Many retailers fail to grasp the critical importance of data, yet it is nearly impossible to run a successful retail operation without it, especially payment data.
Instead, retailers often focus on immediate sales figures, marketing campaigns, inventory management and customer satisfaction surveys. While these elements are important, they only provide a partial view of the business’s health and potential growth areas.
Payment data is an invaluable resource for driving business growth in omnichannel retail, where customers move seamlessly between physical stores, digital channels, and other touchpoints. It is the lifeblood of customer experiences, shaping everything from the initial interaction to the final click of a purchase, and beyond.
So, how does payment data impact these crucial aspects of omnichannel retail?
Facilitating Seamless Customer Onboarding
Customer onboarding is the initial interaction that sets the tone for the customer’s entire experience with the brand. According to a Baymard Institute study, 22% of US online shoppers abandon their carts due to a lengthy or complicated checkout process. This is where payment data steps in. It can be used to simplify the process, automatically filling in forms based on past transactions and expediting account creation. This seamless onboarding sets the stage for a positive customer journey right from the start. One-click purchases, pre-populated billing information based on past transactions, and alternative payment options all contribute to a smoother checkout experience, reducing cart abandonment and boosting conversions.
Regulatory Compliance
Payment data not only facilitates an excellent customer experience but also ensures compliance. It plays a vital role in helping retail businesses ensure adherence to Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. By analysing this data, retailers can verify customer identities, screen for suspicious activity, and mitigate fraud risk. This not only protects the business but also fosters trust with customers who value secure transactions.
Regulatory compliance is another area where management of payment data plays a critical role. Strong data management and governance acts as the backbone for adhering to various regulations, such as PCI DSS (Payment Card Industry Data Security Standard) and GDPR (General Data Protection Regulation). Non-compliance with regulations can result in hefty fines and reputational damage.
Customer Insights
The benefits of payment data extend beyond simply checking compliance boxes. Data analytics enables retailers to gain valuable insights into customer behaviour, market trends, and overall business performance. This helps them to make data-driven decisions and optimise their omnichannel strategies, ensuring long-term success. A McKinsey & Company article emphasises that companies that leverage customer behavioural insights outperform their peers by up to 85% in sales growth and over 25% in gross margin.
Hyper-personalisation
Payment data helps retailers achieve a 360-degree view of their customers and cultivate stronger customer relationships. However, for payment data to be a truly useful tool, it needs to be organised and processed correctly using good data models or normalisation techniques. This ensures the data is accurate, consistent, and usable for generating valuable insights. By integrating payment data into their CRM systems, retailers can personalise marketing campaigns by analysing purchase history, preferred payment methods, and loyalty program participation. They can recommend relevant products based on past behaviour and tailor the overall customer experience. This data-driven approach fosters loyalty and encourages repeat business. A McKinsey & Company study reveals that faster-growing companies derive 40% more of their revenue from personalization than their slower-growing counterparts.
Secure Transactions and Fraud Detection
Seamless and secure transactions are essential to a successful omnichannel experience. Payment data ensures a smooth checkout process for both international and domestic transactions, regardless of the location, payment method, or channel. Advanced analytics of this data allows retailers to quickly detect fraudulent transactions in real-time, safeguarding their business and customers. This focus on security builds trust and encourages repeat business. According to a Juniper Research study, online payment fraud losses are expected to exceed $362 billion globally between 2023 and 2028, highlighting the importance of robust fraud detection measures.
Secure data handling practices, such as encryption and tokenisation, widely adopted across industries, protect sensitive payment information from being intercepted or misused. Because of the increasing sophistication of fraud, payment data becomes even more crucial in instances where a retailer has been defrauded. The data facilitates proactive chargeback management by identifying suspicious transactions and implementing robust fraud detection mechanisms. This enables retailers to minimise chargebacks and protect their bottom line.
Better Rates Negotiation
Retailers can negotiate better rates with payment processors by leveraging detailed analysis of their transaction data. By examining transaction volumes, distinguishing between cross-border and domestic transactions, and understanding the distribution of payment types (debit, credit, wallet), retailers gain valuable insights. Additionally, analysing geographical trends and fraud patterns further strengthens their position. Armed with this comprehensive data, retailers can present a compelling case for lower fees, ultimately leading to significant cost savings and improved profit margins.
Financial Health
Finally, accurate financial records are paramount for any business. Payment data serves as a reliable source for accounting purposes, ensuring transparency and facilitating smooth financial operations. This financial health allows retailers to re-invest in their omnichannel strategy, further enhancing the customer experience.
By leveraging payment data for financial insights, retailers can optimise their inventory management, streamline logistics, and identify areas for cost reduction. This financial health ultimately translates into a better customer experience through improved product availability, faster delivery times, and potentially, lower prices. Good payment data also helps with automatic reconciliation and back-office activities.
ROI of Leveraging Payment Data
Investment in payment data capabilities can help retailers boost the bottom line. By analysing payment data, retailers can unlock several insights that translate to significant ROI. This data-driven approach empowers retailers to move beyond guesswork and base their decisions on concrete facts. With the help of payment data retailers can measure key performance indicators (KPIs) like conversion uplift, cost savings, and customer satisfaction with pinpoint accuracy.
Additionally, the data collected across different channels (online, mobile app, physical stores), enable retailers to gain a clear picture of which channels are performing best. This knowledge empowers them to optimise resource allocation, invest in high-performing areas, and potentially phase out underperforming channels. Understanding best-performing points of sale allows for targeted marketing campaigns and inventory management strategies, resulting in a strong return on investment.
Challenges in getting good-quality payment data
While payment data offers undeniable benefits, retailers often face the challenges in gathering data from various sources. Different payment processors use different data formats and levels of detail, creating a great level of inconsistency and distorting valuable trends and insights. There are existing solutions to bridge these data gaps, but they might not work for all processors. Building a custom solution in-house could solve this, but it can be complex and expensive.
This complexity often leads retailers to focus on basic reports of past transactions, rather than analysing future trends. The key is to unlock the hidden insights within this data. By harmonising the data from different sources, retailers can transform this into a clear picture. This allows them to move beyond simple reporting and use payment data to proactively analyse trends and make strategic decisions based on real insights.
Retailers that prioritise the strategic use of payment data gain a crucial advantage: foresight. By analysing customer behaviour trends and identifying potential blind spots in their business, retailers can adapt and optimise their omnichannel strategy to meet evolving customer needs. This proactive approach ensures they remain relevant and competitive in the retail world.
How can we help?
At PaymentVibes, we bridge the gap between business strategy and execution for retail merchants by enhancing payment capabilities, enabling faster achievement of business objectives. Our unique blend of retail experience and deep payment industry knowledge allows us to elevate your payment organization and tailor our expertise to your business needs.
Contact us for a discovery discussion.
