Data, security and fluidity, on the occasion of Paris Retail Week, Arnaud Bodzon, head of payment at LVMH and mentor of the show, shares his vision of trends in terms of payment processes.
What are the major trends in payment?
For my part, I identify three major trends. The first is not new, it is the evolution of payment paths and methods: Ever more omnichannel, with non-linear purchasing paths where customers will prepare their purchases by navigating between stores, e-commerce sites, mobile applications, social networks, etc., with an ever-increasing share of the smartphone. This is also accompanied by new payment methods, adapted to these digital uses: ApplePay, GooglePay, soon Click-to-Pay and Wero in Europe or Paze in the USA, etc.
The second trend concerns the exploitation of payment-related data. Payment data is very rich. It allows us to enrich our knowledge of the customer and their consumption habits. It also allows us to reduce friction and increase conversion. It allows us to understand the commissions paid by the merchant in order to challenge their suppliers and seek optimizations. And finally, data helps to combat fraud.
Finally, a third, more prospective trend would be the use of payment orchestration. This is a more technical subject, which consists of using a multi-provider payment gateway. The objective is to simplify the integration with several PSPs, in order to facilitate the addition of alternative or local payment methods, to optimize authorization rates and to give back negotiating power to the merchant who can more easily route his flows to one or the other. However, it is still a young technology, whose business model is not yet proven, so we can expect consolidation in the years to come. And, on the merchant side, this requires a lot of maturity and expertise: I think that we should only tackle orchestration after having implemented all the other possible optimizations, starting with an effective fight against fraud.
Are retailers up to date on exploiting payment journey data?
Some retailers are very advanced on the subject and have understood the interest of payment data to optimize conversion, reduce costs and guide strategic decisions. But this is not yet the case for the majority of retailers.
In relation to the customer journey, data can, for example, be used to better understand consumers’ payment habits, particularly with regard to their movements from one channel to another or even, for a very international clientele such as the luxury sector, from one country to another.
Another use of payment data, which seems essential to me, is for decision-making and defining your payment strategy. Without data, how can you know if a PSP actually offers a better authorization rate than another? Without data, how can you know if adding a Buy Now Pay Later solution has really kept its promises of increasing conversion, increasing the basket or attracting new customers? Without data, how can you know if adding a new wallet has really increased conversion or if it has simply cannibalized another cheaper payment method? What about the impact of a payment method on fraud or returns? Using payment data to calculate their own KPIs is a major challenge for retailers who want to effectively manage their payment strategy.
What are the main points of friction that still cause shopping cart abandonment or push consumers to change brands?
The payment step is regularly cited among the causes of cart abandonment. One of these causes is the lack of trust of some customers towards e-commerce sites: the customer has doubts about how their payment data will be secured.
Another major friction point is the lack of the customer’s preferred payment method. For example, a customer may prefer to pay with ApplePay when making a purchase on their mobile, on the subway for example, so as not to have to take out their bank card and enter their numbers. This is why offering the right payment methods is a differentiating criterion for a brand.
Finally, a major point of friction for consumers is refused payment, still too often linked to a technical error. And to identify these errors and correct them, data is needed.
What are the best practices to avoid declined payments?
To start with, it’s basic, but we need to guide the customer in their entry and avoid sending authorization data that we are able to identify as false. To illustrate, this involves, for example, visually grouping the card numbers as they appear on the card and notifying the customer of an incorrect entry if we detect that the Luhn key is incorrect or the validity date has expired.
Then, there are other more “technical” good practices: looking for exemptions to 3DSecure authentication to simplify the process while avoiding fraud, transmitting the right data to maximize the chances of authorization, favoring the national payment network when it exists, such as Cartes Bancaires in France, to increase the chances of authorization while reducing costs…
What are the main qualities that a luxury retailer must provide in terms of payment journey?
As with product manufacturing, luxury must provide a higher quality of service than traditional retail. We must therefore be more demanding on our performance (authorization rates, fraud, etc.) because average baskets are higher, so the risk is higher, and therefore the players in the chain are more reluctant to issue authorizations.
In addition, our clientele is very international, so we need to be able to offer local but also international payment methods. This is the case with the acceptance of China Union Pay, Alipay, WeChat Pay, JCB networks, wallets such as KakoPay for South Koreans, etc.
Source: www.ecommercemag.fr
