provide proof of purchase, and the store associate will be able to seamlessly complete the pickup or return.
3. Prioritize encryption and tokenization requirements.
Tokenization, or substituting sensitive data with unique identification symbols, provides a much more secure way for merchants to accept payments of any type. This has grown in importance for omnichannel retailers that need to make the payments process secure and seamless across multiple channels. As compliance and security mandates continue to grow, implementing tokenization is the only way digital payment methods will continue to be accepted.
In addition, retailers will need to meet stricter encryption requirements. The PCI Security Standards Council designed the PCI PIN Security Requirement 18-3 (Key Block) mandate to enhance the protections of symmetric PIN keys shared among payment system participants. With phase two set for January 2023, organizations must implement key blocks for external connections to associations and networks.
Following Visa’s interpretation of the requirement, where coverage “includes keys that protect PIN data, as well as keys that protect other cardholder data,” the upcoming deadline will cause retailers to assess whether their current hardware and applications can meet these new challenges. For those who haven’t already done so, 2022 will be spent in a race to catch up with the guidelines.
A New Year Brings New Opportunities
Regardless of whether your new year’s resolution included upgrading payments processes, it’s clear that strategic and innovative payments are key to serving consumers as the way they shop and pay continues to change. To make 2022 the most successful year, retailers must equip themselves with the right technology to introduce digital payments options, serve omnichannel shoppers, and meet evolving security requirements.
Andy Orrock is the chief operating officer of OLS Payments, a company that provides software and services for processing electronic payment transactions.
For more than 30 years, Andy Orrock has created and been chief operator for innovative enterprise-class payment systems for Fortune 500 retailers. As COO, Andy oversees the strategic direction, development and operation of the processing systems that OLS provides. He’s been chief architect of a number of OLS services holding a patent for a bridge service designed to maximize uptime for retailers. Prior to OLS, Andy held positions at Tosco and S2 Systems.
A Boston native, Andy and his wife have called Dallas home now for more than 30 years. He is a fan of print media and still reads 3 printed versions of newspapers every morning.