A 'Shorter Path' to Payments Bolsters Security and Loyalty

The less obtrusive the payment becomes, the more it enhances the consumer experience

James Ray Headshot
By James Ray
Managing Director of Merchant Services for J.P. Morgan

The following article appeared on PaymentsSource.com on Jan. 19, 2017:

The less obtrusive the payment becomes, the more it enhances the consumer experience.

A comprehensive approach addresses security in layers and throughout the payment process—from the tokenization of a customer's payment credentials to the point of purchase and from the data center to the networks. A multilayered approach assumes the system is at risk of breach and therefore uses dynamic security methods like encryption and tokenization to address risk.

Working with an experienced payments provider is especially important given the cost of investment, the fast pace of innovation and the unknowns and risks of adopting technologies too early.

Trust must be implicit, with security expected, but consumers don't want security to disrupt or slow things down. Security must integrate the latest technologies and best practices for staying ahead of cyber threats and managing transaction risk while minimizing friction.

Encrypting data at the point of purchase, such as on a consumer's browser rather than in your Point of Sale (POS) system, can reduce PCI scope as part of a strategy to manage payment acceptance costs.

As mobile devices are increasingly the tool of choice for consumer research and transactions, the use of device ID and authentication becomes essential. The "fingerprint" of the device becomes in some ways more important to fraud prevention than the payment credential itself.

Tools to reduce friction help merchants to distinguish when to inhibit versus enable a purchase. Robust intelligence can pinpoint a transaction's origin in real time. Rich metrics can facilitate fraud analysis.

A shorter path to purchase can also deepen loyalty. Payments must be unobtrusive for this to work. This includes linking into rewards programs seamlessly. If you invest in loyalty programs, wouldn't you want to leverage your investment at the point of purchase when a purchase triggers a reward?

As merchants influence more consumers via mobile channels, loyalty could be the tipping point for mobile wallets to take off. In turn mobile wallet usage could drive more consumer loyalty. According to Accenture's 2015 North America Consumer Digital Payments Survey, two big trends are: higher-than-ever mobile payments awareness, and the ability of rewards to speed mobile payments adoption.

Clearly mobile wallets and loyalty programs are interconnected. Payments and loyalty can connect together through the rich information troves tied to transactions. There is an opportunity to convert consumer payments data into intelligence that provides insights for merchants regarding how to enrich the consumer experience in meaningful ways.

The use of this intelligence can deliver behavior-driven offers and more targeted rewards. This can help consumers with purchase decisions, provide incentives and encourage loyalty.

With the right payments provider merchants can achieve Increased customer involvement with their brand across channels, improved conversion rates and reduced shopping cart abandonment, deemphasized checkout along with strong security, and emphasis on the consumer experience and building customer loyalty.

 

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