Dec. 7, 2018

By Bengt Horsma, VP Digital Payment Products and Innovation Leader, Synchrony

Cash, check, money order, credit card, debit card, digital wallet, watch, social media, mobile app, in-store account, fingerprint, your face, and now implanted chips: In the last decade, there has been an explosion in ways consumers can pay for products.  

Driven by trends in mobile and consumer expectations, this proliferation in payments media was focused on making the buying process frictionless throughout all channels of commerce – in store, mobile and online. However, as these channels converge and as technologies evolve, they have become an avenue for businesses and payments providers to identify and more deeply engage with purchasers.

This allows for more than just quicker payments: As businesses gain the capacity to identify customers and link that information back to data about those customers, they’ll ultimately provide merchants with the ability to drive sales and loyalty while delivering a more personalized and safer customer experience.

There are three ways that businesses can take advantage of these new modes of payment:

Invest in digital identities

Consumer focused businesses and payment companies are investing in methods to quickly recognize customers and align that recognition to their data about those customers. This greatly reduces the need for customers to fill out information manually.

Payments organizations such as the Fast Identity Online (FIDO) Alliance and the W3C Working Group have emerged with the goal of allowing businesses to conduct more user payment data exchange in the background. This enables payments to happen more quickly and seamlessly without compromising the quality of authentication.

Individual companies have also invested in solutions that make behind-the-scenes customer data input easier. Synchrony, for example, has invested in Payfone, which uses consumers’ data from their cell phone provider to auto-populate data fields, ensure consumer authentication and make paying and underwriting easier.

Many retailers and businesses see technologies that facilitate customer recognition as an avenue for increased sales. In a world where 76 percent of online shopping carts are abandoned (according to SalesCycle), and where consumers avoid long checkout lines in stores, delivering frictionless payments can be a sales driver.

Creating Deep Personalization to Increase Loyalty

In addition to driving efficiency, digital identification technologies also introduce new opportunities to increase consumer loyalty. When businesses can identify a customer, they can target the customer with personalized offers and communications online and via their devices.

As technology evolves and allows businesses to recognize when customers are in their stores, merchants can communicate with them via mobile devices or dynamic digital displays. This delivers a truly personalized in-store experience.

In addition, having real estate on a consumer’s mobile device can provide businesses with insights into that consumer’s behaviors, further allowing businesses the opportunity to offer a unique customer experience.

Most retail customer experience strategies have focused on guiding the customer to the items they want. Customer recognition allows businesses to develop a path to purchase for items on an individual level.

Driving Strong Yet Simple Security Policies

This push toward using technology to identify customers provides further benefits beyond increased sales. While data breaches continue to attract global attention, traditional fraud and identity theft remain commonplace and deeply costly to consumers and merchants. All new technologies, especially those that handle consumer data, present cybersecurity and fraud concerns. However, as companies continue to develop technologies for payee identification, they provide opportunities to mitigate risks and to fight many traditional types of payment crime.

The human element has historically been a primary cause of theft and fraud. Traditional forms of payments that require consumer interaction tend to be the riskiest: cash can be stolen, cards can be skimmed or scanned, credit card information can be copied or phished and compromised passwords can permit identity theft.

By removing consumers from the complex payment process and providing a more seamless payments experience using customers’ own devices (the activating of which often includes biometrics or multiple factors of authentication) or through services like PayPal, businesses can limit purchasers’ exposure to fraud and theft.

Meanwhile, by identifying customers and connecting that identification to a larger quantity of customer data, companies can assess attempted purchases not just for accuracy on payments data, but also against the customer’s behavioral patterns and more – using machine learning and AI algorithms to verify the authenticity of the purchase across a wide range of information. As these technologies improve, they will put new security tools in businesses’ toolboxes and provide new degrees of protection.

A Safer, Smarter Payment System

For most of commercial history, transactions were personalized: Store owners knew their customers and their behaviors and needs. In many ways, the focus towards digital identification in payments is a reversion from a recent trend towards anonymity back to the norm, using data to allow businesses to scale personalization.

As businesses use payment methods to recognize and get closer to customers, they will realize benefits that those storeowners once saw: customers who feel they’re known and cared for, deepened relationships at the personal level, opportunities to make relevant offers and the ability to identify fraudulent activities.

Through identifying customers, technology is opening a new front for retail – one that drives incremental sales and provides new possibilities for enhancing security.

Cover photo: iStock

Topics: Loyalty Programs, POS, Transaction Processing

Companies: Synchrony Financial, Synchrony

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