Accenture Banking Blog

I want to thank Emily Boese—a managing director in our Payments practice—for working with me to develop this post. Emily leads our team focused on payment acceptance working with merchants, acquirers and companies throughout the payment acceptance ecosystem.

Merchants are at the center of a massive transformation in payment acceptance. Digital payments experiences are more than novel and convenient, they are driving purchasing decisions. The payment acceptance choices merchants make now—and the ecosystems they do (or don’t) enable—will impact future consumer loyalty tied to brand experience.

That’s why merchants must build payment acceptance into their core value proposition in ways they never dreamed of even two years ago given the velocity of change in the market and elevated consumer expectations. The first step is thinking differently about payments.

Start with three critical mindset shifts:

1. From cost center to brand multiplier 

Merchants traditionally considered payment acceptance as a cost center, which is a half-truth. Retail businesses spend about 2 percent in credit card processing fees. Fees creep up to about 2.5 percent for card-not-present businesses.1 But the proliferation in digital payments options is forcing merchants to think beyond fees and rethink consumer experiences to include anywhere, anytime payments in a safe and secure environment. Consumers want to pay their way, which varies by tender type, device (form factor) and channel. They don’t know (or care) what happens in the payments value chain behind the swipes and taps. And if the payment transaction is a stumbling block, they can—and do—choose another merchant. Eighty-seven percent of online shoppers abandon their carts due to complex checkout. And over half (55 percent) would not just leave their carts, they would never come back to that retailer’s site.2

The payment acceptance choices merchants make now—and the ecosystems they do (or don’t) enable—will impact future customer loyalty tied to brand experience.

Revenue and brand loyalty are at risk if merchants don’t make payment acceptance more strategic. This realization is fueling merchants’ efforts to offer more frictionless payment options. This evolution is taking hold across industries in countless forms. Hotel guests are bypassing the front desk check-in process—48 percent of hotels are planning to invest in mobile check-in/out.3 Quick-serve restaurants are receiving customer orders through attendant free kiosks—McDonald’s will have self-ordering kiosks in all its US restaurants next year.4 And checkoutless shopping is not a scene out of the Jetsons—Amazon wants to open 3,000 cashierless Amazon Go convenience stores by 2021.5 This is only the beginning. The sky’s the limit for merchants that seize payment acceptance as a new revenue driver: fewer abandoned shopping carts, more frequent store visits and increased brand loyalty.

2. From one-stop shop to bespoke solutions

The days when merchants could get all of their payment acceptance solutions from a one-stop shop are dwindling. The roles of virtually all categories of acceptance market participants are converging. Hardware OEMs, software developers, networks and acquirers are coloring outside the lines, expanding beyond their native product categories. At the same time, new players are entering the industry, and new product combinations are quickly emerging.

This Wild West of acceptance business models and functions has a significant impact on merchants. It is creating tension between the simplistic buying decisions of the past and the complex market landscape of the present. Even options that provide an integrated solution may not be the right decisions for different geographies, tender types, form factors or channels. This is why merchants need a mindset shift in how they approach purchasing acceptance solutions. There will not be single perfect solution for all opportunities. Merchants need to prepare to piece together a right-fit solution working with multiple vendors with overlapping capabilities. The name of the game here is best-of-breed assembly to support consumer demand. It is important that merchants take on this added complexity to simplify the consumer experience. Addressing this internal complexity requires merchants to architect their platforms for embedded flexibility. Merchant integration platforms, operating models and capabilities road map should be agnostic to solution providers in the marketplace due to the accelerated pace of payments innovation.

3. From local to “glocal” readiness

Global is the new local for merchants. First, consider the fact that ecommerce has reduced the investment, management and administrative barriers to international expansion, even for mom-and-pop merchants. There’s also the sheer force of globalization, which is changing how merchants do business and who and where their customers are. Economies are highly integrated. Trade as a percentage of global GDP hit 71 percent in 2017.6 People are on the move. International migration reached 258 million people in 2017.7

As a result, we are seeing the internationalization of payment acceptance—both the supply and demand chains have gone global. Merchants must be prepared to sell their goods and services to people all over the world to tap into global demand. They must have the payments infrastructure to provide seamless payments experiences. With thousands of banks and hundreds of tender types and countless device and channel preferences, this is a significant undertaking. So much nuance drives consumers’ unique payment behaviors across geographies. For example, China has five times the number of mobile transactions than the United States.8 People are on the move. International migration reached 258 million people in 2017. The challenge for merchants will be to become “glocal,” which is understanding and meeting local needs on a global basis. This means making the trade-offs between specificity and scale.

Value creation starts here

A common theme runs through these mindset shifts. To ride the wave of change, merchants need to pivot away from payments as a purely finance function. What’s needed is a cross-enterprise approach to developing a payment acceptance strategy that integrates finance, marketing, customer experience, technology and operations. Ironically, to simplify payments experiences for consumers, merchants will have to introduce a bit of complexity into their businesses models, at least for the short term.

Look for our next blog, which will explore perspectives on the enablement side of payment acceptance.

1 Card Fellow, “Average Credit Card Processing Fees” 10/30/2018
2 James Melton, “Getting the Online Checkout Process Wrong Can Be Costly, Research Shows” 8/13/2018
3 Hospitality Net, “Open Key Projects Issuance of 100,000 Mobile Keys Monthly” 1/8/2019
4 Ed Rensi, “McDonald’s Says Goodbye Cashiers, Hello Kiosks” 7/11/2018
5 Spencer Soper, “Amazon Will Consider Opening Up to 3,000 Cashierless Stores by 2021” 9/19/2018
6 The World Bank, “Trade (% of GDP)
7 United Nations, “International Migration Report” 2017
8Accenture analysis