The Future of Payments (Shopping)

How do you create a brand that people are loyal to? Why do people buy your stuff instead of someone elses?

• Why would I buy an Apple phone over an android?
• Gucci over Chanel?

For me, this is the raison d’etre for being in marketing.  All about why and how people buy stuff. Pair that with an understanding of the payments industry and you’re cooking on gas.  Payments, to me, is the sexy bit. Are you really going to do it? It’s the crux of a shopping decision.

Before I get into the nitty-gritty of how a payment process can sway that decision, I’d first like to ponder the psychology of buying.

In purely psychological terms, as you shop, your brain releases endorphins and dopamine. This is what your brain releases when you’re happy, and as many things that make you happy are, it’s highly addictive.

For different people, this means different things. Your brain calculates how buying something will feel before you consciously consider whether to purchase it. Perhaps you’ve set a strict budget for yourself but then you encounter something delectable and all of a sudden your neurological flares go off and your best-laid plans are out the window.

But it’s not all in your head, brands can do a lot to twist your views. In-store, your shopping experience is influenced by colours, sound, smell. Apple, for example, set laptops at exactly 70 degrees in their store, which entices you to touch them. And eventually, probably, buy them.

Our loyalty to a brand impacts our enjoyment of the shopping trip, how long we’ll spend in a shop, and our tolerance for that. We will only be prepared to invest time and effort in learning the particular way of a new store if we perceive it to offer a genuine benefit. For example, in Lidl you have to learn that prices are displayed on the shelf above the goods. You’re less likely to bother learning that if you’re a regular Waitrose shopper.

Online, it’s a bit more clinical. Price, discounts, ease of site, reviews, shipping costs and a tailored selection of products all feed into whether you’re going to purchase or not. Of those levers, a tailored selection of products is interesting to me.

This should be far easier to do online than in-store because you can track the journey of each individual shopper and use that data to make their journey better. Either during this shop, based on what ‘people like them’ do, or in future when they return to your site.

Remember when you got your first Tesco loyalty reward voucher through your door before it was all automated? I remember being shocked, and if I’m honest, a bit embarrassed, that they knew me so well.

Now, I look at a dress on an H&M site for 2 seconds and it follows me around the internet for weeks, getting cheaper and cheaper by the day. I believe brands that use data well can change your shopping habits irreversibly. But they must be ethical in this, and they must understand what data is valuable to them and where the red herrings are. Too many companies end up down a rabbit hole due to an outlier in a data pattern.

How does the payment piece fit into this? As I said, payment is the crux of the shopping journey (the sexy bit) and it’s not easy.

Cart abandonment is, on average at 69%. That means you’ve whetted their appetite enough with product, marketing, and sales for them to put your product in their basket and get ready to buy. And yet, at the last minute they’ve just dropped off, decided against it.

Devastating.

When people talk about an optimized checkout experience they talk about:

• Ensuring your mobile checkout works.
• Reducing the number of checkout steps.
• Using guest checkout.
• Showing checkout progress.
• Using auto-fill.
• Offering mobile payment options

But depending on the consumer, and the purchase… the wants, needs, and desires of payment changes.

Some want the Uber effect. Low cost, high-frequency purchases where I never consider the payment. It just happens.

For others, they want to input their address to ensure it’s right, they want the validation of 3DS to make them feel more secure.

Endorphins rise as they hit more clicks through the journey.

SCA (Strong Customer Authentication) in the payments journey introduces regular use of two-factor authentication, added friction.

You need two steps out of the three following to make a payment:

• Something you know, like a password
• Something you are, like a fingerprint
• Something you have, like a phone

This plays into the hands of this second experience, giving a more secure checkout. Ensuring a consumer knows they are making the right purchase. Reducing fraud for merchants, but also enhancing the experience of those endorphin clickers. It might not enhance the joy of the Uber experience lovers, but that’s really in the hands of PSPs to help merchants explore the best possible journey for their customers after September this year.

Choice is another big consideration. Adults make on average 35,000 decisions a day. You have to question whether you want them to have to decide between PayPal, apple pay, card details or visa checkout.

The paradox of choice states a large amount of choice is commonly associated with welfare and freedom, but too much choice causes the feeling of less happiness, less satisfaction and can even lead to choice paralysis. It is important to find the right balance for your customers.

Data used in checkout can help you predetermine your customer’s preferred payment method. But again, this has to be ethical. One step too far and your customer is questioning their trust in your brand.

Speaking of ethical, people care about corporate social responsibility more now than ever before. Ethical shopping, for example, is one of the fastest growing sectors in retail today. Last year the amount spent on sustainable food and drink grew 9.7%, with the market now worth £81.3 billion in the UK. The result is a shopper-base actively looking for an ethical ingredient from the brands they’re buying from.

Payment companies have a duty to be ethical, in my opinion. At Judopay, we’re striving to build a cashless society and looking to provide mobile alternatives that remove the need for cash, it’s ingenious. However, it comes with a lot of responsibility.

The use cases for cash purchases are quite intuitive. Giving to charities, to the homeless, looking after the elderly. Etc. Judopay has a duty to acknowledge these challenges and help find solutions in every way we can as a large part of the drive for cashlessness and we take that seriously.

As a final point, I want to leave you with a thought from Airbnb. When Airbnb first launched they thought about their customer journey in terms of an 11-star experience.

• 1 star is you turn up and you can’t get in. You hate it, you never go back to Airbnb again.
• 3 stars is you turn up, you have to wait 20 minutes for the host to arrive. It’s annoying and you’re never telling your friends to “use Airbnb, it’s great”.
• 5 stars is you turn up, your host is there to let you in, the place is clean and you have a comfortable stay.
• 6 stars is you turn up, the host knows you like surfing and they’ve left for you a surfboard and directions to the nearest waves.
• 10 stars is the Beatles airport arrival. You arrive, there are 5,000 fans ready to greet you.
• 11 stars, you turn up and your host is actually sending you to space as a surprise.

The point of the exercise is that if you define the very best, the 11-star experience, it puts into perspective the previous steps. If 11-stars is going to space, suddenly the 6-star experience where your preferences are pre-known and catered for before arrival can bump down from a 6-star experience to a 5-star experience. In fact, for Airbnb, it has been. It’s now expected as part of the Airbnb shopping experience.

Think about this method in terms of payments.

If one star is the merchant can’t take payment.

And 5 stars is it just works.

What’s 11 stars?

Guaranteed payment with money back due to loyalty to your PSP?

I’m sure you can get more creative.

By finding your 11-star experience you can find the happy medium between the very top and the very bottom: and that defines your 5-star customer shopping experience.

For your company, what is the 11-star shopping experience?

And where’s the middle ground between that and zero?